ox
Roger Ibbotson, 56
Chairman, Ibbotson Associates; finance professor, Yale School of Management
"Higher risk investments will continue to yield higher returns and stocks will continue to outperform bonds. Stocks and bonds will still be the basis of corporate financing, but derivatives will evolve and become more automated and easily traded. There will be many more instruments and easy-to-understand centralized trading. Trading costs will drop and trading floors may disappear.
"Automation is the one clear thing that will bring dramatic innovations. Services will increase and there will be much more efficient information with a deeper level of detail. The key to avoiding 'information overload' will be a variety of aggregates -- we will go from the top down with live models that will allow people to make more informed choices. Data will move
toward simplification and ease of use. We won't have to know all the underneath activities to make an investment decision and we'll be able to do more by doing less. Life will become simpler.
"Globalization will be especially interesting for the U.S. financial industry, as it will be one of the great benefactors. Financial firms will be providing a major U.S. export in terms of data and products. As the leading provider, foreign investors will invest either directly or indirectly in the U.S.
"There will be more passive investing -- perhaps as much as 50% -- with active investing becoming 'super-active' -- and there will be very little middle ground and turnover rates will rise."
