When you think of patient capital, the first thought tends to be institutional in nature for it tends to mean long term thinking and a steady dependable stream of income being added to the fund. However Tom Bradley of Steadyhand Investment Funds believes you are perfectly positioned to be have patient capital as long as you believe you will be living for more than 10 years. If the doctor has given you weeks to live, it is different story – the best advice is to ensure your will is up to date which will allow for a reasonable easy transformation for your heirs. If you expect to live, you will need to exhibit some of the traits of the patient capital proponents. The second thing to do is ensure those in your investment process buys into the program.

The traits we all have which start with an independent view. We all believe our country was formed with an independent view, if everyone else is doing it, do you have to? Another trait is buy when opportunities present themselves, not when the money is available. Cash does not burn a hole in their pocket. When they buy assets, in their reasoned opinion, the assets will eventually be worth more than they are able to purchase them for. The key word is eventually.

The picture is patient capital is focused on the long-term value creation. It is comfortable being out of the sync with the popular trends and it does not get distressed by market dislocations, it gets excited by the great opportunities to be had.

The next part of the process is to make sure everyone who touches your money buys into what you are doing. You do not need to be a great investor – but you can hire and fire people who do follow your philosophy.

Patient capital is not about day trading or rotating the portfolio to catch the latest trend. Your advisors should not be phoning you about quick tips or short term results. If you buy you are looking for a 5 year hold. The reason you buy and hold is the stock is lower priced and in 5 years the price will be much higher.

Linking to dividend paying companies, there is always a trading range in dividend paying stocks. The idea for you is to buy them on the downfalls and as they reclaim their market share you benefit from a higher stock price. The dividend ensures the company is still making money, attracting great talent and can do a rebound. All stocks go through set backs, it is the patient money that knows what it is looking for and grabs the bargains which turn out successful in the long run.

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

 

 

 

When this can be viewed, Donald Trump will be the President of the United States and it is clear that his Presidency will be different than the others. Not necessarily better or worse but different and one of the ways is Twitter. Under the old normal of the Presidency, the President carried a big stick, but talked in a soft voice. The reason was the United States has been a world leader which the President as one of the most important people in the world or at least the office. Fitting to all Presidents of any organization, when the person says something. particularly about an area of your interest, you pay attention and likely change to meet the expectations of the office holder, this is a normal thing to do, if you wish to keep your job.

President Trump has been using his Twitter to lavish favor on some companies and for the other companies he has unleashed his displeasure. The concern is partly about the President, it is also about the public which believes in all things which the President tweets about – good or bad. In thinking about President Trump’s tweets, Barry Ritholtz who runs a management investment firm and is a columnist at Bloomberg News came up with the POTUS Index Funds. (POTUS is short form for the President of the US). There would be two indexes one for all the companies who have made the good list and the ones that made the bad list of the POTUS. For Mr. Ritholtz he called his funds Oligarch index and the Drain the Swamp Index. Since winning the election the Oligarch Index has performed better than the Drain the Swamp index.

Linking to dividend paying stocks, it may turn out Mr. Ritholtz has come up with some both fun and profitable method to invest or it may mean all the companies will eventually go back to the normal. There are many ideas to make money on the markets and new ones come every week which is a good thing. For the average person, investing in profitable companies over the long term and those profitable companies can pay a dividend means you have passed the number one rule of do not lose money. As the dividends continue year after year, the market will reward you with higher stock prices or Price/Earnings ratios.

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

The Dow Jones and other indexes have risen to new heights and the rally has been going on for a 7 years, will there be a correction? It is with these thoughts, people turn to ensuring their portfolios will be able to withstand a correction. What stocks will protect you or ensure that if the market was to correct, they would not go down too far? In early January, Khaled Eniba of Thomson Reuters pondered the question and came up with some criteria you need to consider when investing defensively:

stick to traditional sectors of consumer staples, health care, telecom and utilities

stocks with a training price to earnings (P/E) ratio of less than 21 and forward P/E of less than 17

free cash flow greater than the dividend yield

5 year average dividend payout ratio that does not exceed 60%

5 year net income volatility is less than the S&P 500 average of 21%

Company                    Mkt Cap   Beta    P/E    Forward   Dividend    FCF    Div   Net Income

($ Bil)                                P/E            Yield %      Yield   P R    5 yr vol

J&J                                 316.343  0.75    20.38      16.31           2.8            5.00    54.5        10.8

Wal-mart                    211.158    0.09   14.92    15.84            2.9            7.54    36.6          3.0

Amgen                         118.164     1.16    15.87    12.28             2.9           7.13    31.9         12.5

CVS Health                   87.128   0.86   17.43     13.93             2.4            6.94   25.0         3.5

