[finance-geek]

At a primary level, you are correct. But the effects of passive investment are more subtle. 1. More investment dollars chasing big companies allows those companies to issue more stock without having to worry about pushing prices down (since there is this extra upward pressure of increased flow.) 2. Increased stock prices from increased flow gives the company more stock value for acquisitions 3. If money keeps flowing into particular stocks, it encourages companies to be lax about dividend growth, since the prices rise regardless.

[maerF0x0]

Those are subtle and interesting points.