For most of us, thankfully we are not involved directly in armed conflict, but what happens when there is one in a country. From the outside looking in, we know there will mass migration to safe areas of the world, ideally all those leaving have some form of money to ensure travel costs. After the mass migrations which will make headlines, the businesses that are left how do they function? Louai Al Roumani, Former CFO of BBSF Bank in Syria has written a book about how to function, which can be used for contingency planning if fortunately you are not involved in armed conflict. The book is titled Lessons from a Warzone, Penguin Business, London, UK, 2020.

Chapter 2 Transform your concept of time

Syria is one of the oldest countries in the world, in the bible Cain and Abel happened in Syria. In the corporate world, management is inclined to view time as being chunks of fiscal years. The short term is about a year; the long term is 5 years. In a crisis the most important aspect is to identify the strategic core elements that you believe will make your business sustainable, regardless of the different situations, because the war will end someday.

Knowing the Critical Success Factors (CSFs) of your industry and how their criticality shifts in a crisis- is of utmost importance.

What are the CSFs in this industry, assuming there was no war today?

If the war ends tomorrow, or in 5 years, would these CSFs still be critical?

At the bank, one CSF was having a high-liquidity ratio and low cost of funds or having enough cash reserves from deposits at a relatively low price.

War is destructive, but it does not necessarily destroy an industry’s general dynamics. It is likely to lead to a shift in the criticality of some factors and the difficulty in fulfilling them.

Having high liquidity or high cash reserves was identified as an integral CSF. You can only lend when you have enough funds, that was not going to change today, tomorrow or in the future. What changed was before the war, all banks fulfilled this CSF easily. A bank could not differentiate itself having this advantage. When the war started and people withdrew their funds, the success factor shifted to become much more comparatively critical than before.

Another CSF was trust. Banking is built on trust. BBSF decided that in whatever we did and no matter what the context was, gaining and maintaining the trust of the public was a CSF.

It is not always about the money or play the long game like a 3rd-generation family business does.

Questions:

Do you think this crisis will eventually be over?

Are you asking questions about the timeline of the crisis? Does anyone know the answer? Do you have control of the answer?

What are the Critical Success Factors of your industry? How has their criticality changed? How valid are they now? Will they be valid next year? 5 years? should your actions fulfill them?

Do you let your actions today shape your long-term aspirations or the other way round? which do your think is better?

If your goal is to maximize shareholder wealth in the long run, are there areas where you could be better off sacrificing short-term profitability, if that builds long-term value?

Linking to dividend paying stocks, for your investments do have an understanding of the what the Critical Success Factors of your investment are? If you do then you can evaluate the company based on the CSFs and you will have a reasonable idea of whether to hold or look for alternatives.

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

For most of us, thankfully we are not involved directly in armed conflict, but what happens when there is one in a country. From the outside looking in, we know there will mass migration to safe areas of the world, ideally all those leaving have some form of money to ensure travel costs. After the mass migrations which will make headlines, the businesses that are left how do they function? Louai Al Roumani, Former CFO of BBSF Bank in Syria has written a book about how to function, which can be used for contingency planning if fortunately you are not involved in armed conflict. The book is titled Lessons from a Warzone, Penguin Business, London, UK, 2020.

In a war, almost everything is thrown into question. It is tremendously difficult to make any assumptions, because anything can change at any moment. The unthinkable becomes thinkable. Mr. Roumani’s position was the CFO in charge of leading the strategic planning of the bank in addition to the oversight of the finance function. The BBSF had 700 employees and 39 branches and continues to operate in Syria. Mr. Roumani was with the bank from 2011 to 2015.

Businesses are dynamic, and every business is bound to go through turbulence or tough times at some point. The lessons we learn in life usually happen at critical times. The more critical the context, the more valuable the experience may become. War increases your exposure to many different scenarios and accelerates the learning process, adding clarity concerning what really matters and what does not.

The book is divided into 10 chapters or 10 lessons.

