I’ve been building up a couple of dummy funds on Reuters’ new Portfolio tool. Not only is it a welcome diversion from actual work, but it allows me to test the mettle of the fund managers we speak to, and check out the guidance offered by the Lipper Leader fund rankings.

One of my portfolios uses the stock picks and short ideas offered up by the managers we interview for the many FUND VIEW stories which dot the Reuters wire. The other simply picks some of the funds which score highest across the Lipper fund sectors.

In theory, it gives me ample room to lay blame elsewhere when the dummy funds inevitably go belly up and I’m forced into a fire sale of assets to repay my dummy investors with dummy money. In truth though, I’m going to set the asset weightings and decide when to buy and sell so any abject failures will be more fairly laid at my door.

The early results, in fact, are pretty encouraging.

The Fund Viewer stock picking portfolio has delivered me a comforting 8 percent return since I put it up on Sept 25 (my wedding anniversary — must be a good omen) and that’s with a ridiculously cautious 36-percent weighting in cash, as well as some equally ridiculous single-stock exposures caused by misreading the denominations. (That little ‘p’ is pence folks, big ‘P’ is pounds)

My Fund Leaders fund of funds has even less of a track record, but has still managed close to 2 percent returns since Oct 6.

Both funds are outperforming the FTSE Europtop 100 index, my chosen benchmark, by more than 18 percent on a three-month view. I’ve not exactly been scientific about choosing the index, but fortunately my dummy investors have notoriously poor due diligence standards.

Get on to the portfolio page, see if you show up my performance record as a painful underachievement, and try to top the Reuters Portfolio league.

Doubtless the FSA would like me to point out that the value of investments can go down as well as up. Mind you, anyone not conversant with that little peccadillo of the markets has either been asleep for the last year and a half or houses a memory so short-term they may well have forgotten the first half of this paragraph anyway.

All the talk of addressing the global imbalances throws a spotlight on contrasting demographic trends in the world’s two most populous nations — China and India.

Prior to the financial crisis, India’s annual growth rate of about 9 percent seemed positively moribund next to China’s double-digit economic expansion. But purely on demographics, the dimming power of the US consumer could give India an edge over its neighbour in the longer run.

That’s what India’s trade minister Anand Sharma seemed to suggest last week when he reminded the audience at a London conference that the country had “20 percent of the world’s children”:

We know that when we talk about emerging countries the consumption patterns are different. Most of China’s production is meant for (markets) abroad. India consumes two-thirds of what India produces.

Indeed, Goldman Sachs projects that India’s middle class will outstrip China’s by 2045. This is some 15 years after half of China’s population becomes either too old or too young to be part of the workforce.

Beijing’s mandarins are taking note of this monumental shift in dependency ratios. After decades of enforcing a ‘one-child’ policy in the face of an human rights outcry, China appears to be relaxing its stance on population control. Family-planning officials in Shanghai have begun to urge eligible couples to have two children.

BlackRock Asian equities portfolio manager Jing Ning says it’s useful for investors to start thinking about this demographic shift. Healthcare providers, for instance, will look increasingly attractive investments.

“For the next 20 years, it will be critical for the government to reform its social welfare system,” she said.

Interesting change by State Street in its monthly sounding of its institutional investor clients. The firm has gone back over all its data and rebased it in order to get an indicator that not only marks up and down changes in investor confidence but also suggests what regime investors are in. Ken Froot, the Harvard professor who co-developed the index, describes the move thus:

“We have revised the Investor Confidence Index to provide a better guide as to the level of risk tolerance. Specifically, we have rebased the index so that a level of 100 is ‘neutral’: readings above this level tell us that institutional investors are increasing their allocations to risky assets, while readings below 100 indicate that institutional investors are reducing such allocations.”

So what does this month tell us? The global index is now at a 10-month high, having risen every month since December.  But according to the new rebased reading, it has only been in territory that indicates the buying of risky assets for the past two months.

The optimist would say this means investors are only just warming up. The pessimist that they have only been recovering from an overshoot.

Around 200 union workers and some local politicians protested wage cuts and other givebacks required by the Bush administration’s bailout of General Motors and Chrysler.
    
“The call for wage cuts is an attack on the middle class,” said Rex Lux, a truck driver at Chrysler who said he had come to the rally to show his support for organized labor. “The middle class send their kids to college, they buy cars and they keep the American economy going.”
    
