In a book called American Rascal – How Jay Gould built Wall Street’s Biggest Fortune written by Greg Steinmetz published by Simon & Schuster, NY, 2022 the author highlights how Mr. Gould was became one of the wealthiest operators on Wall Street. It is important to remember; there were very few rules or regulations because they believed regulations would stifle progress Much of what happened now would be declared illegal. However, in those times, it was expected to be done to achieve results.

If you look into recent history, there was 2 brothers who had oil wealth and decided to the silver market was undervalued. They pushed up the price, but did not sell enough when the price fell and lost $1.7 billion. In 1869, Mr. Gould decided gold was undervalued, under the idea every harvest time, the price of gold surged, if they could persuade the government to let the gold price rise in line with seasonal demand, there was money to be made.

There were risks at the time, during the Civil War, the government ran out of gold to pay soldiers and switched to paper money known as greenbacks. It promised to buy them back after the war at a price of 6 ounces of gold for 100 greenback. The price of gold fluctuated during the War, before Gettysburg the price went to 287, after the battle the price fell to 131, given the government said the price should be 100. After the War, the price went up to 150. Farmers wanted the price to be high to pay off their loans The banks wanted the price to be 100.

The Treasury Board President believed in gold not greenbacks. President Grant backed the Treasury Board President. But what if the President changed his mind or it look like he changed his mind?

Gould was attempting a mini-corner. Buy enough gold to make gold scarce to drive up the price, but not enough to allow government to intervene by releasing gold in the marketplace. Would the President commit to a new policy? did Gould have people on the inside giving incentives?

The plan worked for a while, gold went up, Mr. Gould was able to sell half his position, but he needed another day. The gold price traded on Black Friday and the government said they were going to sell $4 million of their holdings, the price went down and on that day, $500 million traded hands or all the gold in the country had turned over several times.

Mr. Gould was able to escape without too much damage, but his partner James Fisk went bankrupt. Another consequence was British investors in railway stocks, wanted change in Erie Railroad and Mr. Gould appointed a new Board and he sold his shares.

Mr. Gould went to a new railway – Union Pacific. While it was true, Mr. Gould looted the treasury of Erie Railroad, he also made improvements to the railway and ran it by winning new business, improving service and making it better. One of the competitors of the Union Pacific was the Kansas Pacific, Mr. Gould went to the Netherlands to buy bonds from the Dutch holders of a subsidiary – Denver Pacific. He bought them for 74 cents on the dollar; this pushed up the price of Kansas Pacific shares and ending merging the Kansas Pacific with the Union Pacific.

In 1881, Gould through a variety of purchases to enable control, he was the master of 16,000 miles or one of every 6 miles, giving him 15% of the largest, most important industry in the country. The choice of buying the railways was to pressure the more dominant railway in the area into a better deal for his railway or consolidation of the industry.

One of the many methods, Mr. Gould used to consolidate was to purchase a competitor knowing every railway has a profit center where they make most of their revenues and profits. If he cut rates to decrease the competitor’s revenues and profits, the company was more willing to negotiate. If a company does it enough times, then their reputation proceeds the conversation of working together.

Linking to dividend paying stocks, often the best stocks to buy are the ones that industries have been consolidated. Many took risks, some came out ahead, some did not, but after the industry has been consolidated, profits can be made. If the industry can make profits, then it can pay dividends and as investor you can enjoy reading about how it was consolidated to learn about the new industries that will invariably go through the process.

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

If you were an investor during the period of time known for the Robber Barrons or the turn of the century, you likely held railroad stocks or bonds. If you transport yourself to that time period, most of the people lived on east coast and had arrived by ship, transported their goods by ship and thought about the sea. After gold was discovered in California, there was a migration or a gold rush of people to go which meant they needed transportation services. The choices to go were by sea or by land, via wagon trains. A few decades later, railroads were being built all over the US to bring out the riches of the earth both in the rocks and from the continuing riches of the farmlands we know today. In every new industry there are many competitors but eventually companies need to make money or consolidation happen. In the world of logistics, if you have the right of way into the large urban centers, the railroad will make money, if not something needs to happen.

In a book called American Rascal – How Jay Gould built Wall Street’s Biggest Fortune written by Greg Steinmetz published by Simon & Schuster, NY, 2022 the author highlights how Mr. Gould was became one of the wealthiest operators on Wall Street. It is important to remember; there were very few rules or regulations because they believed regulations would stifle progress Much of what happened now would be declared illegal. However, in those times, it was expected to be done to achieve results.

