OldShooter
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Well, IMO not exactly.Yes, all the passive index investors (like most people on this site) are contributing to market volatility.
Every bull market (in my 40+ years of investing) seems to end with the pundits warning of "weak hands." These are the late-arriving and naive investors who are forecast to bail as soon as the market scares them. They probably do bail, and that probably really does contribute to volatility.
So now this "weak hands" story has added the footnote that the weak hands are passive investors. Probably that is true. But the index is just a collection of stocks, so whether that collection is sold off by weak hands that hold those stocks individually (or hold stock-picking mutual funds) or by weak hands that hold a broad index, I think the result is pretty much the same. A broad range of stocks are sold as the weak hands bail out.
So, IMO no news here. Passive investors probably contribute to volatility in about the same way that weak hands have always done. No more. No less.