When something is new or new to the general public, it is often expensive and early adopters pay extra. As the general public believes it needs to have the new item or gadget there is a rush to provide to them and eventually prices come down and the new item is embraced by the general public till the next innovation. Along these lines, AI software is new to the general public and the adoption is becoming rapid.

In an article by Karen Weise and Cade Metz of the New York Times News Service, similar to other new gadgets and products, the race to build generative AI systems, the tech industry has been bigger is better, no matter the price tag. Now that AI is in the general public, the expectations are that more and more products and services will use the generative AI, companies are embracing AI technologies that are not as powerful, but costs less and that can be a good trade off for many users.

Microsoft has introduced 3 smaller AI models that are part of a technology family the company has named Phi-3. The smallest model can fit onto a smartphone and can run on chips that are not Nvidia’s or the AMD type.

Chatbots are driven by large language models or LLMs. The system does analysis on digital books, news articles, chat logs and other text culled from across the internet. By pinpointing patterns in all that text, the system learns to generate text on their own. To do this process requires considerable computing power and that is expensive.

This is the reason why the large technology companies are building data centers

The smaller models are a trade-off between power and size. Researchers believe the smaller models can at least approach the performance of the leading chatbots such as ChatGPT an Google Gemini.

Linking to dividend paying stocks, in every industry there are trends and cycles, the big cycle at the moment is generative AI. The generative AI is the new part, the AI has been used in many companies for a long time, but it was limited to a few users particularly trying to match ads to consumers to raise spending or when your app says the offers best suited to you to open your wallet. As months go by, the generative AI will be in most products and that can be a very good thing to allow for better decisions. One very good decision is lose less money which means depend on both dividends and capital gains. In the universe of companies there is much choice and most of us cannot buy every company, how do you choose?

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

In the movie the Field of Dreams staring Kevin Costner, a line was repeated if you build it, they will come. The movie was about baseball and the Kevin Costner character built a baseball field in the corn fields for deceased ballplayers to play baseball. Because it was the movies, the players came to play. In reality, there was no one watching the players and the baseball field was less than profitable. In the real world, if there is a large enough government grant, infrastructure will be built.

In an article by Ken Ritter of the Associated Press, a $12 billion high speed passenger rail line between Las Vegas and LA has started construction. The promoters of the rail line suggest that by 2028, millions of people will take the train at a cost of $400 round trip. If you believe the millions or the trains carrying 30,000 people a day, check out the Amtrak trains or Interstate 15 traffic. In 2028, the summer Olympics are to be held in LA.

The government has received $6.5 billion from the Biden administration including a $3 billion grant from infrastructure funds and approval to sell $2.5 billion in tax exempt bonds.

The company building the train is called Brightline West and operates a fast train between Miami and Orlando in Florida. The train will be in the median of I-15 and cut the 4-hour trip by car to 2 hours. Las Vegas is a popular driving destination for Southern Californians and I-15 is often crawling on Sunday traffic.

Linking to dividend paying stocks, if you think about the Field of Dreams there are many ideas in the marketplace searching for dollars, most of them should remain as ideas. However, the dreaming is a good thing in order to make things better. For a dividend investor, the idea actually has to have a market that is willing to buy the product or service at a profit or profit = revenues – expenses. It is simple formula, but before you put your money on a dream, examine the balance sheet to ensure there is money to be made after the government money is used.

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

In many countries around the world, many services started as private but as time went on the country decided to bring them under a quasi state control because the services provided were needed by everybody. Some examples are the transit, utility sectors, and water and sewer services, in most states this is provided by government because everyone needs to use the services. As time went on, the philosophical argument about having the private sector do the job would result in greater efficiency and lower bills. This was done in London, UK.

In an article by Sarah Young of Reuters, Thames Water which supplies about 25% of the British population with water and sewage services, is trying to have the regulator raise bills by 40%. This increase would allow Thames Water to tackle sewage spills and fix leaks and do environmental projects. The additional problem with Thames Water is it has $27 billion in debt and the regulator Ofwat, wants to minimize bill increases.

