Why I Give: Warren Buffett

In 2006, I made a commitment to gradually give all of my Berkshire Hathaway stock to philanthropic foundations. I couldn't be happier with that decision.

Now, Bill and Melinda Gates and I are asking hundreds of rich Americans to pledge at least 50% of their wealth to charity. So I think it is fitting that I reiterate my intentions and explain the thinking that lies behind them.

First, my pledge: More than 99% of my wealth will go to philanthropy during my lifetime or at death. Measured by dollars, this commitment is large. In a comparative sense, though, many individuals give more to others every day.

Millions of people who regularly contribute to churches, schools, and other organisations thereby relinquish the use of funds that would otherwise benefit their own families. The dollars these people drop into a collection plate or give to United Way mean forgone movies, dinners out, or other personal pleasures. In contrast, my family and I will give up nothing we need or want by fulfilling this 99% pledge.

Moreover, this pledge does not leave me contributing the most precious asset, which is time. Many people, including — I’m proud to say — my three children, give extensively of their own time and talents to help others. Gifts of this kind often prove far more valuable than money. A struggling child, befriended and nurtured by a caring mentor, receives a gift whose value far exceeds what can be bestowed by a check. My sister, Doris, extends significant person-to-person help daily. I've done little of this.

What I can do, however, is to take a pile of Berkshire Hathaway stock certificates — “claim checks” that when converted to cash can command far-ranging resources — and commit them to benefit others who, through the luck of the draw, have received the short straws in life... At the latest, the proceeds from all of my Berkshire shares will be expended for philanthropic purposes by 10 years after my estate is settled. Nothing will go to endowments; I want the money spent on current needs.

My wealth has come from a combination of living in America, some lucky genes, and compound interest. Both my children and I won what I call the ovarian lottery. (For starters, the odds against my 1930 birth taking place in the US were at least 30 to 1. My being male and white also removed huge obstacles that a majority of Americans then faced.)...

The reaction of my family and me to our extraordinary good fortune is not guilt, but rather gratitude. Were we to use more than 1% of my claim checks on ourselves, neither our happiness nor our well-being would be enhanced. In contrast, that remaining 99% can have a huge effect on the health and welfare of others. That reality sets an obvious course for me and my family: Keep all we can conceivably need and distribute the rest to society, for its needs. My pledge starts us down that course.

Should you bet on the yellow metal?

The year 2010 was quite an eventful year. Uncertainty in global economic scenario continued. We witnessed financial crisis in European countries like Greece, Portugal, Ireland and Spain. We also witnessed further quantitative easing by Major developed economies which kept interest lower. It was perfect setting for Gold price to do well and it did well. In India Gold has given return of over 19 per cent since 1st January till date while Nifty Index gave 15 per cent return for the similar period. 

A conventional approach to decide whether to have gold in portfolio or not in 2011 would be to ask the question, “Will gold continue to climb next year and outperform equities in 2011?” Quest for the answer often results in confusion as one comes across conflicting views. The truth is the answer is difficult. No one knows with certainty as the gold price in 2011 will depend on future events which are very difficult to predict. 

So what shall one do in 2011? The answer is one must have some exposure (10 per cent – 30 per cent) in Gold not only in 2011 but also in 2012,13,14 and so on. Why?, because gold enhances portfolio performance. It either generates higher return for the same risk or reduce risk for expectation of same return. Let us understand how this happens. 

The Gold price tends to move many times in different direction than Indian Equity or say Nifty Index. One of the reason why it happens is because Gold and Nifty prices depend on totally different factors. Nifty index depends on factors like performance of Indian Economy, Net FII inflow, domestic money supply etc. while the gold price depends on global factors like global interest rates, quantitve easing or debasement of global currency, demand and supply of Gold etc. When there is global economic crisis the gold price strengthens and equity prices weaken. This unique characteristic of Gold is equally important for the investors. It is also called co relation. Lower the co relation of two assets, more diversification benefits the portfolio gets. The graph shown here will explain the point. 

