Many financial newspapers occasionally ask the people in the industry – what should you do if …. In an article by Terry Cain, she asked you have inherited $10,000 what should you do? Ideally, debt payment is near the top, but if you have a handle on debt and were to invest what could you do?

One suggestion was to examine your portfolio, it likely is biases toward where you live and try to diversify it. Either nationally or internationally.

Another suggestion is use the power of the kinetic chain which means to take advantage of the tax system which offers opportunities. If you work for a company which offers the ability to buy shares and you can add more, use the matching. You have doubled your investment. Then take some to tax savings accounts and you may receive a larger refund. You have taken advantage of the system with limited risk to yourself and end up with a bigger piece of the pie.

A great suggestion was to buy stocks with a history of dividend growth.

Another suggestion is typically a few companies lead the market indexes and you can use the money to accumulate a position in one of the companies that is on the list on nice to have.

Linking to dividend paying stocks, over the long-term, these stocks will tend to go up because the companies are profitable and can pay a dividend. It is always good to think about what if, but concentrate on the what you have.

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

The video gaming business is larger than the movie industry, but it is the movie industry which gains the headlines. The video gaming industry and the commercialization of the activities of gaming or virtual reality can easily push the amount of money projected to go into market place. At present, the industry is worth $25 billion, it could, remember Wall Street loves the word could, it could go to $80 billion and more than double again by 2025. This according to Citibank analyst Kota Ezowa. Those are high numbers and some companies are worth more than others, which ones should you look at.

Recently, Scott Barlow wrote about themes or trends Citibank sees. If you pick the correct one for example Nvidia Corp. a 10,000 dollar investment in 2012 is now worth close to $100,000. If you picked Sony or Nintendo you have almost doubled your money.

Citigroup’s stocks to watch

Video Gaming       3m           YTD      3 yr Avg        P/E Ratio   P/E Ratio

RTN %     RTN      Ann RTN       TTM           Fwd

Nvidia                  27.9            28.5       97.3                  44.9          39.4

Sony ADR            13.4            36.8       30.0                   n/a           17.3

Nintendo ADR    32.7            31.3        36.6                n/a             31.4

Linking to dividend paying stocks, if you are older you have to watch or see what the younger people are buying. If you do not play games, knowing the industry publishes their most popular game sales, find out who makes them. A hot selling video game adds money cash flow into the company.

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

If you live near train tracks, you will see trains go by on a regular basis and if you examine closely the names of the companies will tend to be small. In another time, railroads opened up the country and everyone travelled by rail. After the automobile was invented, mainly freight travels by rail and commuters travel by train. The passenger service of Amtrack is heavily dependent on commuters, for the other choice of longer distances is the plane. In terms of freight trains, there are only a handful of companies including Warrren Buffett’s BNSF or Burlington Northern Santa Fe in which the dividends he has received paid his financing costs to purchase the stock. When the industry has a few large players and suppliers, the industry is consider mature and everyone collects dividends and lets life go on. Into this picture is a near supplier of trains which you might see if you are a commuter. The CRRC which stands for Chinese State Railway and is merger between the China CNR and CSR or a major railway producer.

The company has benefited from China’s decision to build high speed railways first with suppliers Alstom, Siemens, Bombarider and Kawasaki Heavy Industries. In an article wrtitten by Nathan Vanderklippe and Nicolas Van Praet titled In Their Tracks (June 10) describes the Chinese policies since 2000. The Chinese companies were merger, the large railway companies suppliers were allowed contracts with the railway on the condition they show their designs and train Chinese in the production of railways and railcars. The Chinese are now doing rail projects around the world and bidding less than the private companies. This has done two things one aroused the private companies who work with their governments (building rail cars provides internal jobs; export opportunities, etc). have been having discussions with their governments about Chinese work as well as shake up essentially a semi-monopoly situation. The buyers and sellers all know each other and along comes CRRC bidding at low prices. What should buyers do?