It is noted that the 40% increase propose by Thames Water compares to the 31% increased proposed by the other water and sewage companies.

Chief Executive Officer Chirs Weston said we will continue to discuss the issue with the regulators and stakeholders as the desire is to make a good return on investment. The owners included Britain’s Universities Superannuation Scheme, China Investment Corp, Ontario Municipal Employees Retirement System (OMERS), British Columbia Investment Management Corp (BCI) or large institutional investors. The owners rejected adding a $846 million equity lifeline, saying raising prices is a better solution. Some of the owners have since written down the value of their assets.

The regulator will propose a draft solution by mid June.

Linking to dividend paying stocks, as investors we often believe have private equity or public shareholders will make an organization better. The problem is for organizations that are to serve the general public, it is very hard to cut off the service or limit the service to people who can afford the price of the service. Private companies can limit service or not service non profitable customers, organizations serving the public have to service the public. Otherwise they are efficient as any other organization.

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

In politics making politicians will talk about middle income values and the idea that with a larger middle income, more people could afford housing, vehicles, savings and investments. One of the things the politicians do not talk about is money or raises for workers. In many states, legislatures had the chance to raise minimum wages but they declined. In some states, the Governors threatened workers that we do not want unionized workers but offered no raises. In the 1960’s when more people afford life’s choices, a higher percentage of workers were unionized. That does not mean every workplace was better, it just meant more people had higher wages than minimum wage. There was a marked decline in unionization as companies shut down plants and moved them to lower wage south and out of the country to Mexico or China.

In an article by David Koeing of the Associated Press, the Union Auto Workers (UAW) won a stunning 73% at VW after losing elections in 2014 and 2019. It was the union’s first win in a Southern assembly plant owned by a foreign automaker.

UAW President Shawn Fain said the fight will go on to all the auto plants across the Southern US. The next UAW drive is the Mercedes-Benz plants in Tuscaloosa, Alabama for 5 days around the 15th of May which the union lost the vote.

Harry Katz, a labor relations professor at Cornell University noted the UAW will have a harder fight because of aggressive management resistance and even community resistance. One of many reasons is labor unions are tied to communism and there is a long history of fighting communism, but not a long history of paying employees well.

One of the advantages the union movement has is President Joe Biden, he believes unions help raise workers’ wages to promote a larger middle class. President Biden encouragement means the federal regulators are not putting up barriers to the union. The workers in the southern states see the gains the unions made in more money and benefits in the northern states and wonder why not here?

Linking to dividend paying stocks, just because there is a union does not mean middle income is the result. Most of the writer’s career was with a nonunion higher paying financial companies which found a method to let people go who wanted unions. In addition, one job was with a union who agreed to $1.00 above minimum wage, not exactly middle-income results. Unions come with all types of bargaining abilities but when workers see management doing well and they are doing less well, they are willing to try. For the companies you invest in, what is their labor management practice? what is the ratio between the President’s compensation and the lowest entry level job? will change come to the company?

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

In the 1960’s a TV show was produced called Star Trek whose mission was to explore strange new worlds, to seek out new life and new civilizations, to boldly go where no man has gone before. For most of us, we are not going to outer space anytime soon, outside of flying in a plane, but we can go to new worlds through books. There are a vast number of jobs and most tend to be in one category for most of our lives, which is terrific if you like or love your job or your field. However, with books we can sometimes see possibilities which can help us invest or make life better. One such book is called Grunt by Mary Roach, published by WW Norton and Company, New York, 2016. The book is subtitled The Curious Science of Humans at War.

Ms Roach has written a number of books in the same premise on different subjects, but Grunt is about people who try to make life a little easier to soldiers. We as a society will send many people to train for war in basic training and it tends to be one size fits all. Basic training is to break people down and rebuild them to make them think like a soldier in terms of discipline, bonding with your troop (teamwork) and paying attention to orders. After the person has become a soldier, they are given basic uniforms for all the jobs they will be tasked with, does the uniform fit all the jobs they will be tasked with?

