Susan Taylor of Reuters wrote an article which states Newmont Mining – one of the largest gold mining companies in the world has a cash balance of $3.1 billion. Giving the rising outlook for gold, the company has cut its debt by more than 70% since 2013, the cash balance could go to shareholders in the form of boosting the dividend.

Colorado based Newmont Mining biggest debt payments come due in 2019, there is a window of opportunity to give excess cash back to shareholders. This year the company expects to produce a little over 5 million ounces of gold. In the mining world, Newmont has a window of opportunity to do something with its cash. Chris Mancini an analyst at Gabelli Gold Fund says a potential option is issuing a one time special payment. The fund could also boost its gold priced linked dividend again. At a price of $1,250 an ounce that would translate to 30 cents a share.

Linking to dividend paying stocks, Newmont has the ideal problem, given the company is profitable and has lowered its debt it has the ability to do something with its cash. It could buy another company or give the money to shareholders who will either reinvest it or buy something else. That is a good choice to have.

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

In an upward climbing market, being close to or fully invested is a good thing to do, but what happens if markets go down? Sometimes they go down a little bit (correction) sometimes they fall 10% or more. When the markets fall more than 10% people will begin to sell their investments, given billions of dollars are it ETFs, Index funds, Mutual funds, this will mean the fund needs to sell its holdings to pay the redemptions. What should you do? Larry Sarbit writing an article titled The Liquidity Trap says similar to Warren Buffet- cash is to business as oxygen is to people, never thought about when it is present, the only thing in mind when it is absent.

If you buy ETFs or many funds, if they carry less than 5% cash holdings, if and when the markets go down, they will not be able to take advantage of buying opportunities for they will worry about redemptions and funding the fund. If you believe the market is overvalued and the street tends to agree. then having a cash portion is a great idea.

Linking to dividend paying stocks, some of the money you invest is there for many reasons. Sometimes you improve your residence, buy something, reinvest, there are many things you do with money. If the timelines are perfect then there is little overlap however most times the timelines are not perfect, so you will sell when you need to pay these bills. Ideally, the money was invested for the long term and you made money and the market is still favorable to your outcome. Just remember, sometimes cash is king and be prepared. If you have dividend stocks you have a choice with the dividend  – reinvest or take in cash to have patience for the right opportunity.

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

A little while ago, a movie called Flash of Genius was watched on You Tube, the movie was made in 2008 and started Greg Kinnear in the starring role. The movie is about a college professor and part time inventor who invents the interment wiper (if you drive it is the second setting) which is a good thing. After his invention, he patents and makes the rounds of the automobile companies, but he wants to manufacture it. The automobile companies tweaked his invention, for they do not want to deal with him as a manufacturer and use it. Mr. Kinnear’s character sues an automobile company and it takes 20 years plus to go through the courts and finally win. If he had sold the invention or offered a royalty payment his daily life would have been much different.

While the story is based on the wiper, if you know people who invent, have them watch the show and ask what is better to manufacturer or to have a royalty payment?

Linking to dividend paying stocks,  if you own these types of companies the answer to the above question is the royalty payment. The risk is low, other people will spend their lives ensuring the product is standard or the norm for the majority of users, and you do not have worry about manufacturing concerns, logistics, selling the product, you just worry how you will spend the money. Depending on how much comes in regularly, all of the previous have stress connected to it, it is often easier to deal with money – invest or reinvest? buy or save? do something or do nothing – building a cash balance is not a bad thing to do. These are good problems to have

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

In the first of August, Time Warner reported higher earnings helped greatly by the movie Wonder Woman. Rishika Sadam and Jessica Toonkel of Reuters wrote an article about Time Warner. Time Warner is a media conglomerate headquartered in Columbus Circle in New York City and soon it will be a subsidiary of AT&T. If you wish to make about $5 a share, Time Warner will be exchanged for AT&T stock and cash of $107.50 later this year.

The revenue from the movie industry was up 12.4% to just under $3 billion; the movie Wonder Woman brought in $800 million; while Game of Thrones brought in $1.5 billion.

In the TV channel business the company owns Turner Broadcasting including the TNT and CNN channels. The revenue was up 3.1% but viewers continue to leave cable and go to on line streaming of Netflix and Amazon.

Linking to dividend paying stocks, a media conglomerate will generally earn a profit, in the case of Time Warner $7.33 billion but it often takes a hit movie to move the earnings in a substantial method. The media industry needs the home run type of result; ideally you are looking for companies which only need to hit singles and doubles to consistently earn their money.