For American supplier companies such as Trinity Rail in Dallas which produces the majority of cargo-rail cars seen on the railways, disruption may be coming to the marketplace. For cities across the US such as Boston and New York have spent less money buying Chinese than traditional suppliers. The traditional suppliers are crying fowl for the bids were remarkably lower than their bids. One can read all the headlines of buy domestic and save jobs into the story.

Linking to dividend paying stocks, the freight railroads are not a problem and their stocks continue to be good holdings. The suppliers of the railroads are being disrupted by the Chinese and it is hard to move freight yards which means some jobs will be lost. Even safe and secure mature industries can easily be disrupted so it important to mointor your companies to ensure if they make profits and how do they do it?

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

One of the suggestions you will hear is when investing have a broadly diversified portfolio and logically it makes a great deal of sense. Generally all sectors move on slightly different waves and one sector tends to be higher in the summer and another in the winter time. Owning both with get you the benefits of both. Recently an Arizona State University professor Hendrik Bessembinder published information which says 4% of the stocks account for all of the net stock market gains. The other 96% matched Treasury bill returns.

Tim Shuflet writing in the Globe and Mail says this study means you have to look at ETFs besides the low-cost (which is a very good thing) when you buy an index is this the best thing to do? One of the great thing about indexes is they exchange winners on the market for losers. This means over the long-term, the index will automatically do well. The concern based on the study is examining the performance of 26,000 stocks listed on the US exchange between 1926 and 2015, just 86 of those stocks generated half of the market’s wealth creation. Another 900 counted for the rest. The 25,000 names the market went up and down. The index will own names which do not do well. Professor Bessembinder says the top 86 perform so well, if you owned a diversified portfolio, the good ones can make a winner of your holdings.

Linking to dividend paying stocks, if you want to consistent beat the market, you need to focus on the top 4% stocks recognizing once in a while a high performer tumbles down quickly. If you own profitable dividend stocks, once in a while they will be in the high performers but are more likely to the 900 moving upwards on a year to year basis. Your total return of stock appreciation and dividends received will tend to beat the market but not necessarily a high flyer. You will not be exposed to higher risks and your most important issue with the company will be does it make money? then how? and is it sustainable for as long as you own your shares.

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

Everyday billions of people go their computers and begin a search, many of them use Google because it is fast, it has a clean front page and it was institutionalized by many teachers. Let start with google, although their are other search engines in the marketplace. Have you ever wondered how Google became the search engine that it is? A book called The Search – How Google and its rivals rewrote the Rules of Business and Transformed our Culture by John Battelle, published by Portfolio Books, NY, 2005 will give you understanding of how we go to where we are.

Google started out as a tech company with an elegant solution to searching information from the internet. It order to generate revenues it added the adwords and other advertising to its sites. Sometimes it gets it right and you are very happy the ads appear, sometimes you do not want the ads. The ads pay the bills and if you are the person buying and make a purchase those ads are worth more to the advertiser. Google’s search engine has to balance the two.

Over the years, Google has developed to other ventures and elements such as allowing for its employees to spend 10 to 15% of their time on personal projects which could help the company has lead to enhancing the services of google. In all industries, the company has to be at the right time the market values the company for what it was doing. In the early days of the internet, the value was number of subscribers and companies were valued on the number of subscribers. Then the market changed and began to pay for the number of subscribers who actually bought something and Google was in a great position to capitalize on the change in valuing tech companies. The linkage between adwords and search lead Google to a market leader and search cost pennies, ads cost dollars which means as long as people around the world trust Google’s search solutions, the company will continue to churn out money.

Linking to dividend paying stocks, one of the reasons people buy cigarette companies is the cost of cigarettes is pennies, the selling price is dollars, how can they not make money? It turns of investing, finding Google type companies is rare but once they are reasonably successful, the risk factor drops quickly and reward factor continues to produce for you and your portfolio.