“Why break the middle class?” he asked.
 
The protest in Warren, Michigan, came two days after a smaller rally (pictured above) outside the Detroit auto show by members of the United Auto Workers union.
 
The $17.4 billion federal bailout for the U.S. automakers includes concession targets such as making union-represented workers’ wages competitive with foreign manufacturers by December 2009 and eliminating the union jobs banks, which pays laid-off workers.

(Photo/Reuters)

Tennessee Sen. Bob Corker (right, in the driver’s seat next to Mark Fields, Ford’s president of the Americas), who pushed for tough conditions on the $17.4 billion U.S. government bailout for General Motors and Chrysler, said at the Detroit auto show that he hoped Chrysler would find a merger partner to survive.

“Chrysler probably needs to merge with somebody, not necessarily disappear from the standpoint of existence,” said Corker, who added the automaker owned by Cerberus Capital Management was not making the needed investment to remain competitive. He spoke to reporters as he toured the show before meeting with executives for GM, Chrysler and Ford.

Corker, whose home state includes the U.S. headquarters for Japan’s Nissan, also said he felt GM’s debt load was too heavy and it may not meet the restructuring targets set out under the $13.4 billion loan granted to the company by the Bush administration.

The Republican senator met with GM Chief Operating Officer Fritz Henderson and, during his visit to the GM stand at the show, sat in the Cadillac Converj, a luxury model of the all-electric Chevrolet Volt concept car.

Corker said he loved the Jeep he drove before he came to Congress, though he did not specify which model. Chrysler, which received $4 billion in emergency loans, owns the Jeep brand.

The most contentious issue in the Bush administration’s bailout plan is a goal that seeks to bring hourly wages for the U.S. automakers’ unionized work force in line with those of Toyota and other Japanese automakers operating nonunion U.S. factories.

The labor give-back provisions were spearheaded by Corker and incorporated into the bailout. A proposal to strip the Corker-inspired labor provisions from the automaker rescue was included in legislation introduced in the House of Representatives last week.

The UAW has said it is open to making some changes to help GM and Chrysler lower costs, but has vowed to try and get the administration of President-elect Barack Obama to amend the giveback targets. Obama, a Democrat, takes office Jan. 20.

GM and Chrysler are under tight deadlines to show progress. The automakers must demonstrate to the government within several weeks that they are lowering costs and making other changes required under the Bush administration’s bailout plan.

GM CEO Rick Wagoner has said the automaker could seek further loans from the government at the end of March if the U.S. auto market does not improve. 

Corker also made a point during his tour of saying he had flown a commercial plane to Detroit for his visit. “I came Northwest Airlines and I want you to know it was right on time.”

The CEOs for GM, Chrysler and Ford were criticized by lawmakers in November for separately flying company jets instead of less costly commercial planes to Washington as they sought billions in bailout funds from Congress.

(Photo/Reuters)

This post was written by colleague Christiaan Hetzner.

Listening to GM Europe CEO Carl-Peter Forster (right), there is a big side benefit of having the thankless job of running a business in danger of being dragged under by its foundering parent. 
 
For one, you are not publicly humiliated by lawmakers with an ax to grind the next time you try and hit them up for aid.
 
Whereas U.S. congressmen eager to score points with taxpayers were just itching to take turns tag-teaming his boss Rick Wagoner, Forster said he is treated with far more respect and understanding by the German and Swedish governments when he participates in discussions over receiving billions in state loan guarantees. GM is looking to sell its Saab brand in Sweden.
 
Asked at the Detroit auto show whether the talks were considered in Europe to be as controversial as those in Washington, Forster replied: “Interestingly enough, the Europeans take a very, very different approach. Much less hostile, virtually not hostile at all, seeing the automotive industry as a very important industry.”
 
GM Europe has a funding requirement peaking this year, in part due to this year’s roll-out of the new Opel Astra and Saab 9-5 cars, key models for both brands.
 
 ”They (state officials) understand the extraordinary circumstances in Europe — by the way, the circumstances in the U.S. are even more extraordinary than in Europe. They know how important the industry is for the European economy and particularly for certain member states like Germany, France, Italy, the UK and so on. Absolutely no hostility, very open, understand the situation and try to come up with a solution.”
 
