Why?

Why do we think that globalisation is our invention? Globalisation is a new word to describe a process as old as the human race. It really began according to Nayan Chanda around 60,000 years ago when our ancestors first walked out of Africa. The motives of the early adventurers were generally selfish- to profit, convert, learn or conquer-the overall effect has been to contract our world and draw us down the path to a “global village”. Humankind followed that on foot, donkeys, camels, container ships and cargo planes.

Mr Chanda points out that in 1455 it took 40 days for the Pope to learn that Constantinople had fallen to the Turks- by contrast we watch in horror as the Twin Towers of the World Trade Centre fall-in real time, online and on television.

The Economist suggests that these examples demonstrate the fragility of our close connections. Today’s threats, like Bird Flu or the war on terrorism can go global faster than in the past, but so can our response.

So is globalisation good or evil? I suggest it is good-as we expand lets examine the aspects that will affect our investments in the future.

1 New financial investments are constantly coming onto the market and investment structures previously available only to the wealthy are now available to average investors. Hedge funds are a case in point. In addition to this, new legal structures will appear and taxation laws will continue to alter.

2 Real-time trading is now available, buying and selling online will continue to become more widespread, so for those who invest directly this will create more uncertainty and will exacerbate uncontrolled biases. Online trading, financial advice and research tools and information have transformed the way traditional services were delivered and offer a vast assortment of new services.

3 An interesting development will be in the creation of neural networks – claims have been made that programs now possess the ability to reason and learn from their mistakes. Can artificial intelligence develop biases?

4 Global influences will become even more pronounced – what happens in Venezuela will affect what happens in Moscow. The butterfly effect.

5 The speed and ease of communication will continue to increase and not only will the news from distant countries reach the market faster but news discrimination will impact more quickly.

6 Global consumption will increase as all nations advance technologically and economically. There will be more demand for industrial commodities, agricultural commodities, money, fuel and so on. This will make more opportunities for investors.