Anthem                         37.615   0.67    16.76    12.40             1.8            9.25    17.9        5.5

McKesson                      33.198   1.06     16.48   11.83              0.8           9.02   13.2        10.0

Kroger                             30.883   0.78   15.69   14.77             1.5            4.81    21.8       18.5

Tyson Foods                  22.410   0.16    13.82   12.90            1.4             9.02   12.5        9.9

JM Smucker                   14.904   0.53   20.86  16.05             2.3            8.43    49.2     14.8

Quest Diagnostics       12.814   0.67   19.57    16.94            1.9            4.27     25.2     15.0

Universal Health         10.817   1.10     15.72    13.82           0.4            5.93       6.5     3.6

Linking to dividend paying stocks, all these companies pay a dividend and it is a reason to own them. The markets will go up and down, generally we all like them when they go up, but if the companies pay a dividend you will protected on the downside. Profitable companies tend to have higher P/E ratios because they make money, while you are searching for your investments look at the ability to sustain the dividend – payout ratios and free cash flow. If you buy these types of companies, you will have less stress in your life and be able to either reinvest the dividends or use the dividends to buy other companies.

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

 

 

Prior to World War I, the lands known as the Middle East were controlled by Turkey through the Ottoman Empire and governed at Constantinople (now called Istanbul). The major powers of the day – England and France were interested for the same reason people have been interested the land for centuries the middle east is between the trade of  India/ South East Asia and Europe with  the connection in Egypt of the Suez Canal. Pilgrims of both major religions Christianity and Muslim would go to the holy sites once a year, but they generally went home. In many areas, the land is desert or desert like which makes access to water critical to surviving and thriving. The land was relatively peaceful and feudal in economic structure or few landowners and most people survive on farming.

After WW I, everything begin to change. A book to read about the history of the region is The Balour Declaration – the Origins of the Arab-Israeli Conflict by Jonathan Schneer published by Random House, London, 2010. The British and French believed they had their same influence in the lands, but the local population did not want to be governed by Turkey. They wanted independence although with the Muslim world similar to Christian world of Protestant and Catholic, there is Sunni and Shia depending on who you believe came after the prophet Muhammad. During WW I, the local rulers believed they did not need or want British or French influence, they wanted an uprising or jihad. The British and French decided to counteract the possibility of jihad around the world, they countered with the Arab Revolt. The anti Ottoman Empire foes would fight and then the British and French would divide the Middle East into their lines of business influence. France was to influence what is now Syria and parts of Iraq and England was to influence what is now Saudi Arabia and the countries in the south and life would go on as it had in the past.

Unfortunately for such well laid plans, in various countries of Europe including Russia and Romania decided to make life very difficult for people of the Jewish faith. Where were these people to go and live in relative peace? Typically they would have gone to another country where they could live in peace and participate in the economy, but the thinking was the best choice was a new country. Over a period of time, the Zionists decided the best place to go is Palestine which is now known as Israel. It took many years before the British  made the institutional commitment in what is called the Balfour Declaration or to recognize the Jewish ideal for a homeland, by doing so the British did not make good friends of the existing people in the neighborhood. The colonial way of thinking was as long as all religions had access to their holy sites, the people could live in relative harmony. It was considered some people would go to Palestine because Palestine had not changed in hundreds of years, but many would go somewhere else or it would be manageable.

Linking to dividend paying stocks, in the world of diplomacy countries use other countries as pawns in their chess game. If the country has greater influence, it can affect the other country’s economic life and generally it is interested in it for its resources first. The middle east was important because it was in the middle of a trade route, then oil was discovered. What economic benefit is the country to the influencer? In investing, the large companies have influence over their markets and some have natural or ingrained monopolies which allows them to be profitable over many years even though there is competition. Business can be seen as diplomacy between economic competing companies rather than countries and in many ways as interesting as diplomacy between countries except fewer people die.

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

 

Many people across the country have at least one pair of runners and that will continue for generations to come. How many of us think about where the shoes are designed. We generally suspect the shoes are made in China or South east Asia but the design work, where is it done? According to Philip Marcelo of Associated Press most of the design is in the Boston area. For a long time Rockport was based there, but it seems all the other companies have open or expanding operations in the Boston area. The New England area  has a large concentration of workers versed in design, sourcing, marketing and other aspects of the industry according to Nate Herman of the American Apparel & Footwear Association. There is a large cluster of colleges and universities in the Boston area and working for a running shoe company in the artistry, design and development of the merging of fashion, innovation and design. The companies profiled include Reebok (owned by Adidas), New Balance, Converse, Nike, and Wolverine World Wide.