Perhaps lawmakers in the more socialist governments across the Atlantic better realize what would happen if Opel or Saab cannot get the loan guarantees needed to access to the European Investment Bank’s 16 billion-euro fund for the European auto industry, which is only open to companies with an investment grade rating. 
 
(Photo/Reuters)

Volkswagen, General Motors and Ford walked away with “best in show” recognition from Autoweek magazine for their cars at the Detroit auto show.

Autoweek cited VW’s Audi Sportback concept (right) as “best in show,” with editor Dutch Mandel citing the car’s “stylish looks.” He predicted a production version would hit showrooms by the end of next year for the unanimous decision.

The “best concept” was GM’s Cadillac Converj, a luxury concept version of the Chevrolet Volt all-electric concept introduced two years ago. GM plans to begin selling the Volt by the end of next year. Ford’s 2010 Taurus car was voted “most significant,” while the U.S. automaker’s 2010 Mustang Shelby GT 500 was named “most fun.”

(Photo/Reuters)

Here’s a blog post by my colleague Nick Carey.

This year’s roundtable event for the Society of Automotive Analysts (SAA) — held on the sidelines of the Detroit auto show — was always likely to be a somber affair, what with the U.S. economy in recession and auto sales falling off a cliff.
 
But even though the outlook for the sector this year is grim, analysts and other attendees in the half-empty room managed a few gallows-humor laughs.
 
“I see we have a few empty pews here,” Finbarr O’Neill, president of automotive forecasting firm J.D. Power and Associates (left), said to a few chuckles.
 
Many analysts have moved on since last year’s show, either because the firms or banks they worked for have gone belly up, or because their employers no longer feel the need to cover the U.S. automakers when their stocks have performed so poorly.
 
Even though the SAA rented a much smaller conference room at the Renaissance Center in downtown Detroit — also home to the headquarters of General Motors — than for last year’s event, there were nonetheless quite a few vacant chairs.
 
O’Neill proceeded to tell a joke about an Irish bank robbery — prefaced with the fact that he is himself of Irish heritage — and explained to the audience that the reason he was telling it was that they would need to keep laughing despite the awful auto sales outlook that he delivered. J.D. Power expects that U.S. auto sales in 2009 will be the worst since 1982.
 
“Let’s maintain our sense of humor folks. We’re going to need it.”   
 
But much of the laughter was at unintentional gaffes.
 
In the introduction for Paul Taylor, chief economist at the National Automobile Dealers Association (NADA), one of the hosts said the NADA had 2,200 members before correcting that figure to 22,000. Chuckles greeted the mistake, because the NADA is losing members at quite a pace.
 
The NADA says there were 700 fewer U.S. car dealers at the end of 2008 than at the beginning and expects there to be 900 fewer dealers still by the end of 2009.
 
But one of the biggest laughs was reserved for a comment from Ford’s senior economist Emily Kolinski Morris (right) in a Q&A session after she and Taylor spoke.
 
A member of the audience asked whether Kolinski Morris and Taylor would described the current U.S. downturn as a recession or a depression.
 
Kolinski Morris paused, for just a moment.
 
“I’d rather not,” she said, to widespread laughter from the audience. 

(Photos/J.D. Power and Ford)

Top automotive industry executives gathered at the media preview for the Detroit auto show. Following are some of the notable quotes:
    
MIKE JACKSON, CEO, AUTONATION

“I have seen a better mood at funerals,” he told Reuters TV.
    
IRV MILLER, GROUP VICE PRESIDENT, TOYOTA MOTOR SALES USA

“Last summer’s $4-a-gallon gasoline was no anomaly. It was a brief glimpse of our future.”
        
BOB NARDELLI, CEO, CHRYSLER (left)

“We reduced layers, expanded job responsibility…no one around the table should read this as us trying to position it for sale,” he said of Chrysler.
    
FINBARR O’NEILL, PRESIDENT, J.D. POWER

“We believe we’re near the bottom, or at the bottom. The market will come back, but it won’t come back to where it was before,” he said of 2009 U.S. auto sales.

“Let’s maintain our sense of humor folks. We’re going to need it.”

“Somebody is the walking dead out there,” he said of auto manufacturers.
    
BOB LUTZ, VICE CHAIRMAN, GENERAL MOTORS

“We all recognize we want to use less petroleum. The way you use less of something in the marketplace is to raise the prices. At some point, those who make rules have to recognize the fact.”

