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> If a significant number of people start moving retirement money out of index funds

A significant number of people do not also control a significant portion of total stock ownership. Droves of retail investors could sell, but their ownership is rather inconsequential: the top 10% of Americans own 84% of stock. https://money.com/stock-ownership-10-percent-richest/

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There would still be consequences in the short term if droves of retail investors begin to sell. Consider normal daily/weekly volume, and what would happen if a large percentage of retail decides to liquidate at once. More sellers than buyers will depress share price irrespective of those sellers total % of ownership.

Yes, and? What percent of that 10% are nearing retirement age or retired, and might want to de-risk?

And personally I'd say that the 90th-99th percentile investor (if not 99.9th percentile) would still qualify as "retail" - what proportion of stocks do the top 1% (or 0.1%) of holders own?

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