The universities have formally graduated their students for another year and the first part of summer begins. The second part is starts when public and secondary schools are closed down at the end of June. For generations, the common saying has been and continues to be – one of the best methods to ensue your livelihood is through education – both formally and continuing education after graduation. Likely the continuing education will be more job related, but all levels of education are good. The evolution of the saying was more pronounced before the second world war, when only a minority of students went to postsecondary education. Many people had jobs which involved the use of their bodies, their arms, and legs. As society changed the newer jobs involved the mind and fingers. For the newer jobs, post secondary education was considered more important. It was after world war II, the government sent many of the returning veterans to post secondary education while being paid. This caused the growth of many of the post secondary education institutions which caused the children of the veterans to see going to post secondary education as a viable option. The expected work was different than using your arms and legs, although the money was not necessarily higher. If you look at the people who earn money in the trades, which has a history of on the he job training education, many earn more than those with post secondary education.

Linking to dividend paying stocks, as someone who has gone through the post secondary education route and am bias that way, education offers continuing dividends in the future. It may or may not give you a upper income living, but it will offer you perspective on what happens in the world. You maybe more cynical about the world or happy to play a part – helping your clients meet their challenges they face. You may discover your parents or grandparents were correct in their thinking- slow but steady dividend payments which use the power of compound interest; living within your own means, enjoying life and your family; learning to use the free or the resources in the community; and doing good are rewards to aim for.

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

When the stock markets make new highs which is a great thing, there are two ways it can go one is go up more or second is a correction or downwards. In retrospective it is easy to see where it is going but similar to predicting election results, no one is quite sure any more. At some point, it is a good idea to be a little defensive and look at Utility Companies or those investor owned companies which provided hydro to your home or heat your home during the winter (gas companies). The first choice is where do you live and who provides you. The great thing about utility companies is if you live in an urban area, you are likely dependent on the utility and if you do not pay your bill, the utility shuts off the power. The big question about them is how is the general economy the utility serves doing and how much inexpensive hydro do they produce, an example is owning hydro dams.

Craig McGee of Morningside Research looked at utility stocks with a focus on downside protection. He was searching for the best stocks using the forward Price/Earnings Ratio, the Price to Cash Flow, the expected dividend yield relative to the historical median yield and low earnings variability. In other words, companies which tend to be consistently profitable and expect to continue their ways.

The top ten companies were ranked:

Rank     Company                  Symbol    P/E         P/CF      Expected   Earnings

–                  –                              –              –               –          Yield %       Variability %

1          Entergy Corp             ETR-N     12.39      3.51        4.36             10.11

2.        Southern Co               SO-N        15.82     6.27        4.81              3.41

3.         Questar Corp             STR-N      18.62     8.58        3.18            26.04

4.         Northwest Nat Gas    NWN-N     19.54     7.19       4.09               2.96

5.         Hawaiian Electric          HE-N      14.62     5.83       5.23               7.20

6.        Wisconsin Energy        WEC-N      17.46    7.76       3.44              5.18

7.        Consolidate Edison        ED-N       14.67    6.69       4.58              2.49

8.         PG&E                          PCG-N       15.21    4.74      3.99              8.06

9.         Xcel Energy                XEL-N         15.34    5.93       3.91             2.37

10.        Teco Energy                TE-N         17.19     5.70       5.12            13.00

The above picked 4 variables which give a good picture of the utility and you can add more to complete your analysis but the data shows there are choices to minimize risk. If there is a pullback of the market, shares in utilities tend to rise because of the consistency of the earnings. As long as the area the utility serves is not recession (or is well diversified) and the plants that produce the hydro – gas, coal, hydro, nuclear have low fixed costs relative to the income they are receiving, the companies can be a good investment for a long period of time.