Chapter 1 Don’t do things right; do the right thing

Many turning points, but no turning back. In the conflict of Syria, from the outside we often think in terms of for the government or against the government. In the country it can be neither, just trying to keep the operation functioning. It benefits customers.

One profound moment was in 2012, the conflict was going on but it was not going on where Mr. Roumani lived and worked, it was another part of the country. In 2012, it came closer to home.

Know thyself – 2 simple words by Socrates that have survived timelessly through the years. Self-awareness is key. Knowing yourself, to determine whether or not it is strategically worth navigating a crisis is fundamental.

All privately owned banks in Syria were founded by large regional banking groups. At the outset of war, BBSF was the largest privately operated bank in Syria.

The first decision made by owners is it worth saying in business. Some banks had a small presence in Syria and for them managing Syria was a big headache and not worth it. The owners did not have the risk willingness to operate. BBSF was a merger between a bank in Lebanon and a bank in Saudi Arabia with significant French ownership. The ownership helped BBSF develop a distinct identity that felt like it had sovereignty as a core advantage to be built upon. We had something belonging to us at the Syrian bank that we had to fight for. What is the culture of the organization?

Looking back from the comfort of my London, England home, make no mistake no one enjoys working in a crisis. But a crisis is sometimes part of the cycle of the business. Operating in a crisis can become a very enriching and rewarding experience. It allows you to choose to do the right thing, as opposed to doing things right.

The book has a few examples of doing the right thing.

Doing the right thing entails playing the long game, which requires your long-term goals to preside over your immediate short term goals.

Strategically, is the crisis worth navigating? Do you have the option of exiting, if it is not worth navigating?

Are you inclined to self-impose limits from the start on what to do and what not to do? Do you think these might limit your future self?

What opportunities can you seek out to exhibit noble behavior? What does it cost to be noble?

What is the downside to intentionally shocking some of the systems in place that have become more vulnerable in the crisis? what is the upside? can the upside be achieved instead in controlled environments?

Linking to dividend paying stocks, in an ideal world, you should be able to by these types of stocks and rarely look at them in terms of market price for quarters. All you have to do is to ensure the company is profitable and can pay a dividend. In reality, there are short term events that will focus your attention, but the short-term attention can mean when you receive your dividends you purchase stocks that allow you to weather storms, because you are buying at good prices and holding for the long term.

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

On April 2, President Trump titled the day Liberation Day and sought to change global trade patterns for the past 80 years. President Trump has the ability to install tariffs and in the short term prices will go higher. In the longer run, maybe manufacturing will come back, but not all of it.

One of the reasons not all of it in terms of auto and truck manufacturing is the internal combustion engine has many parts and some of them are sourced out to parts companies who can produce millions of parts at a quality needed and more importantly a price that is as low as possible. On the other side of the coin is electric vehicles and they have less parts. Perhaps President Trump will be a boon to EVs because they will have the fewest tariffs.

In an article by Matthew McClearn of the Globe and Mail, he used the National Highway Traffic Safety Administration (NHTSA) data from 360 vehicles on sale from the 2025 model year. Every single vehicle contains some proportion of its components originating from outside North America, varying from 1/5 to the entire vehicle.

The NHTSA publishes the data because in 1992, the American Automobile Labeling Act was passed and requires car makers to affix a label to every vehicle they sell in the US. They must calculate these percentages prior to the start of each model year and the NHTSA publishes them annually.

The highest vehicle content is the Kia EV6 with 80% content made in the US and 15% made in South Korea. The biggest selling truck is the Ford F150 and has a 45% US content.

It is important to note the world market for vehicles is 95 million, with the US market is about 16 million.

In 2018, a report said North American vehicle production internationally competitive. The reason is the low and high wage jobs are distributed to optimal regional location based on cost, capability and proximity to critical assets. President Trump’s tariffs will strength the domestic industry at a cost of international sales.

