When you invest in the stock market, which is a good thing to do to increase your wealth over time, which stock(s) you choose has some bias towards it. Where you live means you often interact with different stores which means almost every portfolio has some level of residency bias towards in it and that is ok. There are other biases in the market and as long as you are aware of them, some of them are possible to avoid. Often you have to find a reasonably independent person, such as an university professor to highlight the possible biases or conflict of interests.

In an article by George Athanassakos, a professor of finance who holds the Ben Graham Chair in Value Investing at the University of Western Ontario, wrote about conflicts of interests.

80% plus of the trading on a daily basis is institutional investors, even though many are well paid and could be rational investors, they fall into herding or what is popular? In many respects, institutional investors need to hold popular stocks similar to retail investors.

Another aspect of institutional investing is portfolio rebalancing. The issue is portfolio managers have a benchmark, index plus something, and if they do well a bonus comes along in December. To receive the bonus, they generally buy risker stocks in January and by September or October sell them, which allows for the reports on the portfolio to only have good quality stocks. Over the year this will cause some divergence which value investors can take advantage of.

If you own a stock, then an analyst(s) has written something about the stock. We all can do some of own analysis, but we also read or dependent on the views of others. Understand analyst tends to generate trading profits for their firms, which means most people want the stock to go up and recommend buys. If an analyst writes a negative story, the folks on the corporate financing team will receive no or very little business from the company when it needs financing for the business.

Rating agencies are needed, but sometimes they are part of a business which consults with the clients on raising money.

The media posts stories, depending on the source, depends on the information.

Broadly speaking, the whole stock market is a marketing machine, that just happens to sell stocks, as opposed to pills or groceries. When they want to sell stocks, they tend to write nice or positive stories.

Linking to dividend producing stocks, one of the ways to avoid many of the conflicts involved in the stock market is to buy good quality stocks and hold them. The length of time to hold them depends on their profitability to generate healthy profits to pay dividends. The business of the markets is to generate trading profits or people buying and selling. The business for you is to generate compound interest from the dividends and over time the value of the stock increases. It does not necessary mean selling, let others do that so if the company cannot generate profits you can sell into a healthy market.

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

In the technology world, and almost everywhere else people are pitching ideas to be acted upon. Everyone has ideas, some make life better, some easier, some make companies better and some change the world. The ideas that people have are similar to sowing seeds – some get eaten by birds, some grow a little and some become a crop. The question is which is which, recently read a book called Backable by Suneel Gupta, published by Little, Brown and Company, NY, 2021.

Mr. Gupta teaches at Harvard University, prior to that he founded an app (Rise) that was bought by a larger company and sits on a venture capital board which means he has given and listens to many pitches. Why are some successful and some not? In his capacity as a Professor, Mr. Gupta wrote the book Backable. There are many stories in the book, things to learn and some are list below.

One story is about breakfast cereal. Imagine if you own shares in the big cereal companies, for years there was steady predictable dependable profits which translated into dividends. Then over a few years, the industry changed and profits were lower. The issue is why? There were many ideas and theories, including size of families (from 5 plus kids to 1.5 child); changing tastes as nutritional values; and the list went on. After much research, the answer came to the cellphone. When people wake up in the morning, one of the things they do is pick up the cellphone and begin to check it for information of all sorts. When they are reading the cellphone, they are using one hand, which means they have one hand free to do breakfast. Cereal bars are more popular because they can be eaten with one hand, the other solution for the cereal companies is cereals became snack food.

Mr. Gupta has 7 points to make successful pitches.

1. Take the idea and allow yourself to consider the pluses and minuses of the idea and at the end of the process you need to be convinced of the merits. People need to see your sincerity and conviction or being the champion of the idea.

1. Who benefits from your idea? Establish a central character who uses the idea, is willing to pay for it and show their life is better for the implementation.

1. Great ideas tend to stem from an earned secret – a hidden insight you learned through firsthand experience. What research have you done shows you are an expert and you had a break through the process of how you came to this solution. What was your Eureka movement?

1. A backable idea communicates the idea is inevitable. The world is moving to this place and the idea allows you to come along for the ride. If you invest in the idea your vehicle is at the front of the line.