Mr. Gould was born in upstate Pennsylvania and at that time – leather factories needed to soak cowhides in the tannic acid found in hemlock trees. If there was a forest of hemlock trees, it was gold to the owners. Trees are cut and sent to the tanneries. Mr. Gould partnered with a tannery owner to find a forest of hemlocks, set up a tannery and he was in his early 20’s, eventually came up with 50% of the tannery and sold it.

Railroads, similar in today’s world to operate need outside capital. They need to pay for land, rails and rolling stock. If someone had access to deep-pocketed investors at home and abroad, money was to be made. Mr. moved to Wall Street and set himself up as a stockbroker and private investor. In today’s environment, Mr. Gould was a value investor, or he dug deep to discover whatever was knowable, separating the nonsensical from the plausible. He was methodical, more voracious in search of insights and more patient with minutiae.

Mr. Gould met some wealthy investors as a stockbroker, one investor in particular he married one of his daughters, which helped his business. He was offered the ability to buy some bonds in a railway, converted the bonds to equity, became President of the railway and eventually sold it to another railway to make a profit of $100,000 or $2.5 million. Not a bad investment for 18 months.

A famous event happened on Wall Street called the Harlem Corner. Gould was not involved but watched and learned the master of Cornelius Vanderbilt work with corners and short squeezes. Mr. Gould became acquainted with Daniel Drew who was a market manipulator. He specialized in bear raids, but spreading lies and the company’s position.

Before railroads, there was the building of canals, the most famous is the Erie Canal connecting Albany to Buffalo, once completed goods moved from NY to Albany to Buffalo, connecting to the Great Lakes and Chicago. When railroad age began, the Erie Railroad connected Albany to Buffalo and time to ship goods fell from 3 weeks to 8 days. For all the wonderful location, the railroad was not the best constructed – it used a different track gage so cars could not be transferred to other lines; it did not go into New York stopping 28 miles north in New Jersey. Despite the advantages it had, the railway did not make money and went into bankruptcy.

Daniel Drew joined the Board and became treasurer. Being an insider was a dream come true for Drew. As an outsider he had to make things up, as an insider, he did not have to make anything up. He just had to buy and sell before corporate news. Erie’s price could be and was a yo-yo is his hands. These days it is illegal, back then all major investors did it.

Vanderbilt owned the New York Central, he proposed his company work with the Erie and Pennsylvania as a quasi-monopoly to ensure all 3 companies had higher profits. Drew was independent and liked manipulation, Vanderbilt did not like for his companies and thus the Erie War was on. Mr. Gould joined the Board of Erie.

There was 2 ways to run a railroad in the 1860s, run trains on time, keep rolling stock in good condition, charge a fair price, pay steady dividends to shareholders as Vanderbilt did. The other way was Drew’s way – manipulate stock prices and make profits. Mr. Gould joined Mr. Drew.

Linking to dividend paying stocks, when you buy a dividend producing stock, you are expecting the first way to run a railroad will happen because what happened in the 1800’s is illegal in our environment. While investors still short stocks, they will try to flood the news with the misinformation, there are enough sources to verify if the information is good or bad. The new actor on the scene is information bots may do the job which can do the job more effectively for a short period of time. Often it is better to buy and hold and not use margins, that way you can have patience to make a decision.

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

Hopefully you have heard or know about Oracle, it has been a software company since the founding in 1977 and by the 1990’s. Oracle success allowed its founder Larry Ellison to have large homes, many have been featured and he owns the island of Lani in Hawaii. Mr. Ellison’s wealth has been in the top 20 richest people in the world and for a little while last month the richest person in the world as Oracle embraced AI.

In an article by David Steitfeld and Theodore Schleifer of the New York Times News Service, the 81 year old Larry Ellison is using some of his wealth to own media companies. Mr. Ellison fronted the money for his son David’s company Skydance to buy Paramount and CBS for $8 billion. Skydance is expected to buy Warner Bros Discovery and President Trump has said Mr. Ellison will be a shareholder of TikTok along with Michael Dell of Dell Computers and Lachlan Murdoch of Fox Communications. Most of us at 81 expect to clip coupons, Mr. Ellison buys companies.

