When the Spain conquered Mexico and discovered gold in made Spain the richest country in the world. Not content to take the riches of Mexico, they sent their conquistadors south to another  kingdom that had many riches. The Inca empire controlled the western side of the South America  or the Andes Mountain Range with its headquarters in Peru. The Spanish interested in the riches of the Incas attacked first and captured the emperor – the Incas gave the Pizarro’s rooms full of gold and silver which wetted the brothers imaginations. Similar to most conquerors they were not satisfied and wanted more. After a few years of fighting, and aligning with the natives who felt injustice from the Incas and some Incas who wanted power themselves, the Spanish prevailed in controlling Peru. The Inca empire from an engineering point of view was light years ahead of European knowledge and not understanding it, meant their cities were left to the jungle which overran the cities. 400 years later, people began to look for the lost cities and the rumor of hidden gold. Into the mix comes a modern day Indiana Jones – Hiram Bingham. In the book Cradle of Gold written by Christopher Heaney, published by St. Marin’s Press, NY, 2010 examines how he discovered some of the lost cities of Peru.

Hiram Bingham was raised in believing the natives of any society did not have the capabilities of Europeans or in the early 1900’s those that went to the Ivy League Institutions on the east coast of the US. The schools include Yale, where Mr. Bingham went to and included many children of wealthy families. The choice was business or university research – Mr. Bingham was fascinated by South America and wanted to build up the department at Yale. He would travel the routes of Incas and then lecture about his travels during school year and also try to promote the countries to the future business people. The book is a detective story about the routes of the Incas – going to search for any lost civilization and finding the most famous – the beautiful Machu Picchu. Now days it is visited by 800,000 people a year and most come by train or bus; in Mr. Bingham’s day it was by mule and climbing the cliffs. The Incas carved off the top of the mountain to build a city and along the way terraced the mountain side as the early morning mountain mist gave water to the crops. The sun would come up and warm the earth during the day. The Incas also created vast irrigation systems to move the water from the rivers to the fertile planes (some you may have heard about from the question did man do this or aliens? It turns out many native communities were advance of European communities. The Incas worshipped the sun and many of their communities take advantage of the sun – it seems odd that with no more cheap energy we have to do the same thing as the Incas.

Linking to dividend paying stocks, the analogy is Mr. Bingham brought passion, detective skills, and some money to investigate his theories. He also brought time to investigate all locations. Others could have, but he did. Everyone comes up with a theory of making money on the stock market and it is important to investigate but it seems investing in profitable companies which pay a dividend will allow you more time to follow your passions.

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

Similar to many people trying to figure out the continuing appeal of Donald Trump has taken up more time than normal. Part of the problem is expectation of the leader of the established party – those behind the scenes normally would be more rational in their decision making, have to justify whatever the leader says. When Mr. Trump goes off message or drags up conspiracy theories the party which has benefited from whatever conspiracy has to justify what he means or meant to say or the context of his talk. What are the implications for the country and businesses and the people who live within the borders. On one hand he is an wonderful entertainer and understands the problems very well on the other hand the stakes are very high and his solutions are a little thin, but America is a democracy.

One of the first superstar entertainers was Buffalo Bill Cody, whom many have heard of and a few people have seen. In the book  The Colonel and Little Missie – Buffalo Bill, Annie Oakley, and the Beginning of Superstardom in America by Larry McMurtry  published by Simon & Schuster, NY, 2005, there maybe some understanding of the present day situation. The setting is 1880s and till 1916’s and Buffalo Bill’s Wild West show toured the world because in America how the west was won is still an exciting moment in US history. The show played upwards of 130 stops a year travelling on railroads and ships. In the 1880’s the manager of the Wild West show was Nate Salsbury and the press agent was Major John Burke. Both Annie Oakley and Buffalo Bill understood costume and appearance and in front of the crowds were consummate performers and had that special appeal for audiences.

Mr. McMurtry has very high respect for the shows but was the story also accurate – it turns out Buffalo Bill was like a fisherman and some stories were stretched for public consumption. Somehow the difference between truth and rumor becomes harder and harder to sort out. When Buffalo Bill was ranching and not really liking it, he looked at Wild West Shows which he eventually perfected. He also started one of the first organized rodeo in 1882. If you are interested in the business of Wild West Shows a recommended resource is Sarah Blackstone’s book Buckskins, Bullets and Business. One of the reasons for Mr. Cody’s success was the audience loves the idea of the old west and refuses to take anything critically. For most people it is the legend, not necessary the truth that is important. The legend of American settlers taming the west was given. The legend of Buffalo Bill Cody still lives on in the Buffalo Bill Ranch State Park in North Platte, Nebraska.  It also lives with the Buffalo Bill Rodeo.