Linking to dividend paying stocks, the shoe company convergence in the Boston area is reflective of many industries and why most of us are bias towards a few areas. If many people are working in the industry then they are paying attention to the industry and its suppliers and supply chain which they can follow easily. It is wonderful that Boston is an area for running shoes. As you do your research you will be able to focus on the companies and see how the industry tends to concentrate in one part of the country or another.

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

If you want to watch an interesting movie the movie Unstoppable staring Denzel Washington is well worth watching. The day starts as any normal day starts and then someone does not follow the standard procedures (tries to cut a corner), makes an another error and can not correct the first error. Errors tend to compound themselves and soon a train has become a runaway. Originally because it rarely happens, the reaction is we have stop-gap measures and they will work, but what if most of them were not applied or the normal methods did not work. The music of the movie, plus the understanding by the long term workers save the day.

Linking to dividend paying stocks, it is not a big thing which tends to derail us, but little mistakes which should not have happened. We buy a stock but the market does not react the way we think it will and then what do you do. The stock has not moved or lost money so you hold. If you are average person, you wanted to make a capital gain so you wait. If you also bought for the dividends, you can wait while you receive an extra reward – dividends. The only time you have perfect information is when the event has happened, it is very hard to anticipate what the street will do – many people have the same or greater information than you do and many decisions with it. If you try to stay with profitable companies which pay dividends and those dividends are being increased every year by the end of the year your total return will beat the index funds.

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

When you see a headline such as Dismal sales as provided by Siddharth Cavale of Reuters, you need to put the headline into perspective. The reality of the retail world is the last quarter is when the companies make their money. Thanksgiving and Christmas are the two biggest seasons in the retail world and after people really do not need new stuff until the spring. For those of us in the northeast, we better have boots and coats to keep warm outdoors. It was a dismal season because expectations were high that as the economy strengthened department stores would get a boost from a strong holiday shopping season.

The forecast from the National Retail Federation was 2016 sales would increase by 3.6% to $656 billion. However Amazon benefited from online shopping. It seemed people were spending at Apple’s App store which generated $ 3 billion. The most popular downloads were Super Mario Run and Pokémon Go (number one download) followed by Netflix, HBO Now and MLB.com.

The effect of the news of the sales decline on department stores stocks was a falling price.

Linking to dividend paying stocks, while many people have greatly benefited from department stores, it seems it general we are shopping less at them. The stores operate vast amounts of real estate and the market of prices has been decreased which means you are getting the goods for close to the buyer’s wholesale price. The retail world will continue to face great challenges. It is easier to buy utility companies and use the dividends to get the wonderful value the department stores will be offering.

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

In the past, it was reasonably easy to distinguish between fake emails from the IRS and the Banks (if you have more than one account). However each year the scammers are getting better and you have to train yourself not to respond.

We live in an era where we expect and give fast response to customers and that is where the scammers have a gateway. Phishing emails have two purposes: one that clicks on a link to install malevolent software that locks your computer. You have to pay a fee (larger than you expect) to have it unlocked. The second purpose is to provide the log on and passwords to get into your accounts.

Rob Carrick writing in the Globe and Mail received some emails, the blogger received one to, the way to fight back is to know what the policies of the IRS and the bank are. If you receive an email to send an Interact payment, know the agency at tax time asks for check or direct deposit. The rules are similar the rest of the year.

If the bank sends you an email saying your banking activity, know the bank did not send it. Go to your bank. If there really is a problem, you have to go anyways.

Linking to dividend paying stocks, the fraudster preys on your honesty, most people are or try to be honest, however these types of fraud are lucrative and very hard to get your money back. Learn the policies and procedures of the banks and you will be better off. The same matter with investing, learn the rules and you will be better off.

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

 

 

 

What is your outlook for interest rates? if they go higher how much? do you think the economy has improved for the fed to increase it? If you are not a believer that the fed will raise interest rates over 2% then utilities stocks still have value in owning. Gordon Pape examined Southern Company.

Southern Company is based in Atlanta and is the second largest energy utility in the US. It serves 9 million electric and gas customers through 4 states, natural gas distribution in 7 states and is a provider of fibre optics and wireless communication. It typically trades between 46 and 54 and is trading around 49 with a price to earnings ratio of 18, while the S&P 500 as a comparison is 25.

In the third quarter operating revenue was $6.3 billion compared to $5.4 billion the year before at the same time the company had 3rd quarter earnings of $1.1 billion compared with $1 billion in 2015.

The dividend is $2.24 a year to yield 4.6%  and since 2000 the company has increased its payout every year.

Linking to dividend paying stocks, utility stocks generally will not increase your capital gain, but they will and can provide a safe secure dividend which means if you buy the company when the stock is depressed, you gain a better yield than at the bank. Over time, the dividends and the company share will tend to increase and you will have followed the rule do not lose money in investing.

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