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

One of the reasons to buy dividend companies is owning some of the best brands in the world. As consumers we trust a variety of brands and when you look around your home you will see them. Companies own the brands, spend millions of dollars ensuring as a consumer you buy their brand versus someone else and stock holders reap the benefit in terms of stock prices and dividend payments. Recently Tyson Foods bought Hillshire Brands to enhance their line up of foods, to gain greater supermarket exposure and to make more money for the company. Hillshire Farms has some national brands which over the years are part of the average consumer buying habits. Tyson Farms outbid another competitor and paid more than 30 times earnings and a 70% premium to what the stock was trading at before. This means the new valuation for great brands is 30 times and the stock price jumped 70% from before the takeover. There are other companies that have great brands which could sell for the same multiple if they were for sale. Jim Cramer on one of his Mad Money shows valued Kraft at close to $70 billion if the divisions were for sale – at the moment they are not for sale, but in the name of unlocking shareholder value people are looking, maybe even kicking the tires.

Linking to dividend paying stocks, one of the great strengths of dividend paying stocks is the brands that continually generate income for the company. If you own a consumer based company and other companies are paying 30 times the earnings, your company is automatically worth more and the stock price should rise to reflect the new reality of pricing. Since the brands are not for sale, the rise will likely be over  a period time and you can collect your dividends along the way. This is one of the reasons why over the long term dividend paying companies increase your wealth.

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

If you ever been to a museum, after looking at the objects in the museum and enjoying the visit, later you might wonder how did the stuff come to be at the museum. Very often somebody bought it and donated it, in the museum world they are suppose to show the original purchaser had title. In an earlier time, things such as ownership were often overlooked and objects disappeared from one country to end up as collectibles in another country. When a country is stable in terms of its government, the disappearance of the objects is not good. When the stability of its government is suspect, perhaps some disappearance is good, for expensive objectives are often changed – metal melted down, jewels divided up and paid to the new regime and the people trying to make a living. As long as people had disposable income, they have enjoyed nice things, treasures have been moving back and forth for generations. The Rape of the Nile by Brian Fagan, Charles Scribner’s Sons, New York, 1975 is about tomb robbers, tourists and archaeologists in Egypt. The country had one of the longest, wealthiest civilizations in the world under the rulers of the Pharaohs. The crafts people at the time produced magnificent objects for the rulers. The ancient Egyptians saw death differently – the Pharaohs would come back from the after life, presumably they would need to return a similar lifestyle as they had when living. The tombs are and were a treasure trove of paintings, jewels, gold, all treasures everyday individuals would like to have and expect to have.

In China all those who worked on the city for the Emperor were buried with the Emperor; in Egypt the people moved to work for the next Pharaoh and thus some of the valuables went to extra income. There was an ability to earn a living from tomb raiding and both tourists and locals were willing buyers. Archaeologists are a slightly different breed, they want to discover the remains, particularly the remains of the wealthy people in the country for the glory of the museum and themselves. Sometimes when treasures were discovered they were sent to other countries particularly – England, France and Germany at a time when the items were not important to the rulers of Egypt. The great museums of the countries have a wealth of information for its residents to observe, study and eventually some will travel to Egypt.

Linking to dividend paying stocks, when receiving the dividend you do not have to worry about the providence of the object, as a shareholder you have a right and expectation for the dividend. Similar to treasures of another country in a museum you can see the dividends often and be enriched by them.

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

Bad Science is a book by Ben Goldacre , Fourth Estate, London, 2008 and stems from a column he writes in the Guardian newspaper called Bad Science and you can read his blog at http://www.badscience.net. Mr. Goldacre writes about your health and what you should or should not believe. The last column showed some of the classic methods to ensure the data gives the result you want, the next points is why we continually believe the stupid things the marketing industry sends our way.

The reason is essentially most of us will not take every piece of data presented and examine it for all the flaws before we make a decision – we reason informally or by intuition or by rules of thumb that simplify problems for the sake for efficiency. This efficiency or convenience comes at a cost – it can be exploited and it is.

Randomness – as human beings we have an innate ability to make something out of nothing. We can spot patterns, but what happens if we spot a pattern where none exists? What if we are wrong in considering what the randomness should look like, what if we are not that good at it?

Regression to the Mean – if things are at the extreme, they are likely to settle in the middle.

The Bias Toward Positive Evidence – we tend to ask questions to reinforce or confirm our hypothesis. If the marketers are asking the first question, what result do you believe you are confirming?