Linking to dividend paying stocks, all industries evolve for various reasons. Before the interstates highways were built, most people travelled by train. Then there was move to cars and planes, everything evolves for multiple reasons. Changing the systems means someone has to invest in bringing the change about, will tariffs be enough of a carrot to change the system?

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

The biggest company in the world in terms of assets under administration (AUM) is BlackRock with over $11.6 trillion. This means the investment world pays attention to the annual letter by Chairman Larry Fink.

One of the reasons BlackRock is so big is their tradition investment in technology. In the 1980’s the banks generally had better technology than the buy side, and this exacerbated an information asymmetry. BlackRock’s founders wanted to better understand portfolio risks and protect against downsides but could not find any products that suited their needs. This led BlackRock to invest in and develop Aladdin, its robust investment platform and risk-management system. By the 1990’s, institutional clients were expressing an interest in using Aladdin to oversee their full portfolio, not just the assets that BlackRock managed on their behalf. By 2020, Aladdin has grown to cover every asset class and is used by BlackRock and more than 200 insurance companies, pension funds, and asset managers in nearly 50 countries. BlackRock continues to improve the platform at scale and realize the benefit as an overall ecosystem. (think Microsoft on your laptop).

In an article written by Iain Withers and Ross Kerber of Reuters, Larry Fink wrote in his letter that protectionism has returned with force.

Mr. Fink wrote about the wealth divide that too many people are currently missing out on prosperity in twin-speed economies, where the wealthy build more wealth and others face deeper hardship.

Mr. Fink’s part solution is to democratize markets by helping a greater number of consumers access to potentially higher returns in private markets such as infrastructure and private credit.

BlackRock is a world leader in passive index-tracking funds. He believes that individuals should move from 60% stocks and 40% bonds to 50% stocks, 30% bonds and 20% in private assets.

One method to do this was first BlackRock bought infrastructure specialist Global Infrastructure Partners, private credit provider HPS and private data firm Prequin. The companies will provide the deals and BlackRock will figure out how individuals can invest in them. The big problem is most publicly traded assets are priced daily on the market while private stocks are not listed, trade less frequently and pricing can vary.

Linking to dividend paying stocks, in the last couple of decades we have seen the growth of private equity and as the growth came it has allowed more companies a choice in raising capital. Do they issue bonds, stocks or using private equity and all have advantages and disadvantages. One thing investors do like about BlackRock is the leader in index funds and the Aladdin software system that gives institutional investors an edge. As long as the two assets are world leaders, expect BlackRock to continue to build on AUM.

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

For an investor, one method of doing research is court documents, because companies get sued on a regular basis. Every large company has a law department and they are also have retainers to the larger law firms that are known nationally. One of the good things for investors, unlike Public Relations outside the court which is design to ensure the company is a favorable light, inside the court truth must be told. However, when it comes to paying for actions, who is responsible needs a court to decide and how much?

In an article by Josh Funk of the Associated Press, in 2023 a train derailed near the town of East Palestine, Ohio and toxic chemicals were released into the environment. Who should pay and how much?

The train carrying the load was Norfolk Southern and it is looking for 2 other companies to share the cost of a $600 million payment. The other two companies are: GATX Corp who owns the railcar and OxyVinyls which made the chemicals in the railway car.

The train derailed and Norfolk is responsible for the derailment because its job is to maintain the railway line and run the train properly. However, similar to most railways, the railway does not own most of the cars it hauls, and that means everyone involved in shipping hazardous chemicals bears some responsibility for ensuring their safety under federal regulations.

GATX which owns railway cars and rents or leases to companies says it compiled with all the relevant regulations for taking care of its railway cars. If there was a problem, NS should have spotted the problem, repaired it and sent GATX the bill for the repairs.

OxyVinyls which made the chemical inside the car, noted NS runs the railway, they are responsible for the safety. The train company operated and inspected the train and was responsible for delivering the cargo safely. NS says they relied on information from OxyVinyls on what to do with the chemicals when the derailment happened. What happens in a fire? how do they handle the chemicals.