1. When you are pitching, do not give a neat tidy wrapped up picture, allow the listeners and those with access to resources to join in the process. You are pitching to show them how they will succeed with you. The listener who understands the idea, will bring his/her perspective into play allowing for questions. If they are looking at their phones, you have a problem.

1. Prior to pitching for big money, practice and try to find people that will object, in order to address the elephants in the room and use the rule of 21. Practice 21 times for it allows you to have a recovery muscle when according to the Peter Principle if something could go wrong, it will. You need to show all sides of your character. Understand reinvention is an essential part of the backable process. Your presentation likely will evolve over time.

1. Show what you do or how your idea will be implemented. People are more compelling when they are being shown than describe to. Remember the idea is the most important thing, not you. Also note, just because you pitch someone, not everyone will like it or want to do something with the idea. You need to find someone who shares the same space as you and is willing to work with you.

Linking to dividend paying stocks, the executives who run profitable companies will hear many pitches because they have money to invest, the group which does this is corporate strategy and the Mergers and Acquistions group. The group will often say no, but when ideas fit the company, positions or the whole company can be purchased for talent. In your investments, how is the internal M&A group doing?

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

Around the world, countries elect or select leaders who offer visions of what their country can or could become. Some end in up enriching themselves along the way, but all have power to influence. The longer the person has been in power, the more important aspect is who are the people behind the leader. Is the leader open to change? is the leader pro business? besides the power what does the leader hope to do with the country people and resources?

In China, their leadership believed similar to the US, after 2 terms or 8 years, a new leader should be selected. That was recently changed, and Xi Jinping remains as the top leader of China. In late October Premier Xi and the Communist Party of China had the Party Congress which reaffirmed his leadership.

In an article by Keith Bradsher and Alexandra Stevenson of the New York Times News Service, Mr. Xi pushed out rivals who had been perceived as pro-business and he also ensured the people around him are closer to his age or he has few rivals at the top level. Generally, part of the leader’s job is to bring up new talent in the pipeline. Mr. Xi is not doing that he has packed the Politburo Standing Committee with loyalists or yes people. (Centuries ago, Emperor’s had a person to say no and come up with reasons for no and their position was secure.)

Mr. Xi’s belief in the primacy of the party could shift the world’s second largest economy back toward a more state-led model. This model points national security and ideology would be a higher priority than maintaining a robust growth.

Linking to dividend paying stocks, most of us want consistent profits that can pay dividends that tends to be mean the status quo, but by not adopting changes the company can decline. There is a fine balance and margins can fall quickly which often takes new leadership to make changes to remain as a status quo. Usually when party loyalists trump everything else is good to have other alternatives ready.

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

On this Remembrance Day, we think about the young men and women who joined the military and fought for a war their country believed was very important. Most of the people are young because all militaries are dependent on young people to do extra ordinary tasks in time of war. Shoot real bullets at someone else who shoots real bullets at you. Thankfully the medical corps are very good at keeping people alive and the rehab centers have much better artificial limbs for people to continue to live long and productive lives.

If a country wishes not to engage in sending young men to battle, sanctions are the next best step. When Russia invaded Ukraine, the west including Europe and the US imposed sanctions on Russia hoping to send the economy into a recession.

In an article by Maina Stevis-Gridneff of The New York Times News Service, she wrote the European Union has named 1,236 people and 155 companies for sanctions, freezing their assets and blocking their access to trade in the EU. The EU has banned the trade of products in nearly 1,000 categories and hundreds of subcategories. Russia is one of the world’s largest exporters of oil and gas and the EU has a near total ban on oil.

There are some products that have not made it to the list including diamonds, nuclear power and some Russian oil deliveries.

Russian diamonds go to the diamond hub city of Antwerp, Belgium. The trade of rough Russian diamonds is worth $2.4 billion. The Bellllgian government says it would co-operate if diamonds made the list, but somehow when the European Commission meets, diamonds are not on the list.

Nuclear energy is more complex because power plants in France, Hungary, Slovakia, Finland and other countries depend on nuclear imports and the trade is worth $300 million.