As we can see from the graph that often Gold prices and Nifty prices went in different directions even though ultimately both have given positive returns in the end. 

The blue line in the middle is value of portfolio which has invested roughly 40 per cent in Gold and 60 per cent in Nifty. One can see that the portfolio value line is smoother than both the assets. Smoother the line lesser is the volatility or lesser is the risk. The graph clearly shows that how in 2010 adding Gold to the portfolio has lowered the overall risk for the investors.

Also 2011 will not be majorly different. As explained earlier since the driver of gold prices remain different than drivers of Nifty index, Gold is likely to behave differently than (will continue to remain uncorrelated with) Nifty. And due to this investors will gain immense diversification benefit by having gold in the portfolio or reduce risk without sacrificing the returns. 

Investment in Gold can be done very conveniently through Gold Exchange Traded Funds (ETFs). Gold ETFs are backed fully by physical gold. The Physical Gold is kept in vaults of custodians who are regulated by SEBI and RBI. The units of Gold ETFs trade on stock exchanges like any other shares and it can be held in demat account. Typically one unit represents around one gram. Gold ETFs introduced in India Since March 2007, have witnessed rapid growth since then. Gold ETFs are set to grow further as more and more investors discover benefits of investing in them.

Gartner raises global 2011 IT spending forecast

Research firm Gartner said global spending on technology is likely to rise 5.1 percent in 2011, higher than its previous estimate, as the dollar's recent weakness helped spending in 2010 top its forecast.

It now expects total global IT spending to touch $3.6 trillion this year, up from its earlier forecast for a 3.5 percent rise. For 2010, IT spending rose 5.4 percent to $3.4 trillion, up from Gartner's estimate of 3.2 percent.

"Aided by favourable U.S. dollar exchange rates, global IT spending growth is expected to exceed 5 percent in 2010, but a similar level of growth in 2011 -- while forecast -- is far from certain, given continued macroeconomic uncertainty," Richard Gordon, research vice president at Gartner, said in a note.

While the global economic situation is improving, the recovery is slow and hampered by a sluggish growth outlook in the key economies of the United States and western Europe, he said.

Also, there were growing concerns about the ability of key emerging economies to sustain relatively high growth rates, he added.

Spending on telecom equipment is set to rise the fastest at 9.1 percent in 2011 to $465.4 billion, with telecom services spending seen rising 3.4 percent to $1.65 trillion, Garter said.

The research firm forecast a 4.6 percent rise in IT services spending to $817.9 billion.

The computing hardware segment, where spending is forecast to grow 7.5 percent to $391.3 billion, is likely to face challenges in growth of personal computers due to a possible weak economic growth through the first half of 2011, Gartner added.

RIM Is Buying Sweden’s The Astonishing Tribe (TAT)

RIM, makers of BlackBerry smartphones is set to buy Sweden’s The Astonishing Tribe (TAT), which specializes in developing software that lets smart phone users personalize their device the way they like.

15% of smart phones globally use TAT software. Even Android smart phone users can make three dimensional icons on their screens by downloading this software.

It is not known yet how much RIM will pay for the Swedish software development company TAT.

Confirming the deal, David Yach, chief technology officer at RIM, said in a blog post, “Today we are pleased to confirm plans for The Astonishing Tribe (TAT) team to join Research In Motion (RIM). We’re excited that the TAT team will be joining RIM and bringing their talent to the BlackBerry PlayBook and smartphone platforms.”

He further added, “For those who don’t know, TAT is renowned for their innovative mobile user interface (UI) designs and has a long history of working with mobile and embedded technology.”

Let’s see if this latest acquisition by RIM can help BlackBerry put themselves at par with iPhone and Android phones.

Global cloud computing mkt to be worth $30bn in 4yrs: Gartner

The global market for the 'transformational' cloud computing technology is expected to be worth over $ 30 billion (around Rs 1.35 lakh crore) in the next four years, according to a senior official at research group Gartner.


Cloud computing refers to the technology, whereby entities can share resources and software on-demand through the internet.