Linking to dividend paying stocks, given there are only a few railway companies and they are not building more tracks for new players, railways are often seen as a good long term investment. Most of the railways although there is some overlap tend to have a near monopoly over a portion of the country. Most of the time, railways are doing a good job of moving freight back and forth across the country at very competitive prices. Lawsuits allow you to understand how the railways have evolved and actually operate.

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

In basic economics taught at the high school level the charts of supply and demand are taught. It is done for a couple of reasons – if guns and butter are the example, if you produce more guns, you will likely produce less butter and vice versa. The basics are always what you have to go back to as you evaluate companies.

In an article by May Angel, Marcelo Teixeira and Jessica Dinapoli of Reuters, the supply and demand will affect coffee prices.

In the past year, the cost of arabica coffee beans has near doubled owing to 4 successive seasons of deficit as adverse weather makes it harder to grow enough of the delicate bean to meet consumer demand.

Coffee roasters are pushing for increased prices, however grocery stores and supermarkets are pushing back to postponing signing new supply deals to the point some grocery stores have run out of stock. In Holland, the Dutch supermarket chain Albert Heijn ran out of product. When the shelves were restocked, the prices were higher.

One of the world’s largest coffee roasters is JDE Peet purchase prices have increased significantly.

In Brazil, which is a global supplier of coffee beans, one of the worst droughts on record happened and supply decreased.

According to Reg Watson, director of equity research at Dutch Bank ING, prices are expected to rise between 15 to 25%.

A large Brazilian roaster called 3 Coracoes raised roast and ground prices by 14.3% on March 1, having previously raised prices 10% in December and 11% in January. In Brazil, prices in the stores have increased 40%.

Data prepared for Reuters by market research firm Nielsen show the volume of roast and ground coffee sold in North America and Europe the world’s biggest consuming regions fell 3.% as prices rose 4.6%. As prices rise, the consumer either buys less or pays more.

JM Smucker owns Folgers which sells to Walmart and Target, expects a decline in volume starting in May as it will raise prices again, its CFO Tucker Marshall said at a conference call.

Consumers are more willing to trade down from brands to private label or in-house brands produced for the supermarket to cut on costs and provide cheaper alternatives.

Linking to dividend paying stocks, in commodity-based companies, the supply and demand is a critical feature to be examined. At what cost will consumers move from name brands to private label brands. People have a reasonable idea giving the normal demand, but how much for a cost factor determines what people will do? It is both an art and science.

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

Tariffs have been used by every country in the world in order to ensure economic activity is done in the country. The difference with President Trump is he loves using them or threatening for across the board issues. He also expects tariffs will reverse 40 years of supply system management in one month. There are valid reasons why the supply system has built the way it has and tariffs will likely not change the system. It can affect at the margins, both margins for companies and at the edges, however decisions are rarely simple, they are complex. We will see how permanent, the tariffs are.

In an article by Timothy Gardner and Marianna Parraga of Reuters, the President has many tools in his tool kit and President Trump signed an Executive Order based on the 1977 International Emergency Economic Powers Act authorizing his administration to impose 25% tariffs on imports from any country that buys Venezuelan crude oil and liquid fuels.

There are a number of issues with Executive Orders, the government has to prove in court that there is an emergency, although going through court takes time. The other issue there are refineries in Houston area that are designed to refine heavy tar sand oil. Most of the oil comes from Canada, but with the tariffs of Canada, the next logical step in heavy tar sand oil from Venezuela.

Fernando Ferreira, director of consultant Rapidan Energy’s geopolitical risk service, said assuming it withstands litigation, I can see this becoming an attractive option for the Trump administration to exert pressure on US adversaries in addition to traditional sanctions.

China is the biggest buyer of Venezuelan crude with 55% of its exports or 500,000 barrels a day. The crude tends to go through Malaysia or becomes Malaysia crude.