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

Everyday billions of people go their computers and begin a search, many of them use Google because it is fast, it has a clean front page and it was institutionalized by many teachers. Let start with google, although their are other search engines in the marketplace. Have you ever wondered how Google became the search engine that it is? A book called The Search – How Google and its rivals rewrote the Rules of Business and Transformed our Culture by John Battelle, published by Portfolio Books, NY, 2005 will give you understanding of how we go to where we are.

When Google was being built the founders had to scrape for every machine they could find to support the early service, they were forced to optimize Google to run off-the-shelf parts- cheap hard drives, cheap memory chips, and cheap CPUs. Essentially they created a massively parallel formation of cheap processing and storage. The beauty of the system was it was very scalable – the more computers added, the better it ran. If a component part broke, it was swapped out. This approach is now called distributed computing, and since Google has evolved the system to its own operating systems on tops of its servers and even customizing and patenting its approach to designing, cooling, and stacking its components. In the server business, heat is an enemy. Sometimes having all the resources in the world, does not make you successful. Sometimes the less money you have to throw at a problem, the better it is. Although with Google’s credit rating and cash in the bank it can now afford to throw money at problems.

The distributed computing helped Google to become one of the largest data centers in the world, and when crisis happen, people turned to Google. This extraordinary asset is the ability to cache any information, at any time and show it to anyone on demand. This asset plus when the press used Google it worked and their lives were made easier. Since their lives were easier, the reporters used Google more than any other search and would mention the name Google when they did their reporting.

If you are curious or just want information, the ability to use Google search is limitless. This ability has changed all professions and reduced barriers to entering many businesses. Search is the new interface of commerce which allows for people to do many new and interesting things. It is also based on trust and fraud which is easier to do. In the past, many people only had access to certain amount of information and it was easier to find out if you can trust them. With search there is a great deal more information one can find out anything which can lead to fraud. It is easier to fraud someone, because you can find out about the person or their company. Google has to walk a strong line to trust the information and how the information is sorted. It also has to work on keeping the fraud to a minimum.

Linking to dividend paying stocks, with every endeavor there is an element of trust and fraud. The more dependable the information the more you trust it, but the more you trust it, the easier it is to do fraud. If you want an example of movie thinking of Trading Places with Eddie Murphy and Dan Aykroyd. In the movie the information to bring down the bad guys was misinformation. The bad guys thought they had information from the government sooner than everyone else, but they were wrong and lost their money. Buying or investing is often the trust and fraud element.

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

Everyday billions of people go their computers and begin a search, many of them use Google because it is fast, it has a clean front page and it was institutionalized by many teachers. Let start with google, although there are other search engines in the marketplace. Have you ever wondered how Google became the search engine that it is? A book called The Search – How Google and its rivals rewrote the Rules of Business and Transformed our Culture by John Battelle, published by Portfolio Books, NY, 2005 will give you understanding of how we go to where we are.

When the internet was invented it was for a free flow of information, naturally some of it was about work then hobbies and normal life gets added in. As the internet grew to more users, there was a desire to rank information. What information is more important? what information is relevant to the user? In the example of Google – the founders Larry Page and Sergey Brin designed a search engine which was better than most. However, designing a better mouse trap does not mean selling a better mouse trap. In all businesses, revenues are needed to ensure the company meets its bills and grows, sometimes it is better to sell out to a bigger company. In every business the cost to acquire a new customer is sizable which is why many companies are very specialized. However for companies which appeal to the general public, there is advertising and sponsorship which put the company in the public’s eye. In the advertising world, it is often said advertising is wonderful, except for you never know which part of the dollar was good and which part was crap. The internet helped solved this problem, if someone searches for a product or service, they are likely interested in buying it. That is worth more money than blanket advertising.

