Obama's economic plan - Soak The Rich

[Meadmaker]

Actively managed mutual funds and individual investors were buying these same stocks before the index funds came along.

They were doing so in an attempt to beat the market. They generally failed, at least as far as their investors were concerned. Their stocks often beat the market, but they skimmed enough off the top in fees that their investors often fail to beat the market. Nevertheless, they were analyzing stocks and trying to buy good ones, thus contributing to the collective wisdom of the market.

Index funds don't do that. Now that index funds represent a significant portion of invested money, they will have an influence. How could it be otherwise? The behavior of the investors has changed. The behavior of the market will change with it.