So here is one of the risks of the passive indexing that Mr Bogle espoused:
Mega-Cap Stocks Continue To Dominate. But Why? - RIA
Quote:
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Therefore, as investors buy shares of a passive ETF, the shares of all the underlying companies must be purchased. Given the massive inflows into ETFs over the last year and subsequent inflows into the top-10 stocks, the mirage of market stability is not surprising.
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Individual mega caps will have a declining growth rate, then the price becomes expensive, so the sellers (apple is down) take the money and buy other lower valued mega caps, just rotating money within the index which gives the illusion of strength, against a weakening economy. .
The long term index buyer is betting on
survivorship bias where the index continues the behavior of expelling declining stawks and including up and coming large growth stawks. The other is the safety /liquidity of the mega caps, which is creates a "pyramiding bias" of everyone flocking to the same 5-10-20 stocks to guarantee / hedge against poor stock picking to keeping their jobs. . However, the better returns are made with stawk picking, not amongst the mega caps, but there are liquidity and ownership constraints.
pick your poison!