Morningstar Advisor - February/March 2009 - (Page 40) Morningstar Conversation Getting a Read on Risk By Paul D. Kaplan As investors awaken to the risks of investing, our distinguished economics panel debates the value of current risk models. To investors who lost mightily, the stock market crash of 2008 was a shock to the system. To Drs. Roger Ibbotson, Benoit Mandelbrot, and George Cooper, the decline was just the latest in a long string of the market’s fits and starts. And if investors are finally awakening to the risks they incur when they invest in stocks, these three distinguished academics long ago observed that the market is a lot riskier than it may seem. Ibbotson is the founder of Ibbotson Associates, which is a wholly owned subsidiary of Morningstar, and professor of finance at the Yale School of Management. He is chairman and CIO of Zebra Capital Management, a manager of quantitative equity hedge funds. Mandelbrot, the inventor of fractal geometry, is Sterling Professor Emeritus of Mathematical Science at Yale and co-author, with R.L. Hudson, of The (Mis)behavior of Markets (Basic Books, 2004). Cooper, principal of Alignment Investors, is the author of The Origin of Financial Crises (Vantage Books, 2008), which The Economist calls “a must-read on the origins of the crisis.” From Chicago, we invited them to participate in a conversation, via conference call, about the 40 Morningstar Advisor February/March 2009
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