Bill Gates asks a simple question: Which is more important, connectivity or malaria vaccine? As he pointed out in a long interview in the Financial Times, one can save millions of children, while the other is “not on the first five rungs in the hierarchy of human needs.”

Put like that, it’s hard to disagree. He’s made a barely imaginable amount of money, and like many before him, wants to do something useful with it. But while Microsoft’s operating system may dominate the world’s personal computers, his economic thinking is rather pre-digital.

A vaccine which needs no refrigeration is clearly valuable, but it will not help Africa out of poverty. Indeed, in the short term it will make things worse, by accelerating the population growth which in many countries is already at or beyond the capacity of the local economy to handle. Connectivity, on the other hand, transforms behaviour.

The poorest farmers can see real-time information on world markets and trade on it; more productive methods cross the world at the speed of light; banks (and perhaps central banks) become irrelevant as mobile phone credits become the currency. This revolution helps explain the valuations put on the likes of  Twitter.

Connectivity doesn’t provide heat, light, food or transport. It does provide the way out of poverty for millions, and is a powerful reason why world prosperity is rising despite the travails of western economies. More prosperity means better education, and more brains to rise to Mr Gates’ challenge. That’s why connectivity is indeed more important than malaria vaccine.

This is not a hedge fund

A fund manager will be forgiven for losing money during a bear market. He may be forgiven a (short) period of under-performance against his benchmark. But woe betide him if he sells and the market then rises. The risk to his mandate if he’s caught this way far outweighs the rewards if he’s right.

Gervais Williams has not exactly bet the ranch on a bear market, but last week he bought a little insurance for Diverse Income Trust. As the manager, he paid 1.6 per cent of its net asset value for a FTSE100 put option big enough to cover a third of the value of the portfolio. The strike price is 5800 – miles out of the money – but it does run until June 2015.

As Christopher Brown at JP Morgan points out, the option is an imperfect hedge, since Diverse’s portfolio is only 8 per cent in FTSE stocks, and if smaller companies perform badly against the big stocks, the option wouldn’t offset the portfolio’s losses even in a bear market. Nevertheless, it’s an unusual and imaginative way for a manager who’s apprehensive to hedge his bets.

Perhaps Mr Williams has been talking to his fellow fund manager, Stewart Cowley at Old Mutual, who also reminds us that stocks don’t reach the sky. Among his seven reasons to be gloomy he lists the end of QE (which has already lost its power to hold down bond yields), hot money puffing up equities, the still-ticking eurozone timebomb and London’s fizzing property market.

The bears will be right one day, yet there seem to be diverse views at Diverse. No sooner had the bet on a plunge been revealed than chairman Michael Wrobel nearly doubled his holding in the company.

Blinkx and you miss it

Paul Richards at Numis has been recommending Blinkx shares since they were half today’s price, partly because he reckons he understands what it does. Essentially, it injects ads into on-line videos, working for content owners on the one hand and website publishers on the other. The trick is tailoring the ads to the video the viewer wants to watch.

Blinkx was spun out of Autonomy, another business which most of us, including its ill-starred purchaser Hewlett Packard, struggled to understand. Blinkx’ half-time results were far ahead of expectations, but the shares are pretty far ahead, too, and a market value of  £710m is nearly five times Numis’ estimate of this year’s sales.

Mr Richards’ faith is undimmed, even with the shares priced at 300 times his forecast earnings and following sales by three directors in September. Well, he’s been right so far…

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