"It (cloud computing) is an extremely attractive technology for entities. The worldwide market for this technology is expected to be over $ 30 billion by 2014," Gartner Vice-President (Research) Milind Govekar told.


Noting that developing markets such as India have an edge in adapting to cloud computing, he said that service delivery (using this technology) would be crucial.


"Companies need to embrace many changes with cloud computing and services would go through huge transformations with this technology," he added.


Govekar noted that cloud computing would be more environment friendly and efficient than many traditional technologies.


In a recent research report, he cautioned that while using cloud computing, enterprises must curb their old habits of over provisioning infrastructure.


"(This) would result in diminished resource efficiency and environmental benefits, particularly for private cloud environments," he said.

Google Earth 6 Brings Integrated Street View And 3D Trees. Yes, Trees. 80 Million Of Them!

 

There’s an easy way to tell that Google Earth is getting so advanced that it’s getting dangerously close to looking like actual Earth: touted new features are kind of humorous. While version 4 brought the sky, and version 5 brought the oceans, now version 6 is bringing trees. Yes, trees. I fully expect version 7 to highlight the addition of dirt.

Kidding aside, the latest version is obviously the best one yet. And trees are obviously a hugely important part of the Earth. To get them into Google Earth, the search giant has made 3D models of over 50 different species of trees. And they’ve included over 80 million of them in various places around the world including Athens, Berlin, Chicago, New York City, San Francisco, and Tokyo. They’re also working with some conservation organizations to model threatened forests around the world.

The other big addition to this latest version of Google Earth is Integrated Street View. To be clear, Google has had a form of Street View in Google Earth since 2008, but now it’s fully a part of the experience. This means that you can go all the way from space, right down to Street View seamlessly. That’s because Google has included their Street View mascot/button, Pegman, in the main navigation controls now. Just like in Google Maps, you just pick him up and drop him anywhere highlighted in blue, and you’ll be taken to the detailed Street View.

And you can now fully navigate the Earth using Street View in Google Earth. Simply use your keyboard or mouse to move around.

Google Earth 6 also makes it easier to discover and explore historical imagery. This feature was added in version 5, but it wasn’t easy to find. Now you’ll be able to see when it’s available right at the bottom of the screen.

Google Earth 6 would definitely be Treebeard’s favorite version of Google Earth yet. Check out more in the pictures and videos below.

Indian IT to become hot spot for M&A in 2-3 yrs: Gartner

The next two to three years could see the Indian IT sector become a hot-spot for merger and acquisition (M&A) deals. That's the word from industry body Gartner, which says the 10 deals see so far this year are just the beginning.

With 10 deals in the pocket so far this year, the Indian it sector seems to have caught the consolidation bug. And Gartner says that the next two-three years will only see this number increase. 

Gartner argues that increased competition in the sector will drive players to employ the acquisition route to expansion. And deal sizes may vary widely: from 50 million deals, to deals that cross the USD 250 million mark.

Gartner adds that the most common situation will involve an IT player looking to acquire it vendors with a complete bouquet of service offerings, and not just niche services.

Partha Iyenger, VP and distinguished analyst, Gartner said, “For an English speaking market and to some extent even a European market, India is becoming the center of gravity of that global delivery story. So they are looking for acq in India of tier 2, tier 3 providers. The second is outward M&A from India where the service providers, we've had a lull coz of recession, primarily focused on mainland Europe.”

Gartner also sees greater Indian interest from Japanese players. Reports are already doing the rounds that Japanese companies like Fujitsu, NTT and Hitachi are on the prowl for stakes in mid-cap it firms in India. Gartner says that Japanese IT firms have a limited presence in India so far, and are afraid of losing clients who are interested in growing their Indian footprint. And this will spur M&A interest from Japan.

Peter Sondergaard, Senior VP - Research, Gartner said, “We believe the Japanese providers will look at acquisitions in areas that are important to them and some of the large ones do need presence in India, so that is one area we will see acquisition.”

Deals will not be restricted to cross-border ones. Consolidation among local tier-2 and tier-3 players is also expected to pick up steam. And may even overshadow partnerships in the space.