Both Venezuela and China slammed the US government for flagrantly violates international trade rules. Although the World Court moves at a slower pace than courts in the US, countries have the option of going there. The other aspect is if the US imposes tariffs, the country has the ability to impose tariffs on American goods. Besides higher prices who wins?

Linking to dividend paying stocks, capital allocation is based on reasonable stability but to do the investment and for the investment to pay off. This is when the priorities of the government and the priorities of the company do not align up and companies will announce future investments but do little because there is no stability the rules will stay in place for any length of time.

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

When a new President is elected, they normally follow the rule do no harm or allow things to run the way they were before but with a different administration. There are always things the new government does because it did not like what the previous was doing. After they fix those problems, the reality of the situation comes up and most like the status quo.

President Trump likes to shake things up, and that can be a good thing, it the messaging allows people to adjust. Unfortunately, sending the country into a recession is not a good thing.

In an article by Matt Ott of the Associated Press, US consumer confidence continued its sharp decline as Americans views of their financial futures slumped to a 12-year low over tariffs and inflation.

The Conference Board reported that its consumer confidence index fell 7.2 points to 92.9. Analysts were expecting 94.5.

It is important to remember about 60% of the US economy is people shopping and buying things. People who love to shop and buy are the lifeblood of the economy, those that are more frugal are important, but the shoppers are the key.

With all the cuts in government jobs, people in non-government jobs tend to cut back because many have grown up when you have a government job, there is job security. You will not get Silicon Valley money, but you have job security. That sentiment is gone and ripples through the economy.

While government talking heads will tell you one thing, the real evidence is from the nation’s largest retailers. Walmart has slashed its profit forecast for this year.

Target Corp’s sales and profit slipped during the crucial holiday season where sales and profits are made.

Mays, Best Buy, Abercrombie & Fitch and Dollar General have grown cautious about their expectations for 2025.

The Conference Board survey shows purchasing plans for both homes and cars declined. If you buy a home, the home will need to be furnished. Then afterwards there is always something to do or week to week repairs and improvements.

In March, President Trump announced a tariff on everything, then he walked it back and imposed tariffs on products on April 2. People know prices will go up, because the solution to build in the US takes billions of dollars of investments and the companies have to know the tariffs are permanent or very long term. If prices go up 25%, but companies need 50% increase before it makes economic sense to change their allocation budgets, prices go up.

Linking to dividend paying stocks, the US economy has evolved to a consumer spending one and when consumers in general cutback it is not good. When you know 50% of households live paycheck to paycheck, the amount of free spending consumers seems to go down every year and every company fights for their share of those dollars. However, it seems for particular events, there still seems to be high demand for products. All of which means is being selective with your stock picking is a good idea.

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

It is good to have alternatives. In life that is a good saying, for it means there are options if something does not work out. It is easier to adjust. In the business world, senior management’s job after ensuring the company makes a profit to pay dividends is the allocation of capital. The allocation is a long-term project which means politicians come and go, what is best for the company?

In an article by Liz Lee of Reuters, China’s economy czar Vice Premier He Lifeng, recently met with the heads of American companies to say China is open for business. The companies included: Apple, Pfzier, Mastercard, Cargill, Eli Lilly, Medtronic, and Corning Glass. All companies with international operations.

Several global investment banks liked China’s moves with Nomura, ANZ, Citi and Morgan Stanley raising their forecasts for the country’s 2025 economic growth by 50 basis points.

The reason why the Vice Premier was able to talk to them was the annual China Development Forum was held which attracted 86 company representatives from 21 countries.

President Trump has placed 25% tariffs on imports, but the US is not the only game in town. China is the world’s second largest economy and can easily move goods around the world.

Linking to dividend paying stocks, similar to many towns and cities, states say they are open for business. If companies like the business environment, they can tolerate the political environment because profits are the end result. All profitable companies are courted by a wide range of people to encourage investment, which is why there are few cuts in that area. A profitable company has options, and with dividends you can have some to.

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