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(I'll tell you again, just like I told you before I tried to throw an apple at Bill Gates' house from a party boat full of neoliberals: one of the largest drops in the stock market since the 1920s, complete with a plague and Prussia or whatever going buck wild.)
Imagine a society in which all but 10 individuals invest a fixed percentage of their income money in an index fund that in turn buys shares of any publicly listed firm in proportion to its market capitalization. The remaining 10 trade actively. For simplicity, assume that the necessary purchases and sales are done every day at market opening, based on the data from closing at the previous day. The ten active traders…
The inverse is true - the more people that stock pick, the more opportunities exist for index funds.
So, yeah, there's definitely a balancing act between the two.
Wouldn't the value of any stock not included in a fund be almost worthless or un-tradable? I am assuming that day trading is referring to the buy/selling of individual stocks by anyone other than a fund.
An increase in market efficiency means the prices of the equities match their true value faster.