In the beginning years, Google was more interested in designing a better search engine and combatting the spam which can and did push up spam (junk mail ads). The trick is traffic could be had for pennies, but if you charged higher prices for clicks on advertising and ad words, you would make a lot of money because advertisers would pay more than pennies for the right traffic or traffic which buys goods and services. The founders of Google came up and would continue to come up with a search engine for information better than the competition. It was not without its problems for Google tweaks its algorithm which is the basis for search every once in a while to Try to Do No Evil as well as to battle the junk mail companies. The junk mail companies pay some bills but no one wants the mail all the time.

Linking to dividend paying stocks, with Google and other companies designing a better mousetrap was the first stage of the company; if things had happened differently it might have been a small company or bought by someone else. Google had the right solution it terms of search and with the addition of advertising, made it work. Now they are the dominant position in what they do and it would seem there is less risk in the company. This is why a recent study indicated only 4% of the companies drive the stock exchange indexes, it is just difficult to pick the 4 companies.

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

Since the world often times can be seen as half full, and most investors in the stock market are in it for the more optimistic aspect, it is good to look at the half empty. The market has gone up and the bull market is still going forward. Tom Stanley of Steadyhand Investment Funds wrote a column called Don’t be caught off guard when the bear comes knocking. In the article he recommends you examine your portfolio paying attention what if the markets were to fall:

Down markets are never quiet and are guaranteed to feel lousy. If the downturn is severe than nothing will escape the fall and there will be little attention paid to valuations. Downturns turn people into survival mode.

When markets are down, everyone becomes an economist. Peter Bernstein said in calmer moments, recognize their inability to know what the future holds. In moments of extreme panic or enthusiasm they become remarkably bold in their predictions.

With this big picture focus becomes a shorter time frame. Investors feel the need to be more exact in timing purchases, transfers and withdrawals. This precision has the effect of freezing many people preventing them from taking positive action.

You need to get prepared for next downturn

1. Have a good sense of what you want your long-term asset mix to be (cash, stocks, bonds). This will give you a baseline to work with.
2. Mentally rehearse what you are going to do if the portfolio falls 10 to 15%.
3. Freshen up your target list for securities and funds you want to purchase or add to. (this might be your most important piece of homework – A downturn will push prices down, some stocks there will be buying opportunities)
4. Know who you will lean on.

Linking to dividend paying stocks, if you are a long-term stock holder, downturns are part of the business and this is where you can buy great quality stocks at lower prices and eventually they will go lead the market upwards. If they pay a dividend you can do very well (the last downturn some people borrowed money to buy stocks and the dividends covered the interest cost. The stocks went up and the loans were paid off). The key is which stock would you pick and for that you need to do homework on which are the best stocks to buy.

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

A recent report from Rethink X of San Francisco came out which suggests that Electric Cars are going to change the motor vehicles industry dramatically. The report says electrical cars have 10,000 moving parts; the internal combustion engine or gasoline vehicles have 30,000 moving parts. The drive trains have 20 moving parts while gas engine has 2,000. As more and more electric cars are sold, because of the fewer parts the electric cars can last on average a million miles before they need to be replaced. At present, most of us think of changing the vehicle after 250,000 miles or less (presently my vehicle has near that number and things tend to go wrong with the vehicle, even though it is reasonably well maintained). If the average vehicle will last 1 million miles, then the average mile driven is remarkably inexpensive and that low cost variable will drive down everything connected to the motor industry infrastructure.

The vehicles will need less repair people; less dealerships; less financing from banks; less people in the car business. In addition, they will use less fuel (elecrical top ups) which means we need less gasoline or fewer gas stations. At the present time, it is relatively easy to buy stocks of companies which own dealerships – within the next 5 years you may want to look for alternatives. People still need to get around by if the report is near to being correct, the entire industry will be change or could easily be disrupted. If it is disrupted then the electrical car industry will grow faster than we all think it will.

Linking to dividend paying stocks, more electric cars are great for generators of electricity of utility companies, as time goes on you may consider moving funds from energy companies to utility companies because the cars still need fuel to move.

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