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

 

The best stocks to own over the last number of years is the FAGA or an acornym like it because they had the combination of growth, competitive “moats” and fat margins. What is not to like – the FAGA stands for Facebook, Apple, Google and Amazon. Similar to all things on cycles, while the companies are dominate and are still expecting to be, the combination of growth, competitive moats and fat margins is changing. Shira Ovide writing for Bloomberg News suggests they are changing as fast as the tech companies change.

Apple is still dominate in iPhones (2/3 of its revenues come from it), but Apple is less flush that it normally is (although it has $100 billion in accounts outside of the US), however its most recent quarter, operating profit as a share of revenue was its lowest in 9 years. Apple is spending more and more of research and development, Apple’s operating expenses were nearly 12%, the highest percentage in 7 years.

Amazon is a powerhouse in delivery of packages and over 100 million people pay $100 to be in Amazon Prime to have free shipping and access to music. Amazon is increasing the number of merchandise warehouses, Web video programming and computer-data centers which is good. What is not good, is a operating profit margin of 1.7%. Amazon has gone a terror of spending in the last 12 months for every $1.00 in cash coming in, Amazon keeps 1 cent after accounting for its cash expenses.

Facebook and Google tend to have higher margins, but Google’s parent company Alphabet gave its partners in YouTube videos and Web browsers 22% of its revenues which is highest share since 2014. Google’s profit margin is still a healthy 26.5% but it was 31% in 2011.

Facebook is trying to become a TV-like destination as Facebook is trying to do the same things as Google through partner sharing. The same result will be lower margins for Facebook.

Linking to dividend paying stocks, it is very hard to find stocks which have the great combination of growth, competitive moats and high margins. For the past number of years it has been the FAGA stocks and their stocks reflect the higher stock prices. According to a recent study, it has been important to be in the stocks for less than 5% of the entire listing of stocks leads the market.

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

 

 

A few months ago, perhaps as a public relations countries such as Britain, France and Norway announced they wish to have a fossil fuel ban by 2040. It is true, automobiles are a large contributor to green house gases, however the market is not going to change tomorrow. When the average electric or hybrid car is priced at the entry point of average fossil fuel car, then markets will drastically change. Until then, the hybrid – electric car will be seen as helping save the environment. Hopefully, since all of the countries have automobile plants within their borders, government policies will help the auto companies make the change to electric.

As the change begins, metal markets are changing to reflect the higher need for some metals over the others. To look inside the existing electric cars is to look at different metals than fossil fuel cars, electric cars contain 3 times more copper than fossil fuel. The batteries are a combination of lithium. cobalt, graphite and manganese. In an article titled Electric cars shake up the metal markets by Mark Burton and Eddie Van Walt based in London writing for Bloomberg News, they look at the existing and what might be.

For copper the existing large companies such as Glencore (very strong in copper and the world’s biggest producer of Cobalt), Freepot-McMoRan and First Quantum Minerals .

Lead producers such as Recylex SA and Campine SA are going to have to adapt their operations. Lead is used in starter batteries for fossil fuels but not electric batteries.

Electric batteries are powered by lithium-ion units.

One of the methods to allow cars to travel longer on less power is to make them lighter and automobile companies are using aluminum for that. The steel companies such as AK Steel, ArcelorMittal and Tata are trying to make steel lighter.

Platinum is used in catalytic converters to curb pollution, electric cars do not need them.

A rule of thumb according to Michael Widmer, head of metals market research at Merrill Lynch for metals like copper and nicket, if you underestimate electric sales by 1 percentage point, you can add 1 percentage point to global demand.

Linking to dividend paying stocks, as the make up of the vehicles on the road begins to switch as an investor what you need to do is look under the hood to see what materials are being used. As those change, so does the outlook for the companies who mine and process the materials.

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

 

In the first of August, Apple reported its earnings and according to Alex Webb of Bloomberg News revenues were very good. The company expects to have sales to be between $49 and $52 billion for July, August and September. The previous quarter Apple sold 41 million phones to have sales of $45.4 billion. A key statistic for anyone owning Apple shares is Apple generates almost 2/3s of its revenues from the iPhone.

The issue with a heavy reliance on iPhones and the higher margins iphones are sold at is the smart phone market is becoming saturated and competitors offer many of the same features at lower prices. Apple is adding a 3-D sensor to enable facial recognition in the phone and hopes the feature will spur more sales.

