Recently the writer read the book Outperform – Inside the Investment Strategy of Billion Dollar Endowments by John Baschab and Jon Piot, John Wiley & Sons Inc, 2010. The book examines what lessons can be learnt from the people who manage the funds at the larger educational institutions.

One of the topics discussed was cash. The book is about endowments funds which have very specific methods of operations as opposed to individuals. Part of the operations is a liquidity notion, ensuring their portfolios generate part of the operating budgets of the institution. How do you look at cash? If you are a dividend stock holder, the stocks generate cash either to be reinvested or to take advantage to buy more dividend stocks or for other purposes. For many investors cash is not consider part of the asset allocation method, but if a downturn hits or money is needed what would be sold first? Not considering cash or equivalents is doing a disservice to the the portfolio.

In an ideal world you should have 18 months of operation in cash or liquid cash equivalents. Liquid means if you were to sell to generate cash what investments would you sell and not necessarily at a loss? In a high degree of portfolios, the method to make as much money as possible is to use leverage, if you are correct, you have done very well; if not, cash needs to be raised. Do you have a strategy for cash? If you own bonds and dividend paying stocks which have paid dividends for a number of years, you can project income into your portfolio. Cash needs to be part of the asset allocation model.

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

Recently the writer read the book Outperform – Inside the Investment Strategy of Billion Dollar Endowments by John Baschab and Jon Piot, John Wiley & Sons Inc, 2010. The book examines what lessons can be learnt from the people who manage the funds at the larger educational institutions.

Educational institutions by their nature will have professionals both internally and externally evaluating their portfolios. If you are not doing investments as part of your daily work, then remember the rules of keeping it simple. Simple in terms of fees, in terms of what you think you own and what you do own, simple in terms of the strategies you use, simple in terms of your time frames and simple in knowing why you own what you do. Some of these simple rules are hard to do when good sales people call you. However since you control the money, take your time to keep it simple. By investing in dividend stocks, you have shown you do have patience. if you do nothing when you own good dividend paying stocks that have raised their dividends on an annual basis, you have done good. Remember you are an individuals and individuals have the opportunity of flexibility.

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

Recently the writer read the book Outperform – Inside the Investment Strategy of Billion Dollar Endowments by John Baschab and Jon Piot, John Wiley & Sons Inc, 2010. The book examines what lessons can be learnt from the people who manage the funds at the larger educational institutions.

Many of the institutions use a macro approach with emphasis on emerging trends. If you regularly read or listen to the news, you should be able to identify the emerging trends. The secret is how do you profit from knowing about the trends? The are many strategies you can use but an easy one is to park the money you were considering investing in the trend into an ETF or Exchange Traded Fund that is related to the trend.. ETFs track an index and now there are many to choose from. There are two good reasons for this strategy – one the fees are low and two as time goes by you do more research into how to play the area, you can determine what kind of returns you are expecting to make. For many institutions this process takes months before they determine which investment councillor to use. The two elements to learn from university endowments are keep your investment fees as low as possible and two take your time before you make a decision and once you do monitor the results.

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

Recently the writer read the book Outperform – Inside the Investment Strategy of Billion Dollar Endowments by John Baschab and Jon Piot, John Wiley & Sons Inc, 2010. The book examines what lessons can be learnt from the people who manage the funds at the larger educational institutions. If you are a college football fan, you would have heard or maybe even went to one of the larger schools profiled. The investment track record for the past number of years has been very good for endowments, why and what can individual investors learn?

Two themes which come into play are time and what is the money needed for? Time is a factor because the expectation is the institution will last for a very long time. This means the horizon for some of its investments to pay off will be longer. Balancing the time horizon is what is the money needed for? In the case of school endowments, some the money is used for the payment of operating costs of the university and scholarships. In this case, a specific amount is needed for each university as a minimum. Once it is met, then the endowment has options for investments.

Likely your portfolio is not the same size as the school’s but answering the above key questions is the first step. The reality is many of us individuals, want more sooner and we like rising markets. The method to counteract the reality is when and for what purpose?    Tomorrow will be part two.