Oil tankers move oil, and they are registered in every tax haven country around the world. One of the lobbying groups is mounted by Greek diplomats to allow Greek owned tankers to transport Russian oil to non-European destinations. According to Marine Traffic, a shipping data platform, more than half of the vessels transporting oil are Greek-owned. The movement of oil through Greek ships is one of Russia’s largest revenue streams.

Linking to dividend paying stocks, all countries around the world have diplomats who besides doing immigration concerns and tourists visas help out their country’s interests including corporate concerns. When a country does business in another country, the diplomats help the corporate interests lobby the government for assistance and remove barriers to business as corporate interests’ merger into a country’s interest. When that happens, companies have the government as a partner and as long as they abide by the law of the country, the partnership works well. It is good to have the government as a partner.

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

Every technology invented will have some great attributes or wide-ranging uses for non-military uses. The same technology can be used for military purposes. A case in point is drones and the use of them. It is very common for domestic pipeline companies to use drones to investigate their pipelines, if something happens, the drones can make it to the scene first and actions can be taken at the control center and on the ground. Drones are in use for construction buildings for engineers to investigate how things are going and you can imagine hundreds of other uses. In the Russia-Ukraine conflict we have seen drones carrying missiles cause damage to both sides. The use of technology to hamper the ground game of humans.

In an article by Mark Lewis of the Associated Press, there are great amounts of oil and gas under the North Sea and on the Norwegian side, Norway has offshore platforms to pump out oil and gas to Europe. (there are very interesting videos on You Tube about putting pipelines from the platforms to the collection stations to be sent to Europe). Recently Norwegian oil and gas workers have been seeing drones buzzing overhead. Officials believe there are not the competition but sent from Moscow as a stark warning.

Norway has taken the top exporter of oil and gas to Europe away from Russia and this has meant Norway’s Prime Minister Jonas Gahr Store has sent the navy and fighter planes to the scene, he has also asked co-operation of the navies of Europe to help out. Norway is investigating who was controlling the drones and for what purposes.

Norway has about 15,000 miles of pipeline that bring Norway’s oil and gas to Britain and Europe.

Linking to dividend paying stocks, when you invest in companies you are hoping they follow the law of the land and make profits to pay dividends. If the investment does that, you can hold on to your stocks for years. Most of the infrastructure which companies build is built on the goodwill of the people of the country, and it is important that goodwill remains high. For some industry that typically function out of the spotlight, their abilities ensure the government’s interest is always a high priority to ensure the continual functioning of the infrastructure. It is good to have the government as a partner.

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

At one time Standard Oil control by John D Rockefeller controlled the oil markets of the world. It was the biggest, it had interests in oil drilling, oil and gas pipelines, refineries, and where ever in the world where oil could be found Standard was there. Eventually, the company was broken up to 7 different companies and over the years, Standard Oil became Exxon which is headquarter in Houston, Texas. Exxon continued to have operations around the world although in many countries it is a joint venture with the government or government favored company.

As the world knows, Russia is a major oil and gas producer and was selling 40% of Europe’s needs. Russia also provides China with oil and gas, which is why China remains friendly with Russia. When Russia invaded the Ukraine, Europe and America put sanctions on Russia and forced many companies to stop doing operations in Russia. It takes time to stop operations, unless the company is willing to take millions or billions in write downs of its operations. Exxon has been in Russia for decades and over the years have invested heavily in bringing oil for the Siberia. The winters are long, the summers short and the land is often more bog or waterlogged, but there is lots of oil.

In an article by Sabrina Valle of Reuters, Exxon announced it is out of Russia because President Putin expropriated its properties after 7 months of discussions over an orderly transfer of its 30% stake in an oil project. The 30% stake was valued at $4 billion. Exxon’s partners in the oil field were Rosneft, India’s ONGC and Japan’s SODECO.

Exxon took a $3.4 billion write down in April and a $600 million write-down in the 3rd quarter. On October 7, President Putin seized Exxon’s shares and transferred them to a government-controlled company. The other partners under the order can increase their ownership stake.

Linking to dividend paying stocks, companies that operate outside of the US will run into countries that operate differently. There are remedies when a government expropriates which include courts and lawyers and government pressure, but they take time and sometimes it means new leadership in the country. (in Cuba, companies whose properties were expropriated are still waiting, but companies can wait a long time). The companies will move on to other venues in the world for their operations or they have flexibility.

