The Altercation over Indexation

Jul 26th, 2007 | Filed under: CAPM / Alpha Theory

Continuing the proud tradition of the “Rumble in the Jungle” and the “Thrilla in Manila“, Financial Planning Magazine hosted what it called the “Fundamental Indexation Smack Down” last month between the inventor of fundamental indexation Rob Arnott (the Patent King of Pasadena) and Gus Sauter, CIO at Vanguard.  The entire 15 rounds was just released in a 60-minute webcast – and there’s no annoying $30 pay-per-view charge. (see entire video here, audio here)

It’s actually a pretty interesting 60 minutes.  (Thankfully, even more exciting than the 60 minute SEC meeting we watched earlier this week.)  However, if you’re pressed for time, you will find that both Arnott and Sauter make their key arguments in the first 25 minutes (but you will miss Arnott’s taunt in Round 7 when he pointedly asked Sauter, “Why are you so scared of this?” – not quite Jack Nicholson’s “You can’t handle the truth!”, but a high point nonetheless).  Whether you make it to the end or not, you will find it’s a great way to get up to speed on the arguments for and against fundamental indexation without having to reading mind-numbing academic papers.

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