Passive Investing is an investing strategy whereby investors purchase market-weighted indexes or portfolios without picking individual stocks/sectors or conducting due diligence and research.
If there is no one to actively set prices, passive investors will buy no matter companies are in good or bad shape
There will be no one left to sell certain companies when they are overvalued and buy bargain companies when they are undervalued compared to the rest of the group
If passive investors decide to sell, a feedback loop could be triggered that causes stocks to crash
This is a becoming a more serious concern as passive investments have grown since 2009 while active investments have shrunk