On the weekend, to stay out of the rain, I stopped at the local library. Similar to most libraries there is a collection of magazines which on an average day I would not buy but may read once in a while. In one of the magazines there was an article about the Bonneville Salt Flats. For those who read car magazines, the salt flats have for many years been a place to try to gain a new car speed record. As the name implies the ground is flat and prior to people landing on the moon, new land speed records were regularly set at the location. Every couple of weeks or so, people gather to try to see how fast their vehicles will travel, leading up to Speed Week in August. Do they make lots of money, no. But it is legal and there is a a dual need to go faster and to try.

Linking to dividend producing stocks, some of the people who go to Bonneville do it because it is their passion. Dividend producing stocks can help pay for your passions. The regular income which often increases over time, can enhance your passions, which bring dividends in a non financial matter. Both are important, being passionate about something enhances your life while dividends enhances your financial situation. Go for both – income and growth in finances and in life.

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

In the US, two professional baseball teams  (Detroit Tigers and San Francisco Giants) are playing for a championship called the World Series. The reason it is called the World Series is the first championship was sponsored by a newspaper called the New York World. Anytime the other newspapers talked about the championship they would have to advertise the New York World newspaper. It is one of the reasons why in sports, just about every sport has sponsorship and marketing related to it, The New York World newspaper eventually went out of business but the trophy was never changed for the name gave the illusion the world was playing for the cup. For many years it was not so, now with players from all over the world playing professional baseball, there is validity in the name of World Series, even though the teams are based in North America..

Linking to dividend paying stocks, when companies start out they tend to be focused on a small part of the economic cycle because they do not have the resources to do everything. Over time some companies will grow and evolve and become “world class” companies for they have diversified operations around the world. Most will not, for the desire and management skills are different as the companies grow in size and scope. All along the continuum of medium sized to large sized companies are companies that are public and pay dividends. Look beyond the name to the business model and if you like the model and it has paid dividends for a number of years, you will end up with championship dividends.

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

If you are alive, you have a bias.You can pretend that you do not, but you do. We make choices everyday, We pick colours to dress ourselves, we are creatures of habit. There is nothing wrong with having biases. The trick is to ensure that because you have a bias, you do not automatically dismiss those that disagree with you. It is the same in the investing world, we have a bias towards what is a good industry segment to be in or not. We have a bias towards companies, it is easier if you like the company and invest in it. The point of the above is in every market segment, there are opportunities.

Linking to dividend producing stocks, if you start with the bias the company has to pay a dividend which has been paid for a number of years. You will find the usual companies such as utilities, pipelines, but within this select group will be companies you may not be familiar with. Some will be in industry segments you have a bias against, as long as you reject for the correct reasons, than dismiss them outright, it is okay, You likely will dismiss some because most of us do not have unlimited funds to buy every dividend producing company.

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

At this time of year, people begin to go into the card stores to look at calendars for next year. Now days you can have almost anything you wish on the calendar or you can make it yourself. Inside many calendars are the reminder stickers – appointments, birthdays, medical appointments, and others. In most homes there is a least one common calendar that people tend to look at, which makes the calendars useful and in a good position to share information.

Linking to dividend producing stocks – for each of your stocks that you own you should mark the date the dividends come into your account. If you can do that process, it means the company has paid dividends for many years and expects to continue. For some companies which have continually increased their dividends, you should see more money than planned which is a good thing. Companies such as Coca-Cola and Wal-mart are two of many examples.

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

Every industry has their own season for new products, at this time of the year it is the fall and winter clothing and the assorted events which go with fall and winter. If you are in the fashion industry, the new lines are in the stores and to stay in business the people have to be excited and engaged with the offerings. Every year something changes to stay fresh, however the themes of style and flexibility remain the same. The challenge is to ensure those who spend money on fashion be very regulars and for those that need adjustments to come in and spend.

Linking to dividend producing stocks, for those stocks which pay a dividend the challenge is to ensure the business model remains correct. Every year brings challenges both internal and external threats, but if the model is working and the dividend is safe, it is a time to see the glass more than half full.

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