Davos, Switzerland (CNN) - Arriving in the Swiss Alps for my first taste of the annual Davos talkshop I felt like a boy on his first day of school as I filed awkwardly off the train behind a party of “conference veterans” from a British-based press agency.
These weary vets had come to my attention during the stunning journey up from Zurich as I was snapping away at the procession of picture-postcard views. My artistic reverie was suddenly interrupted by a bored-sounding voice lamenting the need to “do Davos again.”
I thought perhaps this bored journalist had endured one fondue experience too many.
As a Davos “virgin,” I failed to see how a gathering of some of the world’s most influential people from the world of politics and business, from Nicolas Sarkozy to Bill Gates, could be anything but exciting – well thought-provoking at least.
Ignoring further comments about the World Economic Forum being a ski holiday for many of the 2,500 delegates, I headed for the CNN bunker - located deep inside the impressively fortified congress center – certain this year’s event would yield some positive stories after the gloom of the past two years.
After all the theme this year was all about the three “R's" - the need to “rethink, redesign [and] rebuild” the world.
As I waited to put my bag through an airport-style x-ray machine, I chatted with a Swiss-based journalist about what she hopes to get out of the next few days. “I hope we’ll see some evidence that politicians and business leaders are actually back in control after the turmoil of last year,” she said. “But if nothing else it’s good for local businesses.”
And with that I moved on past several machine-gun toting guards and rows of satellite trucks belonging to the world’s media, before I finally entered the convention center itself and yet another checkpoint manned by suited guards this time.
With VIPs including Sarkozy due in town, this was something I would have to get used to. It soon emerged that the security guards have fun with the media by constantly changing the routes in and out of this maze-like facility.
I just hope the delegates appreciate Davos is serious business these days.
The UK Q4 GDP figures announced this morning were a shocker. However, the British economy scraped its way from recession in Q4 by its dirty finger nails. The median forecast of a 0.4 percent gain in GDP by the majority of renowned economists were rubbished and the official figure of 0.1 percent increase is a massive set back.
I wondered why Lord Mandelson was so guarded about the recovery, reiterating that it was so brittle. The services sector underperformed. It expanded by just 0.1 percent and not the 0.5 or 0.6 percent rise suggested by the business surveys.
With household incomes under pressure, credit in short supply and a major fiscal squeeze looming, the path to a full recovery is going to be a long and tortuous. I am in the minority that believes that GDP will grow by just 1 percent in 2010. Talk of an exit of quantitative easing, despite opinion to the contrary, is not only precipitous, but also folly in the current circumstances.
The auto sector did well thanks to a stimulus program, which may be fully utilised before too long.
Going forward, this recovery may well be achieved with high unemployment. Last month’s retail sales rise of 0.3 percent was disappointing. Going forward we’re all skint with taxation likely to increase and with less disposable income finding its way to the shopping malls. Retail is so important!
Perhaps Messrs Brown, Darling, Myners et all will desist from larruping the banks too much, whilst the economy is in such a parlous state. That does not presuppose that radical regulation is not a prerequisite ,as well as some taxation over a protracted period of time to ensure the taxpayer is repaid in full. The bonus culture is being altered. Few disagree with that philosophy.
Beijing, China – A lot of strange stuff happens in China, especially when dealing with government departments.
In the ongoing Google versus China row, we contacted the China National Computer Network Emergency Response Team to speak with deputy operations chief Zhou Yonglin.
Zhou claimed during an interview with the state-run Xinhua news agency that China was the world’s largest target for hackers and he questioned Google’s claim that it had traced cyber attacks back to China.
The team sent us a two-page application form for our interview request with Zhou.
At the bottom of the first page is a column titled, “The Approval and Censorship of the Content Regarding the Interview,” in which it states the applicant and his/her media organization should promise that before the content of the interview regarding CNCERT is officially published, the to-be-published article or news should be censored and approved by CNCERT.
The articles or the news that haven’t been approved could not be published or released to a third party.
Riyadh, Saudi Arabia (CNN) - I woke up after an overnight flight from London with the Winter sun of the Arabian desert and the sound of steel rods being loaded up, cranes moving beams, workers toiling away. The Kingdom is spending a half trillion dollars over the next five years – recycling oil wealth closer to home – and you can see it everywhere. All that spending barely got Saudi Arabia into positive growth last year, but that is far better than the global recession of 2.2%. Saudi Arabia is expected to grow by four percent this year.
We are at the crossroads with the CNN covering the Global Competitiveness Forum with thought leaders mainly from the West looking to establish a foothold in the region’s largest market. Michael Dell, John Chambers of Cisco, Martin Sorrell of WPP all make it a point to come here before Davos. They share stories of innovation and even failure.
Saudi government leaders want to set the climate for reform and hope these visitors can help that process along. There is a business push in Riyadh but as the local leaders I am speaking to on the ground know, this has to reach into all corners of society to get collective buy in.
Davos, Switzerland (CNN) – This is the standard question the world’s elite ask each other in the first weeks of the New Year. Will I see you at the World Economic Forum? For some the answer may very well be “not sure”, “maybe”, or even “probably not.” The CEOs of Sony, Facebook and Burger King won’t be here. Steve Forbes is staying away. And President Barosso of the EU has decided to give it a miss too. But don’t think for a moment Davos is over and done with. The bankers will be out in force.