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

Every quarter the biggest banks in the country report on how they are doing. With the big banks their operations encompass all sectors of the economy, and it is important to see how they see the economy in action. More importantly they control access to credit, if you have credit and wish to use it to buy income performing assets or personal assets, in the grand scheme of things the big banks will know. The big banks can raise your interest costs on your credit and if you still want to buy you need to pay back greater amounts in interest.

In an article by Ken Sweet of the Associated Press, the big banks reported how they see the economy and they are preparing for a recession or more people and companies not being able to pay back their loans. The method the banks do this is increasing or decreasing the loan reserves. JPMorgan added $1 billion to loan loss reserves, while Citigroup and Wells Fargo added $400 million. It is noted at the height of the pandemic JPMorgan was putting $10 billion in reserves. If money goes into reserves, it is not lent out into the economy. When reserves come out, the banks invite their clients to use the money.

Jamie Dimon the CEO of JPMorgan describe the current situation as odd, reflecting delinquencies are low and consumer spending remains strong despite the inflationary headwinds. He did predict the extra saving US households socked away during the pandemic would likely be exhausted by mid 2023 if inflation is not under control. (when many gatherings were shut down, people did not spend on hospitality and travel, now they can).

Linking to dividend paying stocks, for your investments it is important to understand the basics of the industry and then you can make decisions. For banking it is loan loss provisions – the bank lends money do people and companies pay the money back. There are other factors but there are some basics for every industry. If you see the basics are covered, then you are going to be okay and do not have to do anything. If the basics are giving headwinds, then there is more research to be done.

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

Markets move in cycles and stocks go up and down are something everyone hears, often in one ear and out the other. We all want the stocks we buy to go up and when they do, we become a Wall Street champ. However, many people do not sell and ride the company they fell in love with all the way down and soon you are the Wall Street chump for not selling. There are multiple reasons why the selling did not occur, for the 2 lessons of cycles and prices go up and down are not hard to understand, it is the execution of those simple words.

In an article by Sinead Carew entitled Pandemic darlings’ stock saga ends in tears is about not selling if you own Peloton and Zoom. Both companies are examples of the catch a wave and on Wall Street if you catch a wave, it is a big wave. Peloton and Zoom were in the perfect place or the right time at the right place. COVID shut down gatherings, but people still needed to exercise and communicate with each other. The stocks soared as they were in a position to expand quickly. Peloton went to $171.09 in early 2021, but times changed, and you can buy Peloton for less than $10. Zoom peaked at $588.84 in October of 2020 now you can buy at around $75. Many people made and lost money on these stocks, hopefully some sold along the way.

Linking to dividend producing stocks, the reasons you want to own the stocks is over the long term the total return of capital appreciation and dividends means your wealth goes up. In the short term all stocks go up and down and the markets go in cycles. Cycles mean during the phases of the economy some stocks do better than others depending on the overall economic outlook. If you own a stock which appreciates rapidly, take some profits, otherwise you will have none. If you own dividend stocks as long as the company is profitable and pays a dividend you do not have to do anything but hold.

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

If you listened to some of the debates during the election, you would have heard some conspiracy theories. Whether it is good or not, the issue is more conspiracy theories pop up but for the corporate world they have to operate on facts, not conspiracy theories. In Europe, whenever something bad happens the Russian and Ukraine conflict is a first on the list of blame.

In an article by Marek Strzelecki and Miranda Murray of Reuters, Germany said it was receiving less oil but still had adequate supplies after Poland found a leak in the Druzhba pipeline that delivers crude from Russia to Europe. Germany believes the leak was an accident rather than sabotage.

Drone footage showed a black stain of oil from the underground pipeline spreading across farmland at the site. The refinery which supplies 90% of Berlin’s fuels said deliveries were taking place but at reduced capacity.

All potential causes of the leak are being considered a spokesman for the Polish security services.

Linking to dividend paying stocks, it used to be when things happened there was time to detail with the issue, but technology and drones allow for instant communications, the reasons will come to the forefront and companies must make a statement. Every company worries if the statement is material or not and what effect the stock price will be. People have ideas and there are plenty of them, but facts are what you invest on, leave the conspiracy theories to politicians.

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