Everyone on Wall Street has a system, sometimes it works sometimes it does not. However, if it works more than somebody else money moves into that space till it does not work that often. One system that everyone believes works is access to inside information that is material to the company. Depending on what the company does, as an individual you can watch companies in their daily actions if their strategic plans are working or not working, but to move the stock something has to be called material. Most people believe members of Congress who have many closed-door meetings with company CEOs and then can trade stocks on the information have information that could be material.

In an article by Larry MacDonald, 2 new etfs going through the regulatory bodies would track the stock picks of US Congress members and their families. The funds would be called Unusual Whales Subversive Democratic Trading ETF and the Unusual Whales Subversive Republican Trading ETF.

There are subscription websites including capitaltrades.com, housestockwatcher.com.

We also know as campaigns become more expensive every year, the people who are running are wealthier every year which means many have stock portfolios. One Georgia Senator spent about a hour of his day monitoring his portfolio.

Congress members have to report their trading every 45 days, but failure to do so has a token penalty.

In a book, one of the more successful Senators in the 50’s used to give shares to ensure votes. That should not be allowed now, do not know if it is.

There is a bill before the Congress to ban stock trading and ensure members of Congress either use blind trusts or buy mutual funds or ETFs, which would seem much more reasonable that the system which exists.

Linking to dividend paying stocks, every once there is a new system to beat the market and we all want to beat the market and become wealthier. Unfortunately, the best method is to use the power of compound interest over the long term and your will be wealthier. Dividends and capital appreciation work well as a tried-and-true system.

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

In late September, the CEOs of the 6 largest banks in the US went before a Senate committee and because they see and are at the top of the biggest credit giving companies or banking giants, what they say is important. We often believe that CEOs will tend not to details at what happens at the branch level, because they are concerned with the macro picture and allocation of resources. For example, the CEOs were asked lending to areas of the country where redlining occurred in the past, most of them used, we allocated hundreds of millions of dollars for banking products. The Senators asked non macro questions and the answer as expected was we will get back to you. However, it was good to hear what the bankers said.

A Republican Senator asked given owning a stock gives voting rights, and many people have indirect holdings (ie through a mutual fund or elf, institutions vote for the shareholders). Some of the institutions have been asking for companies’ desire to work for climate change. The Republican Senator asked if this was “woke” and if something some should be done against it? Similar to most CEOs they like to have many options on the table and half agreed.

In an article by Victoria Klesty of Reuters, the largest wealth fund in the world, Norway’s $1.2 trillion fund or it owns roughly 1.3% of the world’s stocks particularly large capitalization ones. The fund said it would push companies it invests it to cut their greenhouse emissions to net zero by 2050 in line with the Paris Agreement.

The Norway wealth fund invests money from the oil and gas reserves in the North Sea, under the new plan, the fund will prioritize dialogue with the 174 companies that are the biggest emitters of greenhouse gases and account for 70% of the fund’s emissions via its shareholdings.

According to fund CEO Nicolai Tangen, the fund owns holdings in 9.300 companies and the fund will be doing frequent follow-ups to ensure the companies are doing what they said they will do. The easiest way to deal with the problems is to sell the shares, but the fund wishes to work with the list and would not release the list. (one can expect that from a fund that invests in revenues from oil and gas, some of the companies are in similar industries).

As of mid-September, 10% of the companies in fund’s portfolio had credible plans representing 38% of the value of the fund. (Some of those companies are big tech).

Linking to dividend paying stocks, most investors vote with management when they vote their shares, it is relatively easy to do (the proxy vote is easy to use) and as shareholders as long as the company is making profits which translates to dividends, they are fulfilling their prime objective. It is good to ask questions of management for management does prepare for the meetings and they hope a few will be asked. When stockholders demand companies do something, they do it by the ballot box and when management does not receive over 90% of the votes (sometimes closer to 100%) they need to pay attention.

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

When the stock market goes up everyone wants to have money in the stock market, when the market goes down, what to do? Values have declined are they better to buy now or hold cash? Cash does not go down, but if inflation is running well above interest rates from banks, what should you do?

In an article by Lewis Krauskopf of Reuters, that’s made cash more attractive hideout for investors seeking shelter from market gyrations.

Fund managers increased their cash balances to 6.1% in September, the highest level in more that 2 decades a survey from BofA Global Research showed.

Assets in money market funds are $4.44 trillion not far from their peak of $4.67 trillion in May of 2020 according to Refinitiv Lipper.

Paul Note of Kingsview Investment Management said the portfolios he manages has 10 to 15% cash as opposed to the normal less than 5%.

The Crane 100 Money Fund Index, an average of the 100 largest taxable money market funds has an average yield of 2.8% up from 0.02% at the start of the year and the highest level since June 2019.

Linking to dividend paying stocks, as individual investors often you wonder if you had institutional type money what would you be doing? It turns out the same as individual. As an individual you can have a long-term holding as your total return of capital appreciation and dividends helps makes you wealthy.