The military has many doctors and researchers trying to determine how to ensure the dangers of warfare are lessen. Within the researchers, a great amount of information is gathered, some of which could be used outside the military, to the general public. If it is used for the general public, that means investment dollars could be enhanced.

There are many people in the world who enjoy fashion and looking good, in the military what cloth is the best one? The place the US Army determines that is the labs at US Army Natick Soldier Research Development and Engineering Center or Natick. Everything a soldier wears, eats, sleeps on is developed and tested here. If someone in the fashion industry believes they have developed a better flame-resistant fabric, the fabric is tested at Natick. They will run a gamete of tests to determine when it works well and when it does not work, because in the Army people are working in all kinds of temperature and will need to reuse the clothing multiple times.

If you look at the average person today, they are carrying a cellphone somewhere. When cellphones were invented, pockets on clothing was a secondary concern, now fashion designers have to think about the phone. In the military, one of the tasks of those that shoot other people is to be a sniper. Most of the time, they wait till the person or persons arrive, while they are waiting are zippers good? It turns out the answer is no, there are other solutions. US government button specifications run to 22 pages, sometimes it seems complicated.

One of the best things about the Iran war was the advances at the Walter Reed Hospital and Rehabilitation Center. Prior to the advances, over the years many soldiers lost limbs but the prosthetics were not that good. There have been tremendous advances in both the replacement limb and wheelchairs which has moved to the general public and some form of normalcy has come forth.

Another subject for the military and the general public is dysentery or diarrhea. William Osler in 1892 wrote for every American killed by battling injuries during the Mexican War of 1848, 7 died of disease mostly diarrheal. During the American Civil War, 95,000 soldiers died from diarrhea or dysentery. During the Vietnam War, hospital admissions for diarrheal diseases outnumbered those for malaria by nearly 4 to 1. Fortunately at the Entomology Branch of the Walter Reed Army Institute of Research people are studying the issue both foreign and domestic deployments.

Ms. Roach does a variety of other subjects including hearing, trying to survive in a submarine which has malfunctioned and a host of interesting parts of military.

Linking to dividend paying stocks, we all look for ideas for the next great thing and often we look to universities for research. The military has a number of research facilities and their solutions make the life of the soldier better. Some of those solutions can be used with the general public and that means revenues. In your investments, how does your company look for great ideas to implement?

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

If you think about the building of the country, most people lived near the coast because the easiest form of transportation was by boat. Eventually, the railway age came to the US and every community knew that it wanted a railway or it would not grow and likely stagnate. Railways were built and then for a hundred years consolidations happened. After WW II, the interstate highways were built and only profitable railways were operational. At the present time, what is both convenient, practical or cost effective, and reasonable has evolved and the supply system fit into the operations of trucks and railways.

In an article by Peter Eavis of the New York Times News Service, the collapse of the bridge in Baltimore has thrown the supply system in a loop. All ports to a degree in specialize and for the port of Baltimore, besides everything else under the sink, the port specialized in farm and construction machinery and autos. The port handled 1.3 million tons of farm and construction machinery and 850,000 cars and light trucks.

In the article, an example was the green John Deere tractor, normally it was shipped from a factory in Waterloo, Iowa and went to Baltimore to go around the world. At the present time, the alternative is the port of Brunswick, Georgia. Griff Lynch, Chief Executive Officer of Georgia Ports Authority, noted while the business is good, the capacity is limited. In April, the port handled 17,000 more vehicles than the normal 70,000 in a month. (if you ever been around a car manufacturing plant, cars and trucks take up a lot of space).

In the trucking industry, they are struggling to get drivers and loads to where they need to go on time and not lose money. Akram Ayyad of 410 Transport said he has to go to the Port of New York and New Jersey, which means his customers have to pay more for freight.