Bias By Our Prior Beliefs – very few of us do not react to data based on what we think the result should be or we have a bias for a certain result.

Availability – our attention is always drawn to the exceptional and the interesting, and if you have something to sell, it makes sense to guide people’s attention to the features you want them to notice.

Social Influences –  our values are socially reinforced by conformity and by the company we keep. Communal reinforcement is the process which a claim becomes a strong belief, through repeated assertion by members of a community. In this fashion testimonials with communities can become more powerful than scientific evidence.

Linking to dividend paying stocks, the above are generic to all of us, we have flaws and the marketing industry of all companies use the above. Many times it is okay, which is why in retrospective many of us are brilliant. When presented with data, ask about how the data was collected and the exceptions, similarly when you receive the annual report – read the notes to see what the exceptions are. The other thing to do is to counteract the marketing people follow tried and true methods of investing – profitable companies over time which pay a dividend. They lose less money on the downside and over time the combination of dividends and capital gains makes a great investment with low risk.

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

Bad Science is a book by Ben Goldacre , Fourth Estate, London, 2008 and stems from a column he writes in the Guardian newspaper called Bad Science and you can read his blog at http://www.badscience.net. Mr. Goldacre writes about your health and what you should or should not believe. A great deal of good health has to do with eating the basic food groups, do regular exercise, and display the traits of a good person on a regular basis. Since some people get sick and others seemingly doing the same thing do not, nobody really knows what is the best thing. That does mean various industries have not come forward and recommended things that you could do to improve the likelihood of not getting sick or doing preventive actions. How they do that, is what Mr. Goldacre writes about – and part of the task is to be cynical about the answer given by companies with the desire to make money from the process. The process the health industry and many other industries use to help answer the question are remarkably the same:

Use of Experts or Authority – anyone who spends a great amount of time on something will become an expert. If you wish to be paid for spending a great amount of time on the issue, you will need some initials behind your name. Every professions spends time lobbying the government to ensure the initials the professional body gives remains the top choice of the government departments which most interact with it. For example if you wish to audit tax returns your designation has to be CA or Charter Accountant. Other designated accountants can do the same thing but will not be recognized by the government or recognized by customers. In the case of health – we as a general public expect something similar to Doctor, because the Doctors have lobbied for the past couple of hundred years, if it health related, you need a Doctor. This does not mean all Doctors are great, and we hope your doctor is one of the great ones, but it does mean for health advice – doctor is the bedrock of advice.

Show Statistics of Improvement – if we do something we hope that the new is better than the existing method. Every year, thousands of new graduates come into the marketplace with great potential and something new and better will come from them. They will need to show the problems they are trying to solve can be solved with something new. The classical tricks to play in the statistical analysis in order positive results shows up include:

Ignore the Protocol Entirely – always assume that any correlation proves causation. Place all the data and if you have measured enough some things are bound to be positive by sheer luck.

Play with the Baseline – sometimes a trial starts and it is doing better than the trial on the placebo or sugar pills group. If so leave alone, if the reverse adjust the baseline in the analysis to show the positive results.

Ignore Dropouts – in all trials of people, some people will not come every week or will drop out of the surveys. Do not report them because they have likely faced some side affects to the drugs.

Clean up the data – all results are put on a graph. If the results from the ones outside of the major concentration of points or outliers help your data leave them in, if not drop them.

Torture the Data – if the results are not showing what you want figure out what good things it shows and concentrate on those results.

Linking to dividend paying stocks, the analysis done in the medical profession for new drugs is similar to the investment industry new products each year. In terms of investments when markets go down, there is an opportunity that it will go back to the normal trading range, (hopefully you did not own the stocks when it went down), new products will emerge to invest in the new opportunity. The reality is over the long term the best stocks – those that consistently make a profit which allows them to pay a dividend is the only ones you have to concentrate on. If the market goes down, you will have dividend payments, if the market goes up, the market pays higher multiples for profitable stocks.