Powerful families have owned influential chunks of American media in the past century, but their reach was often limited by geography or other factors. The Chandler family, owner of Los Angeles Times held sway in Southern California for decades but little power across the US. If you ever seen the movie Citizen Kane staring Orson Wells and asking the question Rosebud? that movie was about William Randolph Hearst and the Hearst chain of newspapers and magazines which is still in operations and going strong.

The difference according to Michael Socolow, a media historian at the University of Maine, in our digital age, the deals are consolidating power. The deals are across multiple platforms, and it is possible to establish an editorial line across TikTok- CBS News and CNN – that is a new world.

It is also different because until SkyDance, Mr. Ellison did not own or control any media properties.

Linking to dividend paying stocks, on one hand it is good Mr. Ellison has developed a new interest in media properties as it shows on average we all living longer and as we live longer, we can have new interests. Mr. Ellison was worth $367 billion which means the proportion of assets he is using for the media buyouts is not high, that is a good thing, and he may do a terrific job with them. It used to be at 65, we retire and clip coupons, perhaps taking new challenges will be the theme of years to come.

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

Every country in the world has industries that are both symbols of the economy and carry more weight than other industries. If you think about the US, in the 1900’s you may think of US Steel and steel making, in the 1950’s it was GM and automobiles and present day it is Silicon Valley and AI. While the focus is on these industries all others exist, but one group of companies seemingly carry more than their share.

In an article by Eshe Nelson of the New York Times News Service, for the past few years in the country of Denmark, the pharmaceutical industry in particular Novo Nordisk has been the symbol for the country. Novo Nordisk was founded in 1923 and has many years of success, but in the last 5 years its blockbuster diabetes and weight-loss drug – Ozempic changed everything.

Novo Nordisk accounted for 11% of the Denmark’s growth, according to nation’s statistic office. ?Hiring by Novo represented 1/5 of employment in 2023, while it was the largest single contributor to corporate tax revenue.

This year, Novo Nordisk warned that its sales growth would slow, this has resulted in Danish Economy Ministry slashed the country’s growth rate by half to 1.4%.

Novo had doubled its workforce by 34,000 and is reducing its workplace by 5,000. In addition, last year the stock market capitalization put Novo as the biggest company in Europe, its shares have fallen.

Linking to dividend paying stocks, all stocks go up and down or fluctuate, in your portfolio if you are fortunate to own shares which rise, remember at some point it is important to take profits, either the money you put in and a little bit, then as the price goes up and down it matters less. With the profits you can diversify into other companies or use for lifestyle. In that fashion, you worry less about the price because you have made profits and have the ability to have patience and can do your homework in a more leisurely manner.

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

Every company makes investments that it expects to generate returns in the future and sometimes politics sometimes gets involved. In the steps to the decision to making decision – there is numerous departments from the local level to the state level to the federal level involved in helping to influence the decision. Often the departments float tax cuts, incentives for training, infrastructure improvements and list can go on. The company then makes a decision and hopefully the location is in business for years to come and makes positive contributions to the community.

In an article by Jeff Amy of the Associated Press, Hyundai Motor Group of South Korea made a decision to invest $5 billion in an auto plant in Savannah, Georgia to produce up to 500,000 vehicles a year. The models will be a combination of electric and hybrid gas electric. Hyundais said it plans to make more than 80% of the vehicles it sells in the US domestically by 2030. The increase is a 20% for 60% to 80%.

Then politics came into the play, the Trump administration has increased the number of raids it makes on companies looking for people who do not have the proper documents. Acting on a tip, ICE arrested 300 South Koreans who were working in the plant and sent them back to Korea.

Would the raid stop the investment made into the US by Hyundai? the governments of South Korea and the US had serious talks. Time continues and state and local governments have promise up to $2.1 billion in tax breaks and other incentives. Georgia Governor Brian Kemp had conversations with the White House about the visa issue. Do not expect more raids.

Linking to dividend paying stocks, often times these companies have enormous reach for both the local and national communities. Within the reach is access to highest levels of government to ensure the process works for the benefit of the company and its shareholders.

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

One of the social-media platforms that has been very successful is TikTok – it shares videos, people can make money from their viewership and because it is successful it draws a large number of advertising dollars. TikTok was invented in China and is owned by a company called ByteDance and the issue of what happens to its data has always been a concern. US authorities have claimed ByteDance is very close to the ruling Communist party and thus the government makes the app and its information collection a national security threat.