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

Most people when they go to the supermarket tend to buy bananas because they are good for you and the price tends to be low. For a number of years, bananas were considered by the supermarkets as a loss leader, or the company kept the price low for people to buy as they saved money on that purchase, perhaps they would not notice they were paying more for other products. There is a science and an art to supermarket pricing for consumers will remember the prices of items they pick up frequently. Supermarkets have teams of people dedicated to where every product goes, in the supermarket world they are called plan-a-grams.

Bananas have a long history since they were brought to America in the 1870’s and evolved to United Fruit which gave the term banana republics to the countries where they are grown. United Fruit paid dividends for decades however it was broken up by the Federal Government and now the big 3 are Dole, Del Monte and Chiquita-Fyffes which control over 80% of the banana sales.

In an article by Matt Lundy, one of the reasons many people buy bananas is they perish within a few weeks of harvest. Most of us eat the type called the Cavendish. The bananas are grown in Latin America, but Ecuador in South America has emerged as the world’s largest exporter according to the Food and Agriculture Organization of the United Nations. The banana is a tropical fruit but grow year around meaning you can buy them anytime you go to the supermarket.

Decades ago, as producers were vying for market share, they started offering longer contracts to their buyers. Now, most of North America supply is sold under rolling one-year contracts, with a fixed price per box. (Bananas come in a box to ensure the bananas are not bruised and can be sold as premium. Even though the Big 3 control 80% of the market, the smaller producers would and do offer lower prices which the supermarkets are very good at ensuring the buyers keep the suppliers fighting one another for sales.

At the moment there is a glut of supply or oversupply, however with bananas having no seasonal variation in consumption, producers have little leverage to push up prices. There are signs of a shift, not much, but signs when Johan Linden, the chief operating officer of Dole told analysts that demand for bananas was increasing. Shoppers are cutting back on other fruits and buying more bananas as they are inexpensive. Can prices rise as costs to producers rise?

Linking to dividend paying stocks, from 1900 to the 1940’s, United Fruit was a stock to be held in a dividend portfolio. Companies that deal in commodities try to keep production costs low and margins healthy and if that happens profits are declared, and dividends paid. Everyone knows some prices of something, often times in the supermarket it is the banana. We look at the price and project it to the rest of the company and that can be a good thing. It is important to do other homework before investing but knowing a price can be a great starting point.

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

Over the past 40 years, Russian has invested billions of dollars to move Russian oil from the north including Siberia to Europe. The pipelines moves the oil and gas and Europe has been a steady and growing consumer. The pipelines include the refinery which makes breaks the oil to something a consumer to use. When Russia invaded Ukraine, the west imposed sanctions and as the sanctions lasted from weeks to months, Russia flexed its muscles to cut back the oil and gas going though the pipelines to the refineries. It might have been maintenance issues, because all pipelines need regular maintenance, but the time frame was becoming too long. What should Europe do?

In an article by Claudia Scholz, the German government decided to take control of 3 Russian refineries located in Germany. It is ironic, in a capitalist country has decided to nationalize a communist country’s assets. The most important refinery is the PCK refinery in Schwedt. The other refineries are the Rosneft Deutschland and the RN Refining and Marketing.

The refineries will be run by the Federal Network Agency and itself of Russian oil and gas, Germany will import oil from Poland, the US, Libya and any other oil and gas producer. Because of the sanctions, Poland did not want to deliver oil to a Russian-owned refinery.

Russian state oil company Rosneft has accused the German government of a forced expropriation of its German subsidiaries. The company spoke of an illegal seizure of assets and announced that it would take legal action to protect its assets. (This is what the US government said about Cuba seizing assets and the issue is still in the courts).

Linking to dividend paying stocks, all companies with assets in foreign countries face the prospect of higher taxes, etc when governments change from pro-business to pro nonbusiness. The language is designed to protect the assets or receive adequate compensation if something happens. The term rule of law has to do receiving a fair value on the assets. For your investments, how much of gross income is received from outside the US and do governments abide by the rule of law?

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

In every credit cycle when interest rates rise and inflation or recession is heard to be coming, the major banks make plans for greater loan losses. If the number is low, the bank makes bigger profits, if the number is high, the bank makes less profit. Given that every economy moves on ease of credit, the banks will determine which companies to slow credit to, similar to most industries the small and medium sized companies tend to see it first. It is why, politicians will say the system needs to change, but it rarely does because someone has to guarantee the credit. Usually, the large organizations are the last to have credit cut but it does happen.

In an article by Eric Onstad, Patima Desai and Peter Hobson of Reuters, the largest bank in the US JPMorgan Chase has reduced lending to China’s Tsingshan, one of the world’s largest nickel producers.

JPMorgan Chase is one of the biggest banks in the metals industry which tends to mean they should have better information than anyone in the business and when they cut back, it sends a signal which is not good. Not surprisingly there were few comments from JPMorgan. JPMorgan has cut credit or serve notice they will cut credit by the end of the year to several customers in Asia and Europe, besides Tsingshan.

