In theory an economy could expand more in private and small businesses and not help index funds. I could see this happening if there were a lot of corporate taxes based on business size.
I think but am not sure that the economy can expand by shifting more “income” from capital to wages which would be bad for stocks. Think 1950s.
If the expanding economy is caused by a lot of disruption from new businesses it could also be bad to hold indices weighted towards incumbents, this seems the most likely to happen of the three cases. The disrupters don’t necessarily need to be big, just enough of a threat that investors think future growth or earnings of incumbents are threatened.
I think but am not sure that the economy can expand by shifting more “income” from capital to wages which would be bad for stocks. Think 1950s.
If the expanding economy is caused by a lot of disruption from new businesses it could also be bad to hold indices weighted towards incumbents, this seems the most likely to happen of the three cases. The disrupters don’t necessarily need to be big, just enough of a threat that investors think future growth or earnings of incumbents are threatened.