Linking to dividend paying stocks, for many companies the legend is more important that the truth of how the company managed to survived and grow to the giant it is. The fact that it is a large organization is credited to the leaders doing the right thing, often you find some did, but many stretched the grey area of the law. The legend is often more important but as owners of the share we tend to be concerned about whether next year the company will be more profitable rather than how the company started.

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

There are two types of research you need to do but most of us focus on the first type. The most common research is of all the stocks trading which would do you buy? the second type of research we rarely do is when do you sell? Besides needing the money? The issue with selling is two fold – what if the price goes down? how much leeway do you give? and what if the price goes up?  Each of these actions are seemingly hard which means it is good to have some sort of rule before you start. In an article in the Globe and Mail Business section Dale Jackson interviewed some people to help you decide When to hit the sell button.

There are many metrics to help you buy and some you can use to help you sell.

If a price goes down 15 to 20% below what you purchased at – you will need to re evaluate the company to understand if the event is a one time thing or it is better to find alternatives.

If the 3 month earnings drops by more than 15%, it is time to find alternatives?

If the stock has gained in price and in relation to the rest of your portfolio you may want to rebalance your portfolio by taking profits off the table. This is the best element and is the easiest decision because you can use the profits to spend or diversify and you know you made a good decision to buy.

Go back to the reasons you bought the stock, does the economy or the company d0 something that changes the reasons you bought the stock? Sometimes when the company makes acquisitions – some you like, others you may not. Sometimes you like companies that use debt, sometimes you do not.

Linking to dividend paying stocks, one of the primary reasons for buying is for the dividend and the long term capital gain. Profitable companies tend to have higher shares in the long term, which means you can wait. Depending on the company, mergers happen and then you have to decide if you want to keep with the new company or find alternatives. There is no end to having alternatives, but with dividend paying companies there is no reason to make the decision right away. You have the ability to take your time.

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

 

Have you every gone to your favorite supermarket or chocolate retailer and looked at the owners of the chocolate companies? The companies make billions of dollars because people love or enjoy chocolate. One of the books written about chocolate is Chocolate Wars by Deborah Cadbury published by Douglas & McIntyre Press, Vancouver, 2010. The author’s name Cadbury means there is an emphasis on British chocolate companies because she is related to the Cadbury chocolate company.

By 1905,  Cadbury, Rowntree, Nestle, Hershey, Lindt, Frys were all producing chocolate products for the masses and all were successful. It takes good management to sustain because things in the world happen. World Wars which affects production and supplies. For a while the biggest American investor in Cuba was Hershey who wanted to control his supply of sugar. He eventually owned the Hershey Cuban Railway, 65,000 acres of land and a town of Hershey, Cuba. Things were going along well for the companies as they continued to make money and try to change the world around them.

Then came Forrest Mars of Mars who began to produce chocolate-coated bars in factory quantities. The other companies focused on solid chocolate bars and only a few brands, when Mars invented Milky Way the industry changed. The challenges of the world changing after WW II and the British Empire changes as countries became independent, including different companies in their home market. As the 1960’s arrive, the founders begin to die or retire, what to do with the companies. All companies founders have a hold on their businesses, when it changes then the company changes. By the 1990’s large multinational companies are looking to expand or grow their divisions by looking at the continual sales of chocolate. Kraft eventually bought Cadbury to strengthen its holding of chocolate companies. Kraft is now called Mondelez International and if you google candy companies the top 100 will show up.

Linking to dividend paying stocks, the chocolate companies changed the use of the chocolate from drinks and hard chocolate to easy to eat and continue with easy to buy, along the way companies expanded and consolidated and still fight for market share. Your choice at the supermarket is still very important to the companies. If your choice is important you can measure how well they are doing while you shop.

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

 

 

If you ask people around the world what do you love to eat? high on the list will be chocolate. Likely if you had children at your door last evening for Halloween, chocolate would be in your house. Have you every gone to your favorite supermarket or chocolate retailer and looked at the owners of the chocolate companies? The companies make billions of dollars because people love or enjoy chocolate. One of the books written about chocolate is Chocolate Wars by Deborah Cadbury published by Douglas & McIntyre Press, Vancouver, 2010. The author’s name Cadbury means there is an emphasis on British chocolate companies because she is related to the Cadbury chocolate company.

In terms of Europe, chocolate was found in Mexico where the Aztecs where great lovers of the bean and the expression “money does not grow on trees” comes from as the Aztecs used the bean as the basis of their currency. From Mexico the use of chocolate comes to the Spanish Court in the form of a drink, it quickly was seen in coffee houses of the day, and you can still buy hot chocolate in your favorite coffee shop. The dominant company for drinking chocolate was Fry’s – the yellow can. They had immediate success and were only interested in cocoa powder. For generations – management asked why tinker with success?