In March, Tsinghan Holding Group was at the center of a crisis at the London Metals Exchange when Tsinghan was speculating prices would drop, however nickel prices doubled in a matter of hours. The LME halted trading and did the unusual step of cancelling billions of dollars in deals thus saving the industry. The action threatened to push some banks and brokers into default and JPMorgan took a $120 million loss provision.

Linking to dividend paying stocks, all commodities trade on exchanges and normally the markets are regulated, and everyone can see the information if desired. If you own investments in the commodity business, it is good to know how the commodity is traded and where it is traded. For all commodities there are the users and speculators in the market and the market needs both, however if one group gets ahead of itself, the other suffers for there is usually a balance. For your investments, you need to know where the company makes money and if the price of the commodity is higher, than you need to do little but wait for the profits to translate into dividends. When the price falls below you need to find alternatives till the commodity price moves above.

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

In the past 10 years we have been living in a low interest environment and when interest rates were near zero, the alternative was to be invested in dividend paying stocks with dividends at 3% and above. Along with a rising stock market, the total returns were healthy. Economies move in cycles and the rise in inflation means there is a reasonable alternative to investing in the stock market or bank savings and bonds and interest rates on savings will rise.

In an article from Reuters, Ray Dalio, founder of one of the world’s largest hedge funds called Bridgewater Associates is predicting if the US Federal Reserve raises interest rates aggressively to tame inflation the stock market will fall as people move money into bond type investments. Mr. Dalio has some YouTube videos on how the market moves into cycles and where in the cycle we are at (the videos are worth viewing). Mr. Dalio said if the fed rate goes to 4.5%, this will lead to a decline in the stock market by 20% as money seeks alternatives in bonds.

Linking to dividend paying stocks, each investor at some point will examine if you can make X% with no risk, why invest in the stock market to make the same risk? In every cycle of the economy there are alternatives, some are better than others. The risk return is different for everyone because what risk are you comfortable with on your money? The answer tends leads to a focus on growth stocks or value stocks and combinations in between. We know that over the long-term investing in the stock market index (where the losers are changed to winners every 6 months) means the stock market will outperform other alternatives. We also know, if a company is profitable its shares will go up and down, but the dividend tends to go up over the years, which makes the total return a good number. In the stock market the only perfect information is looking backwards, as investors you need to look forward and from your homework made a decision.

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

Every disagreement has both known and easily seen reasons and some underlying which are simmer below the surface. Often times we heard about the easily seen reasons because they are the easy fruit to harvest. The issues under the surface are harder to negotiate because they tend to be feelings that people have – some based on facts, some based on myths but feelings nevertheless which need to be dealt with.

In an article by Lisa Baertlein of Reuters, the unions and the railways were set to strike in mid-September and that would not be good for the economy. Railways move freight and the government is worried the economy could go into recession and they have elections in November. The government mediated an agreement with the unions which includes a higher pay raise. Often times while a pay raise is front and center, the issues of attendance, sick time and scheduling are the underlying issues which workers deal with daily. With many tech advances, these issues are tracked closely, and people can feel the company is working against them rather than with them.

The agreement with the railways involved 115,000 workers and 12 unions which all have to have votes to agree to the terms of the government and railways. In most combinations there are some unions which have an easier sell than others, just because of what members want or how they perceived how they are treated. There will be some who saw railways continuing to make profits, pay dividends and very little went to the workers.

Linking to dividend paying stocks, the railways when they are operating are similar to utility stocks which tend to be highly regulated and there is competition, but not necessarily between other railroads. The competition is between trucks and ships and the movement of goods, not necessarily between 2 railroads. This important movement of goods allows the railways to earn profits to pay dividends and shareholders are reasonably satisfied.

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

In private life most people need a lawyer for important events such as buying or selling a home, but for the most part the average person does not need to have a law firm on retainer. In business, there are many contracts and lawsuits, hopefully the lawsuits are minimal, but having a law firm on retainer and legal advice is part of the normal operating business procedures. Companies are sued for a variety of reasons and companies always want to have the conclusion as a one off or somebody in the lower level went over the established line the company operates in. Sometimes the fine is less than typical normal operating procedures and the company will continue to operate be fined and continue to operate because the reward is great.

In an article by Foo Yun Chee of Reuters, the most important search engine is Google and being the most important in the world, how the company ranks its ratings is carefully viewed by competition bureaus around the world. Given Google makes 81% of its income from advertising, particularly from companies who want to be highly ranked in the search outcome, in Europe the top European court fined Google and fined the company $5.38 billion because Google broke competition rules.

Over the past decade, Google has been fined $10.84 billion in 3 investigations. Google has the right to appeal the decision, and likely will. The case is T-604/18 Google vs European Commission and the case involves the restrictions Google imposed on manufacturers of Android mobile phones for Google owns Android operating system.

Linking to dividend paying stocks, given all large companies have lawyers and use outside law firms to handle various cases, you might want to know what lawsuits are pending and has the company put enough money in reserve to pay for them or what the expectation will be. Lawsuits are normal operating aspects for companies, not so much for individuals, but for companies as long as the expected costs are either in reserve or could easily be paid by profits, you have less to be concerned about.

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