The market isn&#x27;t losing valuable insights from people who are investing in index funds. Even if they were confident enough in an individual stock to buy shares, that doesn&#x27;t mean they have any real insight about the company. For example, thinking RHT is a good buy at 63 doesn&#x27;t demonstrate any insight about Red Hats business, management or market.<p>I suspect the opposite is true: the market would be <i></i>better<i></i> if people invested in index funds rather than individual stocks when they didn&#x27;t have any insight about the company. I don&#x27;t have definitions to separate company &quot;insight&quot; from the more speculative information, but the distinction seems real enough.