On GM’s wholly owned Saab unit:

“Frankly they’ve been on GM life support. It’s just an unending string of losses and the hope is always with the next generation of products they’ll make money … but when you look at the financial results it’s just never happened.”
    
TAMMY JONES, CHRYSLER EMPLOYEE AND UNITED AUTO WORKERS MEMBER

“The concessions that Bush wants us to make are just a slap in our faces. People fought and died for our rights and we must fight to keep them,” she said at a protest rally (right).
 
BILL FORD, EXECUTIVE CHAIRMAN, FORD MOTOR

“Right now as we see it we’re comfortable, but we have asked for a line of credit just in case the world implodes as we know it,” he said of U.S. government loans.

“We are betting long term that fuel becomes dear and that energy independence becomes important not only to Americans, but people around the world. The bigger risk is to do nothing.”

RICHARD COLLIVER, EXECUTIVE VICE PRESIDENT, HONDA AMERICA

“We’re not even forecasting because whatever we forecast, we would be wrong. If you look at the last 120 days, if that trend continues then we’re looking at a significant reduction (from 2008).”
    
DAVID CHAMPION, SENIOR DIRECTOR FOR AUTOMOTIVE TESTING, CONSUMER REPORTS

“You reap what you sow. If you were at GM, Ford and Chrysler in the ’80s and early ’90s, their vehicles were appalling in terms of product quality.”
    
JAMES BELL, EDITOR, INTELLICHOICE.COM

“Everyone needed to get over the fact that they’re not No. 1 anymore,” he said of GM. “It’s Toyota.”

“Ford got a lot of credit for not going to the well, but that’s only because they already mortgaged their future,” he said of last year’s automaker government aid requests.
 
MASATAMI TAKIMOTO, EXECUTIVE VICE PRESIDENT, TOYOTA

“In a way, we’re back to where the industry was 100 years ago, when it was moving away from steam-powered cars and competing with horse-drawn carriages. But this time it will be a lot more difficult because we have carbon dioxide and other harmful emissions to worry about.”

FRITZ HENDERSON, CHIEF OPERATING OFFICER, GM

“People are wondering, ‘Is the company going to make it? Is the company going to be viable?’ Until we actually answer those questions more satisfactorily, we’ll continue to have that kind of volatility.”
    
PETER DELORENZO, PUBLISHER, AUTOEXTREMIST.COM

“Ford is clearly distancing themselves from what I now refer to as the old Detroit Two.”

“There’s kind of a Jekyll-and-Hyde thing going on with General Motors.”

On Chrysler: “I call it the dead car company walking despite Nardelli’s pronouncements. There are too many serious problems hovering over Chrysler right now.”

“Being put under the microscope in Washington just opened a Pandora’s box of attention on the Detroit automakers.”
    
(Photo/Reuters)

Reuters interviewed Peter DeLorenzo, publisher of website Autoextremist.com during the Detroit auto show. Highlights follow:

Q: What kind of shape do you see the U.S. automakers in?

– Ford

“Ford is clearly distancing themselves from what I now refer to as the old Detroit two.”
       
– GM
   
“There’s kind of a Jekyll-and-Hyde thing going on with General Motors.”
   
– Chrysler

“I call it the dead car company walking. There are too many serious problems hovering over Chrysler right now.”
    
“The suppliers are starting to make contingency plans for a world that doesn’t have Chrysler in it.”
    
“I just don’t see them surviving the year.”
    
“If the economy doesn’t start to show signs of life, I don’t think Chrysler can keep the whole thing afloat.”
    
Q: Are electric cars finally going to be a reality given the time lines announced at the show?
    
“Will electric vehicles be a part of this nation’s fleet in the future? Absolutely, but I don’t think they will ever be more than 25 percent. Hybrids will be a strong player going forward.”
    
Q: Will those time lines put the U.S. automakers under greater pressure, however?
    
“Being put under the microscope in Washington just opened a Pandora’s box of attention on the Detroit automakers.”
    
Q: Will luxury auto market suffer even more than the overall market in the recession?
    
“I don’t think there’s any question that the availability of incentivized leasing programs allowed people to get into vehicles they couldn’t normally afford.”
    
“A shakeout is coming. It’s probably going to hit import manufacturers really hard.”
    
“It (the luxury segment) will still exist, but I think it will be at a reduced level and stay there for a while.” 

(Photo/Autoextremist.com)