Have a look at this amazing graph from Felix Salmon. It is the evolution of the number of stocks traded on NYSE and NASDAQ. The numbers have been falling since their highs in the late 90s – by 32% on NYSE and by almost 50% on NASDAQ. Amazing, I did not know that the decrease reached such an extent.
What does it have in common with the index funds, passive investing and the Efficient Market Hypothesis? Well, I might be wrong but the less exchange-listed stocks there are, the higher the analyst coverage. This leads to more news per company, to faster price discovery process and thus to more efficient markets. Perhaps a decrease in the number of analysts or active managers could counter act this process. However, I doubt that the stock analyst profession has lost that many of its members. Quite the opposite is true.