Facing swingeing reform from President Obama and with more governments deciding how to impose punitive levies, banks like Citigroup, Barclays and Morgan Stanley are sending top executives. They will no doubt be cautious not to be seen living the good life at a luxury Swiss mountain resort. The consultants will be meeting clients to cement relations and many CEOs will be eyeing up counterparts warily and pondering whether they should be doing a deal.
Davos will always have a unique role to play in the international calendar and this year is no different.
“Dollar cost averaging” is a fancy term for a simple concept. It’s the idea of investing a set amount of money at regular intervals, usually in individual stocks or a mutual fund, regardless of where the markets might be heading.
Many of us follow the strategy, particularly when we’re able to invest money from a regular paycheck using pre-tax dollars. I’ve done so for years.
However, each month when the statement comes, I tend to just look at how my overall investments have fared. Check the number, then toss the statement in a drawer. (From late-2008 through mid-2009, many statements weren’t even opened)
After more than a dozen years of following the concept of DCA, I finally decided to sit down with a calculator and crunch the numbers: Does it really work?
I picked a widely held mutual fund and tracked how it traded on the first trading day of the month. (For the record, it was hardly a scientific approach. I did not factor in possible dividends. And of course this was just one of countless mutual funds on the market today.)
I put in a hypothetical annual investment of $3000.
- To dollar-cost average, I invested $250 on the first trading day of each month. I tallied up the number of shares purchased.
Here’s how it fared after three years: Dollar-cost inched out a random approach by $35.
1. Dollar-Cost Averaging – 154.93 shares totaling $9,148
How about five years? Things changed. Looking back over historical figures since 2005, the lump sum strategy took the lead, albeit by about $45 over DCA.
1. Lump Sum Investing – 250.85 shares totaling $14,812
Now I was really curious. I took it back to 2003 (at this point my desk was littered with Excel spreadsheets and my calculator was asking for a break)
After seven years, the lump sum approach still held the lead, now by $463. Dollar-cost averaging was second. The random approach finished third.
1. Lump Sum Investing – 387.98 shares totaling $22,910
The findings turned my investing brain into mush.
Then I took a step back, and looked at the two years over the past decade where fear and volatility entered into the equation – points when an investor would be most inclined to hold off on investing, or to panic and simply hit the sell button.
As Puru Saxena, puts it “Markets have been run based on greed and fear for centuries, and they will continue to be run on greed and fear for centuries to come. If you want to keep your emotions out of the game, then investing in a disciplined manner on a monthly or quarterly basis is the best option for most people.”
In 2001 and 2008, dollar-cost averaging outperformed the lump sum approach, and it wasn’t close. (In 2001, the dollar-cost approach saw declines of 17 percent while the lump sum strategy fell 20 percent. In 2008, it was 23 percent versus 36 percent.)
And that’s why many advisors point to the dollar-cost approach in the long run. It takes fear and greed out of the equation. It can help prevent investors from making the all too common mistake of buying high, and selling low.
In her Internet freedom policy speech Thursday, you can hear U.S. Secretary of State Hilary Clinton channeling Winston Churchill as she described a “new information curtain is descending across much of the world.”
Indeed, the echoes of Cold War enmity and “iron curtain” rhetoric seem to reverberate in the past week, with companies – rather than countries – as proxy combatants.
The brinksmanship of Google’s announcement it may pull out of China because of self-censorship requirements and what it claims as recent China-led cyberattacks has been followed by state controlled media characterization of the company as “White House’s Google."
Baidu, China’s largest Internet search engine and Google’s biggest competitor in the country, on Wednesday filed a lawsuit in the U.S. against Domain.com saying the domain name server provider didn’t do enough to thwart cyberattacks led by a group calling itself the “Iranian Cyber Army.” When Yahoo gave tepid support to Google’s stand in China, its Chinese partner Alibaba.com countered that the statement was “reckless, given the lack of facts in evidence.”
Fresh in the minds of all Western companies doing business in China is the arrest of mining giant Rio Tinto staff in China on allegations of stealing “state secrets” as part of its iron-ore negotiations with Chinese steel makers.
The current debate blows a hole in the idea that liberalization of the flow of information, like its embrace of capitalism, is inevitable. That needs a rethink.
A free choice of brands of soap in China has not led to a free flow of ideas. Indeed, as the new decade begins and China is poised to become the world’s second largest economy (if it hasn’t already), the Chinese government has only ramped up efforts to secure “The Great Firewall of China.”
Google’s Chinese staff interviewed in the past week felt the company’s controversial choice to enter the market was a way to help transform China from within. That belief, now, seems to have given way to disillusion.
Among the reasons why Google may quit the world’s largest Internet market is fear of the long-term effect of the Chinese market on company policy. If China eventually becomes Google’s largest moneymaker, it would give Beijing extraordinary leverage to influence company policy in other markets.
The Google-China spat seems to me one of the first salvos in a fight that may well characterize the next decade: The conflict between the great economies of the West, built on free and unfettered flow of information, and access to the exploding economy of China, which most economists agree will surpass the U.S. as the number one economy in the next 15 years.
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