The chocolate bars that most of us have tried and likely eaten in the past year, has a different direction because of cocoa butter. For a long time, the cocoa butter fat from the established processes was 50% and was slowly reduced to 30%. The chocolate manufacturers saw possibilities – two different products – use one part of the bean to make pure cocoa and the other part of the bean to eat and that would be targeted to the masses of people. In England, advertising was beginning for most of commerce was done in small shops. If people saw the advertising, they would ask for it and the grocer would stock the item. At the time, chocolate by itself had a slightly bitter taste.

In Switzerland, the chocolatiers were experimenting with using milk and chocolate together to make a sweeter and smoother bar. It was a struggle to find the correct formula but it was found and the process for chocolate which melts in your mouth was discovered. The key was to find a way to evaporate the water from the milk in such a way that it could be smoothly mixed with the sugar and cocoa fats. Then the next problem was to scale up operations to produce the bars people would buy.

Linking to dividend paying stocks, the above process took over 400 years – the 1500’s to 1905. Chocolate was around, at first it was expensive but as time went by the manufacturers brought chocolate to the masses where more could be and is eaten. The growth of the companies and its sustaining power is what drove the markets. In the early days, there  were many companies but most were smaller scale in size. As the manufacturers unlocked secrets in the production phase this is when they could scale and grow the market. It was then the companies made an excellent investment.

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

Today is Halloween and the connection to the witching hour and all things scary. The Korean based company of Samsung recently experienced its scary times in the battery of its Samsung Note 7 phone caught on fire – accidentally. Those of us who own Android phones, Samsung is one of the go to phone types. It would be natural to move up the later when a replacement was desired. Given 80% plus of the sales of phones are the so called smart phones, this is a market where Samsung has to be in. It was good Samsung ordered a recall of all its phones, however for Samsung calling their phones the Galaxy 7 and the Note 7 is an addition headache. Consumers will see the 7 series being recalled and ask for a replacement – they go it and say fix it and the provider will say no the Galaxy is fine, it is only the Note 7. It sounds confusing which means consumers look to alternatives.

In terms of a brand, Professor John Jacobs of Georgetown University says “A company’s brand is their promise to consumers. If you break that promise, you lose customers, you lose their loyalty.” Samsung has said they are stopping making the Note 7, but those in the phone technology world wonder – if Samsung’s cutting features were in the Note 7, what would replace the phone? While Samsung looks for the root cause of the fires, it has issues to consider.

Linking to dividend paying stocks, the relationship line works until it breaks down and what companies do at the time is how the company’s reputation and loyalty will develop. In this case Samsung has recalled their phones, offered credits on their other phones and stopped making the Note 7, that was the right thing to do from a brand perspective. From a corporate perspective it will cost millions of dollars and the stock price has fallen. The next step is replacement of the phone and then the company can rebuilt its loyalty and brand.

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

On You Tube if you look into the Gambling section you can watch videos of how to be a better gambler, but one way to lose less is learn what is a sucker bet and try to avoid them. In Las Vegas or any gambling house, the house has an advantage from 1% 10 18%. If all you do when you go into the casino is have fun and willing to lose some amount of money, then it does not matter what the house rules are. However, if you would like to stretch your dollars there are 3 rules:

1. Learn the game you wish to play. How do you win? How do you lose?
2. Do not lose more money than you can afford to.
3. Avoid the sucker bets or where the house has all the advantage

When you go to a casino if you are a regular person, you want to win something which means you aspire to the possibilities of the game. You could win the lottery size money by playing a game. People for generations have considered the possibilities.

The casino is run to make a profit and it plays attention to the probabilities something will win or lose. Probabilities are math linked for example a 30% house advantage means rather than gambling with a dollar, you are really gambling with 70 cents.

In most games, as much as those who believe in possibilities want it to, the past does not matter for future outcomes. What does matter are the signs in the casino which should be read if the sign says a 99% payout, that means you have a better chance of winning something. In slot games that have maximum payout that means playing 3 coins rather than one coin. The games have some rules, ask the employees how the game works and decide. In slot machines, penny games have a very low payout, although they seem inexpensive. The house advantage is lower at the $1.00 game. In terms of the casino 1% advantage – try craps, blackjack and baccarat.

Linking to dividend paying stocks, while some consider the stock market a casino and there are sucker bets, there are also very conservative bets which make money over time. The trick is to ensure more of your money is in the better companies and for the average person if they pay a dividend, then there is less risk for your money. Over time the capital gains and dividends will help you in your life.

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

 

 

The theory is a stock loved by institution should be a long term steady company with very stable earnings. It is thought institutions have the ability to hire people to study companies and unless they are being fleeced, the people will make good decisions to keep their jobs for a long time. It is worth looking at institutional holding of companies.