Beth Rooney, a director of the New York Port Authority reached out to the Baltimore people and now they are handling 2/3 of Baltimore’s container business and 1/3 of the auto cargo.

Before the bridge collapsed, Kathleen Kropp’s trucking business, Triple H Trucking with 15 trucks moved containers from the port to York, Pa about a 95 mile trip. Now the trucks must go from Baltimore to Norfolk, Virginia to pick up the containers and then to York before returning to Baltimore. The customers pay more, the drivers earn less because they make fewer runs each week. For some companies do more in overtime, but how long do people wish to do overtime? It has taken a month before the ship was moved, but the bridge will take longer.

Linking to dividend paying stocks, the infrastructure is built and it is very hard to move it so supply chains are built around the infrastructure. Similar to the Port of Balitmore, it is always possible to find alternatives for a short time, but costs and people will dictate what will happen in the future. For your investments, what are the alternatives for the supply chains?

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

Former singer Michael Jackson sang a song called Black and White, and in many moral codes there is a definite right and wrong. While the song had to do with racial equality, black and white also refers to the right and wrong judgements. In the real world, we all move into grey, in the world of politics and business there are often more grey areas than strictly black and white.

In an article by Alexandra Stevenson and Melissa Eddy of the New York Times News Service wrote about the delicate balance the Chancellor of Germany needs to do on a regular basis. In the recent past, China was the manufacturing country of the world and German industry assisted and continue to do business in China. The war between Ukraine and Russia, Germany was leading the way towards sanctions to Russia sending no gas and oil to Europe which included 40% of Italy’s oil and gas needs as well as 30% of Germany’s needs. For decades, the commercial relationship with Germany and Russia have been very strong. At the present time, Russia has found new customers in both India and China. German Chancellor Olaf Scholz was in China to promote German business and greater relationship between the 2 countries.

The Chancellor promoted the interests of German companies that are finding it harder to compete in China. He also discussed the European Union (EU) believes it is becoming a dumping ground for Chinese goods produced a loss. It is noted both Germany and China’s economy are not doing as well as they used to.

In China, the Chancellor visited German companies with extensive investments in China and visited with trade representatives and officials in the sprawling industrial metropolis of Chongqing in China’s southwest. He also visited Shanghai and Beijing.

The Chancellor has a described China as a partner, competitor and systemic rival. China and Germany the world’s second and third largest economies in the world. Over 5,000 German companies have operations in China and have invested billions of dollars.

Linking to dividend paying stocks, all companies similar to countries have a variety of relationships with other companies and the people who work for it. Some of those relations are very good and some are designed to have reasonably friendly interests, some of those will be in trade or business organization or charities in their places where the companies do business. If the company can continually make profits to pay dividends, the relationships seem to more on the friendly side, however there is always the grey area when the competition increases their margins.

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

At this time of the year, AGMs are common as the year comes to an end and a break for summer relaxation. At the Annual General Meeting, if the company has done well then it will say the company has been executing on its strategic plan. If the company has not done as well, then the company unveils its new strategic plan to generate greater revenues and higher stock prices. These companies have potentially great assets that need to leverage in a different direction.

In an article by Nicole Sperling of the New York Times News Service, she writes about Netflix. The company had a soaring stock price during the pandemic, but now growth rates are less, although it has 260 million subscribers and many watch for the movies.

The head of new film is Dan Lin and he has reorganized his department by genre rather than budget level. Mr. Lin’s mandate is to improve the quality of the movies and produce a wider spectrum of films – at different budget levels. He has changed the way actors are paid, meaning no more large upfront deals.

The previous film chief Scott Stuber, took the job in 2017 and to ensure people signed on to the service produced large budget movies. That process did work and with over 200 million subscribers the new chief says better movies which cost less to make and less frequent than a movie a week. Netflix is asking if you are a subscriber why do you stay?

