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Challenges And Opportunities
 It has been a … memorable year. Maybe by the time this goes to print, the markets and the economy will be booming, but that seems unlikely, writing this from late 2008. The last few months have been some of the most challenging in recent memory in terms of market performance, liquidity in the financial system and economic outlook.
We thought it would be a good idea to step back from the markets and take a long view of the current crisis. After all, that is what index investors do. And what better way to analyze what is going on than to look at the root of the problems and possible solutions to the crisis as well as to hear the views of some of the most prominent index sages?
Leading the issue with a look at problems and solutions in the markets is Dan McCabe, who strongly feels that markets need to return to their focus to investors and capital raising and away from trading. Next up, David Blitzer and then John Bogle weigh in on the current crisis, placing it in historical context, and helping to put things into perspective. Anchoring our crisis segment is a panel of experts from across the index industry discussing how recent developments are impacting each of their businesses.
Next up we have an old-school look at active versus passive investing in the context of fees from the always-lively and -substantive David Blanchett and Craig Israelsen.
And in this kind of market, what better investable attribute is there to look for than value? There is certainly plenty of it right now. Could the fundamental/dividend/alternatively weighted index investor’s time be coming again? This question and more are addressed when Rob Arnott and Paul Kaplan face off in a debate about the legitimacy (or not) of fundamental indexing. The topic for the debate—a Paul Kaplan article debunking fundamental indexing—is also included.
Next up, John Prestbo makes the case for the good old Dow (whose price no one can take their eyes off of these days) as an alternatively weighted index itself. And Luciano Siracusano asks, why not apply an alternative weighting methodology to growth indexes as well?
So we’ve got the answers to the financial crisis, as well as perhaps some ways you can put it to work for you. Best of luck to all in 2009!
Jim Wiandt
Editor
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