Peter Ashton of Recognia examined his data bank and used the following criteria:

market capitalization of $ 5 billion or more.

companies that have between 50% to 80% institutional holding (or at least 20% held by the small investor or public float)

insiders are senior officers of companies and they are buying the stock of the company they work for – they see a good future, the minimum buying is 200,000 net shares

90 day average of at least 1 million shares traded

Company            Mkt Cap        5 of Inst.        Net Insider       Vol 90 Day        Dividend

(US $ Bil)       Ownership   Shares Bought    Average             Yield

Cisco Systems   157.9                 78.2%                392,213            21,588,639           3.3%

Phillips 66            41.5                 72.6                  1,124,620            2,832,920           3.2

Paychex                21.8                  72.9                     215,558             2,027,534           3.0

Abbott Labs         62.2                 74.3                      785,100            9,534,773           2.5

Intel                      175.9                  67.7                    250,192            21,271,607         2.8

Honeywell Intl     88.4                 77.9                    668,536               2,568,945         2.1

VF Corp                   23.5                  63.1                     290,356              2,444,941         2.6

Morgan Stanley     59.9                62.3                     269,754              12,923,500       2.5

Sabre Corp                7.7                 75.2                     484,412                2,787,679        1.9

21 Century Fox        46.1                51.8                    3,000,000             3,142,066        1.5

Leucadia National    6.8              75.9                        200,000              1,552,548        1.3

Linking to dividend paying stocks, while all the above pay dividend they offer good alternatives to the economy. It maybe the institutions have smart money, although their record can be similar to index funds – but for the index funds to work the institutions and public (smaller shareholders) need to trade. The institutions tend to have longer time periods and put more emphasis on the continual dividend, as opposed to whether the stock will be higher next quarter. The issue is not to much lower, as long as the dividend is paid. they can wait for the longer term capital appreciation. Many institutions have reasons why it can not buy or sell as opposed to the public which can have different reasons. Last week some personal stocks were sold to pay the renovators. We all have different reasons and different perspectives on how the markets will move.

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

 

 

 

In negotiations, what is the end result? Chris Voss who teaches negotiations at universities on both coasts as well as worked for the FBI and has a consultant group called Black Swan Ltd. would say the answer is Yes and How? You can watch a number of You Tube videos and read the book. Mr.Voss’s book written with Tahl Raz is called Never Split the Difference published by HarperCollins, NY, 2016. As you prepare for your negotiations (there is an example of what to prepare for) you need to know what you think is good. If the object is to remain someone to deal with in the future and do good deals, how should you negotiate? what clues do you look for?

As you go through your negotiation you have to consider no is not the end of the conversation. No means under the existing parameters the answer is no, so your task is to remain calm and pleasant and ask if other ideas could work. There is usually space between a yes answer and a no answer. As you are talking, if you can summarize the facts as you see them and hopefully the other person agrees and tends to say “that’s right”. Now you have made the person at ease or relaxed them and the negotiations may still be very tough, but both sides are in a relaxed mood.

One of the keys you are looking for is the unknown, unknowns – what are they thinking about? what is driving the deal? what their emotions are? what are they passionate about? What they do not say, can be as important as what they do say. If a negotiation is a more relaxed phase, it is possible that when you are summarizing a point, the person corrects you accidentally. This accidentally correction can be the missing piece of the puzzle you are looking for, which allows for the deal to be done.

If you achieve a yes, the reality is in about 50% of deals, they will not be completed. The reason can be someone wanted a deal, but people back at head office said no for a variety of reasons. Therefore what you want is a yes and how? how will this get done. What do you need to do to accomplish it? Can you?

Mr. Voss believes lying is the wrong thing to do, because someone will find out. Once they find out you will realize the industry is small and your reputation will be gone – no one will want to do deals with you. One of his lines – never be mean to someone who could hurt you be doing nothing. Remember people always have an option.

Tactical empathy is important so if there is an “elephant” in the room – deal with it at first – turn your negative into a positive. If you deny your elephant, then the person will become defensive, you do not want that. Deal with it and move on. The idea is to make the other person feel like they have won because they will need to deliver on Yes and how?  Try to end positively for some a simple question of is there anything else you can do or are you powerless? It is often amazing how people will jump through hoops to do something.

Linking to dividend paying stocks, there are a multiple theories in negotiations and Mr. Voss offers his. For owners of dividend paying stocks, we expect the companies to be in business for years to come, which means we want their people to do deals when both sides feel they have won. If your company has a chief negotiator that no one in the industry really wants to do business with, people will try not to. Reputation matters – what is your company’s reputation.

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