Linking to dividend paying stocks, all companies have a strategy or at least a strategic plan that as investors you can become familiar with. If you agree with the strategy, you can hold on to the shares. If you disagree or wonder why something was left out, searching for alternatives is a good thing to do.

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

In the financial press, regular readers will read about the commodification of many industries. In the world of commodities, the rules of supply and demand are the important as well as understanding there will be a number of industries that use the commodity and they want to lock in their expenses, However, there is money typically called speculative which tries to forecast supply and demand and either buy calls or puts depending on their viewpoint. If the view is correct, prices will rise or fall or prices will fluctuate. The higher the fluctuation, the greater the possibility of profit. A book examined the traders who have made and lost great sums of money is called The World for Sale by Javier Blas and Jack Farchy, published by Oxford University Press, NY, 2021.

Every country in the world is blessed with something that brings in revenues to the country. Sometimes the revenues are not enough, but the country has a commodity which can be bartered or traded. In the case of Jamaica. In the early 1980’s, oil prices were high and Jamaica’s oil refinery needed 300,000 barrels of oil was needed. The normal process was for the Central Bank to provide a guarantee for $10 million to cover the cost of oil. It did not have the money. The Finance Minister called Marc Rich who arrange a shipment of Venezuelan crude to stop in Jamaica before going to the east coast of the US. Traders could and can do this.

Jamaica is home to the famed blue mountains and they contain the world’s largest supply of bauxite. The mineral is also found in Australia and Guinea. For decades the market for aluminum was dominated by a few North American companies headed by Aloca. The international assets of the company were broken off in 1951 to form Alcan. In 1955, the 6 largest aluminum companies controlled 88% of the non-socialist world’s bauxite supply, 91% of its alumina and 86% of the aluminum. Under a gentleman’s agreement, Eastern Bloc countries did not send their aluminum out to the world market. Prices were set until the 1970’s. In the 1970’s many countries decided to nationalize or buyout the major companies. Jamaica soon owned the company’s bauxite mines and alumina refineries. However, the company had little expertise in selling or shipping it, for traders this was a dream scenario.

The oil price is related to aluminum industry because to make aluminum lots of energy is needed and many hydro electric plants were founded on cheap oil, which changed when OPEC raised prices. The aluminum plants that exist today have water hydro plants beside them. In the 1970’s before the shakeout, prices of alumina fell. Traders such as Marc Rich, they negotiated a very good contract with Jamaica for the alumina and then found refineries in the US to make aluminum. In short order, they were to become the world’s largest aluminum makers competing with Alcoa and Alcan and without actually running any smelters.

In the book, when Russia changed its economy, the traders were there to capitalize on the changes. There are many stories about the challenges and rewards.

In the paper you will read about changing weather patterns which affects crops and the ability of the area to feed itself. The world of trading grains is dominated by ABCD or Archer Daniels Midland, Bunge, Cargill and Louis Dreyfus. All of them have large trading desks to take advantage of supply and demand. Cargill’s trading company is called Tradax based in Geneva since 1956. When countries need grain, Cargill’s traders are aware of it and can profit from increased demand.

In the oil or metals, there are a few key suppliers, this means after determining who is winning the contracts, information is not a large informational advantage. In the world of agriculture, there are thousands of individual farmers. For companies dealing with many farmers, it gives them valuable information or big data to do trading with. Within each trading company of the ABCD is the traders who want delivery and those who are trading on the company’s money known as proprietary or prop traders. Most of the money made is by the prop traders.

In the decade to 2011, Vitol, Glencore and Cargill enjoyed a combined net income of $76.3 billion. That was 10 times the profits the traders were making in the 1990’s.

Linking to dividend paying stocks, trading has grown to be the profit centers of investment banks and non investment banks. As long term investors, you like the near monopoly conditions of the companies you own, but every once in a while those businesses are broken and as they change to the market, trading conditions will exist. How does a business make its profits is always a question worth asking?

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