In an article by Alan Rappeport and Jose Bautista of the New York Times News Service TikTok has emerged as one of the biggest points of contention between the world’s largest economies. For the US, Treasury Secretary Scott Besssent and Jamieson Greer, the US trade representative have been the point people on the negotiations, the Chinese delegation is led by He Lifeng, Vice Premier for economic policy.

The solution that has evolved is for TikTok US and its servers continue to operate but owned by a US company. A number of firms have been rumored to be interested.

Linking to dividend paying stocks, TikTok is popular among young people and the issue will be its staying power for the next generation. If you are older, it is important to stay in contact with younger people to see what they use. Many times they will use something you do not simply because the older people do not use it. That suggests every generation will have their platform and it continually moves around the internet. If you invest in a company that becomes less popular with a generation it is still possible to make profits, but you can treat it as a utility not a growth company.

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

In every industry there always a new kid on the block or in the market. Sometimes it is a wonder kid with new ideas, but more often it is someone who wants to be in the industry and is backed by seemingly unlimited resources. It is the second scenario which is happening in Hollywood.

In an article by Zaheer Kachwala and Dawn Chmielewski of Reuters, Parmount SkyDance is preparing a majority cash bid for Warner Bros Discovery it back by Ellison family.

The bid will be for the entire company, including its cable networks and movie studio. Skydance recently bought Paramount Global for $8.4 billion. Skydance CEO is David Ellison who wants to be in the movie business. His dad is Larry Ellison who owns 41% of Oracle Corp. The company plays a significant role in AI and as the stock has risen, Mr. Ellison has been the richest person in the world.

Warner Bros is a media giant and some of its assets are HBO Max, the Harry Potter franchise, and CNN.

The media sector has intensifying competition, as tradition players race to gain scale and strengthen their streaming services as TV viewership declines.

Linking to dividend paying stocks, in the media world there is always money to be made with a hit show or movie, and a million ways to capitalize on that success. However, as dividend buyers you are paying for consistency to deliver profits. Sometimes company scale up, sometimes they divest assets, it is always an interest story to hear every quarter.

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

Sometimes the solution seems simple, and the idea will generate interest and it will take over the public’s interest and all seems good. In this following example, the simple idea is the Americans in particular are overweight which means a great deal of health-related costs. If there was a drug to help combat the weight, the pounds would disappear and the people would be healthier. That is a good thing. For investors the issue is who is doing it? and is the government helping?

In an article by Louise Rasmussen, Jacob Gronholt-Pedersen and Maggie Fick of Reuters, one company had a drug that showed many signs it also helped with weight loss. Novo Nordisk, the maker of Wegovy was originally developed for diabetes. In studies, people who were on it also showed weight loss, Novo’s people went back and out came Wegovy. It was one of the first big name drugs to come out, (in the world of drug making, being first is a very good thing because of patents). People started to use it, sales began to soar and so did the stock price. For a time, Novo Nordisk was the stock with the largest market capitalization in Europe.

When there are profits to be made, all companies salivate towards where the profits are coming from and soon Eli Lilly had a drug and it became the leader in the obesity and diabetes markets. Thus has resulted in Novo doing restructuring or 9,000 people were laid off. The number represents 15% of Novo’s worldwide workforce.

Lukas Leu, a portfolio manager at ATG Healthcare, said the obesity market was misjudged. It is much more consumer-driven than anticipated and Novo expanded organizational complexity too quickly.

At the present time the drug Wegovy is done through syringes but there is a pill coming. Eli Lilly’s Zepbound overtook Wegovy in weekly prescriptions in the US earlier this year. The company is expecting profits to come at the 4 to 10% rather than 19 to 27%.

Linking to dividend paying companies, execution is what you are paying for when buying a dividend paying stock which continues to make profits. The ideas are great, but how companies make money from the end user is what profitable business is all about.

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

For millions of consumers, part of the daily routine is to have a cup of coffee or more to start the day and sometimes throughout it. There are multiple coffee shops to choose from, you can buy the beans or instant, coffee products are there to help you. In the depression, there was an expression, brother or buddy can you spare a dime or enough to buy a cup of coffee. Coffee was and is still part and parcel of living in America. Have you ever wonder about why coffee and the business behind it? In a book called Coffeeland by Augustine Sedgewick published by Penguin Press, NY, 2020, the author looks at the history both good and bad of coffee.