Sales of Apple Music and iCloud gained 22% and brought in $7.3 billion in the quarter. The app store continued to be a driver of performance, President Tim Cook said.

Linking to dividend paying stocks, Apple phones are still considered to be the best of the smartphones which is why people continue to buy them, as an investor you have to ask will they continue to buy them in similar numbers for 2/3 of the revenues of Apple is connected to the iPhone margins. While Apple continues to be the dominant company, the competitors are not far behind and in a year or two margins could fall, although unlike the competition Apple has billions in accounts outside the US waiting for the President to lower taxes before it comes back to the US.

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

 

One of the books which many people have heard about or read one version or another is Robinson Crusoe. The book was originally written by Daniel Dafoe in the 1700’s and the book was soon as popular as the Harry Potter series with the book going into multiple printing. Ever since then, people have been wondering who was the book about, how did Dafoe create the great descriptive passages? In that end a book called In Search of Robinson Crusoe written by Tim Severin published by Basic Books, New York, 2002 in which Mr. Serverin goes to Latin and South America to discover which island or place  Mr. Dafoe used for the island. In Mr. Serverin’s opinion and many others, the island was a composite or a group for not all the natural elements in Robinson Crusoe are on one island.

There are many stories and Mr. Serverin’s research into this book as well as his other In Search of books are well worth reading. In relationship to the theme of Dividends there is a story about a group of natives off the coast between the coast of Honduras and Nicaragua who generally have a subsistence life of fishing and killing animals from the rain forest. But every once in a while some money comes into the tribe and it was (or still could be) from the drug trade. The cocaine comes from Columbia and travels toward the United States. Every once in a while, the boats or planes have to offload their cargoes into the sea to avoid being captured. The native group (the Miskito Indians) retrieve the load and sell it to the drug traders or receive a finder’s fee. For generations, the Spanish mined gold and silver in Mexico and Peru and sent it to Spain. As the country grew richer and was the richest country in Europe, other countries were jealous and gave permission to pirates (had a letter from the government saying they were on official business, but the reality was the backers and crew split up the proceeds) to rob the Spanish boats. The navy of the Spanish gave passage to most of the boats, but other countries such as Britian claimed various islands in the Caribbean so the boats would have to pass British interests. The pirate trade similar to all shipping once in a while would run aground and if the ship was abandoned then its store house was for anyone to claim. Hundreds of years later, rather than gold and silver, the cargo is drugs. It is interesting to read what happens when the cargo is sold. Many of the men would go into town and get drunk and visit the prostitutes, although some would buy things for their boats; many of the women would buy things for their families and gold necklaces for their children (which can always be sold later or a savings account).

Linking to dividend paying stocks, it is a wonderful adventure to read books such as In Search of because of the question the the who? What? When? How? of the books you may have read as a youngster. The adventure is worthwhile. In your investing, it is better to seek the boring and the known way or profitable companies which pay a dividend. Next year, your research is are they still profitable to pay their dividend and then you can follow or read the next adventure story.

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

 

In the book, Louisiana written by Joe Grey Taylor published by W.W. Norton and Company, New York, 1976 the author has a chapter about what happen to the state after the Civil War. The time is called the Reconstruction, President Lincoln sent down Union Generals to begin the process to set up government under new rules. However, it was not the case that all black people could vote, it was still restricted to whites. It was also the time when violence towards blacks rose in a strange way, when blacks were slaves they were an asset to be protected; once they were freemen they were competition for jobs and violence rose. The result was the US military was called in and it was the military’s duty to register all adult males and if they had not voluntarily aided the Confederacy then the people could vote on the new Constitution of Louisiana. Things were progressing and the Lieutenant Governor was a black man. However, there grew a segment determined to keep politics white and for the next number of years limit the vote of blacks both institutionally and at the ballot box. Voting might mean a beating and in one case where a number of blacks were killed, a judge let those on trial go because no white man was going to convict a white man killing a black man. It would take a long time before attitudes changed.

Linking to dividend paying stocks, all companies go through trama at what time or next, what does it do is the question? Does it change? How or does it carry on? Over time, companies need to change but that does not mean often times it goes kicking and screaming before it changes. When you bought your shares, the company reflected your values to be profitable and pay a dividend, did it have other values you shared? Or wanted it to share? Could it do both?

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