Morningstar Advisor - Fall 2008 - 9

Letter from the Editor Crisis Time A drawback of publishing a quarterly magazine is the lag between the time we write and edit articles and the time you read them. In our case, it can be longer than eight weeks. That can pose problems for a magazine covering investment issues during a financial meltdown (and ahead of a presidential election that will have been decided by the time you receive this magazine). Our challenges at the magazine are nothing compared with what you and your clients are facing, of course. I’m writing this letter on Oct. 7. The stock market continues to plummet, and the global financial system is in disarray. No one knows how this crisis is going to turn out. I hope you find some information in these pages (and in subsequent issues) that will help you make smart investing decisions and guide your clients through the mess. Although much of the content in this issue was created before the dramatic events of September, we have scrambled to recast features, re-interview sources, and update our data to give you the most relevant and useful information possible. We posed our 10 Questions (page 14) to three of the best financials managers we know to get their takes on a sector in jeopardy. In Investment Briefs (page 21), you’ll find information on handling the crisis, including two charts—free for you to download—that compare the performance of an all-stock portfolio with a balanced portfolio after other financial crises. You’ll want to examine this research before jumping into equities anytime soon. This month’s Spotlight is on taxes (page 34). With all the financial strains being put on the federal government, today’s low tax rates are not sustainable, and despite what you heard on the campaign trail, tax rates will have to be raised. Mark W. Tatge, a former bureau chief and senior editor at Forbes magazine, examines why this is so and what advisors and their clients are doing now to prepare. When taxes go up, the type of accounts in which clients hold their assets becomes increasingly important. Contributing editor David Harrell surveys the latest thinking on the concept of asset location and how advisors can add value by placing client assets in the most tax-efficient place. Readers also share their tax thoughts and strategies in On Topic (page 12). You’ll see the influences of Warren Buffett throughout this issue. These days, about the only thing that can cheer up investors is an announcement that Buffett has made an investment. It’s no secret that we’re fans of Buffett’s approach to investing and that he has long been an influence on some of our favorite investors, including Legg Mason’s Robert Hagstrom, the subject of Morningstar Conversation (page 45). Hagstrom has written books about Buffett yet applies his principles to growth investing. Also, we profile two advisors who incorporate Buffett’s philosophies into their practice (page 17). Lyle Watts and Jeff Cavender are serious Buffett students who strive to safely compound their clients’ capital. What you’ll find in these pages is the way we saw things as of early October. As we’ve experienced, a lot can change in a month. The story might be a whole lot different by the time you’re reading this magazine. The good news is that, starting next year, we’ll be sending you issues every other month, instead of quarterly. With our new bimonthly schedule, we’ll be better able to give you timely investing information. As always, please e-mail your thoughts about the articles to magazine_editor@ morningstar.com. Jerry Kerns MorningstarAdvisor.com 9

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Morningstar Advisor - Fall 2008

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