There is no question that the recent explosion in ETF investing has changed the way we all invest. We all know the statistics, that it pays to buy and hold indices, be a passive investor and profit from "lazy portfolios." My hunch is that with the recent market bloodbath, we may see a move from ETFs back into actively managed accounts.

With most ETFs weighted toward their larger market-cap holdings, when a giant tumbles, look out below. Take the NASDAQ for example. Last year's gains in the index were almost all due to the staggering rise in Google (NASDAQ: GOOG), Research in Motion (NASDAQ: RIMM) and Apple (NASDAQ: AAPL). No stock moves in a straight line up forever. Investors in NASDAQ ETFs have gotten crushed so far in '08, as the high fliers are indeed coming back to earth.

With most ETF portfolios trading back at levels that we saw in the winter of '06, investors have made no money in the last 14 months. Actively managed accounts on the other hand have produced positive results. Like it or not, many investors are fair-weather friends and as soon as they realize that they could have made a lot more money investing in actively managed funds, they will move their money into these type of investments.

Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer has no position long or short in any stock mentioned as of 1/18/08.