Effectively they prop up monopolies by injecting regular cashflow, not because of their business value, but because of their current size and place on a list.

A few key points to make.

1. I have personal index fund investments. I have no idea where the money is invested - it’s a black box. Am I am Investor in a Covid vaccine bullshit Shop - I fucking hope not. Am I? More than likely, indirectly via index funds.

2. Countries like Australia with a super scheme (10% salary mandatory retirement contribution) force literally the entire workforce of Australia to invest in the top Australian companies. Unless you have 1MM plus to self-manage, you get the super investment flexibility of low, medium or high risk.

Four of the top six Australian companies (ASX) are all banks. Are Australian banks innovative? No. Competitive, no. Do Australian’s like the big banks, literally no one. Do the banks get reliable investment every quarter from everyone’s super contributions - yes.

3. Index funds have made sense from a risk perspective, because the indexes are rebalanced quarterly for example, and you effectively invest more in those valued higher than before, and less in those who didn’t track as well. However, when you have companies propped up like in Australia - you get the “too big to fail” problem that plagues banks world wide.. “we better bail out the banks again”.

It’s not as simple, and these are specific cases, however ultimately indexes are blindly funnelled investment into a common set of companies, at regular intervals (cashflow), without any real sense check or validation of value and merit.

However, I think Bitcoin fixes this long term. It’s diversified across currencies at least. And the more businesses that transact in Bitcoin, it becomes part of their growth too - without needing to invest in index funds to prevent deflationary pressure.