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

The Crusades is a book by Zoe Oldenbourg, Pantheon Books, New York, 1966 and among the topics is who are the Crusaders and why did they go the trip from France to Jerusalem? Many leaders of the Crusaders came from France but people came from all over Europe to Jerusalem, the question was why? In reality, the town was thousands of miles away, the land nearby is desert, there Is no natural trade route and for the most part the town was a minor holding to the group that was administering it. The only reason Jerusalem was important was for religious purposes – in Christianity – Jesus spent the last few years of his life around the town including dying on the cross and going to heaven; in Muslim – Muhammad was taken up to the heavens; in Judaism – the great temple of Solomon which held the Ark of the Covenant was built in the city. Given the connection to the great religions of our times, people have wanted to go to see, but not necessarily to live permanently. Given the town is not on a natural trading route and thus not a profitable income for its rulers, it was always considered a minor holding. But every once in a while the other religions would want control of the town for reasons of the spirit or the dream of having control of the town, but when that control was held the religion focused on its version to the exclusion of the others. Jerusalem was and is a tourist town and dependent on outside income to be sustainable with the great part due to donations from outside the country.

Linking to dividend paying stocks, if you own shares in companies your journeys may take you past the holdings of your company. These journeys can take you across the town or the country or around the world where ever the company drives its income from. The journeys can help you ensure the companies you invest are sustainable and will last a long time for the betterment of society. The Crusades were about a dream and sometimes dreams are fulfilled, sometimes dreams are best not done, but when you get to the destination the basics of profitability and sustainability are needed to ensure the dreams come to reality.

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

The Crusades is a book by Zoe Oldenbourg, Pantheon Books, New York, 1966 and among the topics is who are the Crusaders and why did they go the trip from France to Jerusalem? It was one thing to journey to the city, but to maintain the area is a different story. The Barons from France took power and set up an organization remarkably similar to the one they left behind or a feudal system. On the other side of the equation was the Moslems who held control over the territory. It was interesting reading for the most part the two religions got along because the patch of territory is more desert than fertile land. In the desert, the ways of European agriculture do not survive very long, or the Europeans had to adapt or keep the populations relatively small or leave. Adaption takes time, energy, resources and lots of faith. On both sides, the structure of government meant a good general enable lands to be expanded, a bad general gave the lands back. A good ruler expanded the empire, a bad leader through infighting gave the land back. A good leader took in account of the people’s belief systems and lived in peace; a bad leader attack what was precious and spent most of the time fighting enemies.

Linking to dividend paying stocks, in the context of the book were the kingdoms the lords took over to collect the taxes and fees to administered the lands. They also took in plunder or stole each others merchandise and saw it was good. If the lands were relatively peaceful, a set amount of money came in each year and reasonably fair administration could be done. If the ruler was at war with a competitor the income of the lands went down and needed an influx of cash from what are now illegal events. At the time pirates worked for a share of the proceeds as well as giving a share to the ruler, one way or another funds needed to be accumulated.

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

The Crusades is a book by Zoe Oldenbourg, Pantheon Books, New York, 1966 and among the topics is who are the Crusaders and why did they go the trip from France to Jerusalem? If you look at a map of Europe that is a long trip – with most of the journey by horses or by foot. Although there is some romantic ideals of doing in the glory of God, a long trip generally takes money for supplies along the way and to go into hostile lands or occupied lands means the other side has to give it up. Generally the idea of physical fighting for the Church was not the prefer means of fighting for the Church. The preferred method is for your belief. However Ms. Oldenbourg writes in the feudal society the Lords and Knights were the army of their lands and when offered to go to Jerusalem they were also given the promise to forgive their sins of the people they had killed in protecting their lands. Also included in the crusades were believers, people that we put in jail for crimes; as well serfs who thought this would be better than what we have now. When the Knights committed themselves to go, this meant a fully equipped regiment was in service for the trip – the support staff, the engineers, the arms makers, etc.

Linking to dividend paying stocks, often times when decisions are made there is a personal reason for it that is wrapped around or spun around general themes which few would question. In the Crusades, the Pope was spinning the news of a Crusade which would help him solve other pressing concerns for the Papal States. Asking why would the person take the action at this time, leads to the real reason, not the general public information reason.

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