After the California gold rush, the Central Valley of California was planted with wheat and soon San Francisco companies were being exchanging wheat for coffee, spices and chocolate and companies such as Ottis McAllister, Hills Brothers and Folger’s were developing into larger entities.

In El Salvador, Mr. Hill had settled into a plantation near the town of Santa Ana and the Santa Ana Volcano. He did not know much about the coffee growing business but there were many books about coffee planting available. In the coffee business just as any agriculture product, access to credit is essential to longevity. The price of coffee beans rose, Mr. Hill borrowed and expanded operations to include a mill, which became the place to wash the fruit from the seed.

Regulations and standards are important in every industry, the coffee industry through the New York Coffee Exchange helped established standard grades of coffee. At first, the standards were on the consistency of the bean and lack of other stuff in the bags. It evolved to what does it taste like? At the time, Brazil was the biggest supplier, they had a very consistent bean but not the greatest of taste. Coffee grown in Columbia and El Salvador had better tastes. Technology in terms of vacuum-packing coffee in tin cans allowed none Brazilian growers to compete in the marketplace. The growth of the advertising business and emphasizing a better taste.

During the war years of WW I, San Francisco merchants, operating in a commercial vacuum, collected their intimate knowledge of every plantation and mill in Central America. By the end of the war, San Francisco merchants had taken control of the Central American coffee trade. They were buying 5 times more coffee than a decade earlier or 12% of US imports and rising.

Another change was where a typical American shopped. For a long-time the grocer and dry goods store was the place to shop, the grocer helped customers from behind a counter, listening, advising, selecting, portioning, weighing, wrapping, tallying, packing and making change.

Neighborhood grocers served people who could walk to the store, or they depended on a steady profit from the items they sold most frequently, especially coffee. Most grocers padded their margins by pushing bulk coffee, which was cheaper than packaged coffee and could be blended and diluted to meet almost any preference and price level.

The war changed things, a new store that was centrally managed, vertically integrated chains of hundreds or thousands of stores, the store that led the change was A&P. The company started as a tea shop, where it could be the tea importer, roaster, wholesaler and retailer and beat other grocer’s by a third. A&P developed a new store, called Economy Stores that grew to 16,000 by 1930.

In 1908, A&P opened its own coffee-roasting plant in Jesey City, it began to import coffee from Brazil and by 1921, A&P was selling more than 40 million pounds of coffee at retail, it had become the largest coffee business – the largest importer, roaster and retailer in the world. The brands were Eight O’Clock, the top selling coffee in the world; Red Circle and Bokar. By 1930, A&P was selling over 100 million pounds of coffee.

If all coffee tasted the same, A&P would have been unbeatable. A&P used Brazilian coffee which was inexpensive and low quality.

Central America typically produced high quality, mild coffee or sweetness in a cup. San Francisco based Hills Bros in 1912 offered 23 varieties that customers had around a thousand choices a coffee for every price and quantity. By 1926, it had consolidated and cut to high-grade vacuum packed Red Can. Hills Bros and Folgers would embark on advertising programs to sell the high quality.

In many ways, coffee was the ideal supermarket product. First, quality advertised brands were usually packaged in brightly colored tin cans that were light by volume and perfect for piling into the eye-filling displays supermarket retailers favored. Second, as a daily drink, coffee was on the list of weekly shopping lists which makes it an attractive bargain item to tout in newspaper ads and circulars. Coffee was the most important branded staple of the American diet that was also produced outside the US. As a result of the depression around the world, coffee was cheap in the US.

For Mr. Hill, his plantation grew from 1,600 acres to 3,000 with over 300,000 trees planted and still operates you can check out the website http://www.jhillcoffee.com

WW II, coffee accounted for 10% of all imports between 1941 and 1945. Hills Bros won a government contract to deliver 18 million pounds of coffee vacuum-packed in 20-pound cans painted army drab.

In 2011, we have a third wave of Americans drinking coffee. The first was made up of big supermarkets such brands as Hills Bros, Folgers and Maxwell House. The second is coffee shops such as Berkeley-based Peets and Seattle’s Starbucks, which grew up in the high-quality mild coffee. And the third was a farmer-obsessed coffee movement made up of boutique roasters and stylish shops.

Linking to dividend paying stocks, from the book, although the author runs into many tangents, all industries go through change and processes and there are many risks and challenges along the way. Not all will survive, but they add their mark as time goes by. It is hard to determine who will be a winner and who will be in business and that is where your homework continues.

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