Anyone who has seen images of Venice or been there knows there is something special about the city in Italy. Whether it is the canals, the sea, the San Marco Plaza where people have come to for generations, you know there is something special. A wonderfully written book called Venice – Pure City authored by Peter Ackroyd published by Chatto & Windus. London 2009. Mr. Ackroyd captures the essence of the city starting from the sea and islands to the building materials to governance to merchants to consumerism to where the city is today. There are reasons why the city is special. Venice above all was a trading city it existed for and by merchants. In the market place everyone can to buy and sell and sought profit. The system of trade defined the social and cultural systems of the city; it subsumed them. Fashion and innovation became the key concepts.

The city started with the salt production and the controlling of the production and thus the price of salt. It evolved into trade over long distances; the more the possible risk, the more the possible benefit. In 1500’s there were more than 3,300 ships going around the known trading routes of the Mediterranean Sea bringing back spices to silks to anything else for the ships were owned by the City of Venice and rented out to the highest bidder. The important aspect was the east (where the goods went) did not know the price of the west and vice versa the only people who knew the margins where Venetian merchants. From the 14th to the 18th centuries Venice became the city of luxury goods. We all need some staple goods, but we desire more and the more is luxury goods. Venice possessed no natural resources and the only method of maintaining its supremacy was in the creation of more various and more rarefied items. The early trade fairs were in Venice and luxury items is the stepmother of fashion. (On You Tube saw a profile of Dubai and there was a connection to where Venice was in its heyday.) From the fortunes made in trading came money spent on art which lead to better luxury goods. Eventually Venice turned away from the international world of trade and became more provincial which lead to its decline of influence. Part of the reason was Venice refuse to compromise of the quality of its luxury goods, its competitors had no such scruples. Other countries and industries became more flexible or open and Venice influenced declined. Venice is still special it just trades on something else – itself.

Linking to dividend paying stocks, the growth and continuing to be in the forefront of customer preferences is hard. People change, industries change, countries change but as investor you want to know how the company is staying in front of its customers. In Venice’s time the merchants could exploit the spread because no one knew the spreads on prices, now days people have a reasonable idea and will seek alternatives. When you see company’s paying dividends for over 25 years and can continue as long as you see their ability to retain margins they are keepers for you can learn from them.

There are more questions than answers, till the next time – to raising questions.