Author here: I do passive invest, with maybe 1/3rd of my portfolio. It's a self-fulfilling prophecy. As long as people keep piling in money index funds will keep getting pushed upwards in price.

Passive investing works great when it's a minority of the market.

But it obviously does not work, as the majority of inflows become passive.

There is no case in history where: "Keep buying X, regardless of the price of X" has ever turned out well. We come up with new stories every generation around why it can work. Price matters, and as soon as you introduce a mass of buyers who don't care about price, it distorts markets massively.

Michael Burry has a pretty good article that shows how $1 invested into an S&P500 fund gets amplified into $5 of price pressure through perverse feedback loops.

Also: Active managers have no interest in pricing the market for you. They want to make money. Why would they bother pricing the market when they can siphon money off of passives instead? Passives are like a rock-paper-scissors player that always plays Rock. It becomes incredibly easy for funds to frontrun and take advantage of them, and one day they will be left with the bag.

For now, I am in passive. But I will be the first one out when the narrative starts to crack.

Sorry, there is no silver bullet in investing. We keep inventing them and saying "this time it's different". It's not true.