All companies have a history, an entrepreneur started a business, came up with a better idea, did something to generate sales. If the company is successful, the entrepreneur has a choice to grow or stay focused on what the business is. If it grows, first it stays within the same sort of businesses or vertically integrated then it diversifies or horizontally integrated. At some point, management will change and then they will consider the name, does it reflect reality of what they do? The change can take years because the name is considered an icon and who wants to change an icon?

In an article by Jessica Dinapoli and Anja Bharbat Mistry of Reuters, Campbell Soup is dropping its name to become The Campbell Company.

CEO Mark Clouse said the company is much more than soup and has 16 very strong brands including Soup, Goldfish snacks, V8 beverages, Prego sauces, Pepperidge Farm.

Campbell expects its Goldfish snacks brand to be its largest brand by 2027.

Linking to dividend paying stocks, name changes are normal in the world of business and when it happens, there is a marketing cost to it, but the values of the company continue. It takes people a little while to adjust, but very shortly the changes will be accepted. It is surprising how quickly that happens. Hopefully, the change will continue to allow the company to grow and meet its demands of producing a profit to pay dividends.

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

Every company has sales and that is broken down to products and which products or services sell the most. As you do your homework of the company, you can determine which products is more important to the sales picture than others. Along with the sales, every year is the new features or updates which is used to encourage people to continue to buy the product. Most of this happens behind the scenes and for most people as long as they like the product that is it. For investors that is the start, you will ask what are the trends? do people actually like the updates? sometimes being cynical helps, but you are allowed to fall in love with the product once again.

In the world of smartphones, Apple unveiled its iPhone 16. In an article by Max Cherney and Kenrick Cai of Reuters, the iPhone 16 is artificial intelligence boosted. The iPhone also accounted for more than half of Apple’s $383 billion in sales in 2023. Will people upgrade?

Apple Intelligence, the company’s AI software, will be used to improve its personal assistant Siri. Other features are understanding and identifying objects captured by the phone camera. Craig Fedeighi, Apple’s software engineering chief, said Siri will be more natural, more personal to you.

Nabila Popal, an analyst with International Data Corp, said the target market for upgrades is people who owned a iPhone for 3 to 4 years. This will future proof their phones for AI upgrades.

Apple also unveiled Watches and AirPods with health-related focused features.

In China, Apple was the dominate phone but not the top 5 list are all vendors in China. A number of years ago, the Central government encouraged government employees to move away from Apple and in China what the central government wants, it will gain acceptance.

Linking to dividend paying stocks, for the companies you invest in do you have a reasonable idea of who are the ones with the biggest product sales. If you do, then at key points of the calendar you can see how they are doing with the biggest customers. If the sales are diversified, that is a good thing for you as an investor. As an investor, you want to know how the company is doing, and if you see they are doing well, then you can do nothing as profits continue to roll in and you collect dividends.

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

If you invest the goal is to have more and the easiest and hardest way is to buy low, hold on to your investments for a period of time, sell some of it when it is high and buy more when it is low. That is a cycle. The way a cycle works is when you look backwards, it is easy to see. When you look forward it is very hard to know what and when the top or bottom is. One person who has tried to use cycles as an investment philosophy is Howard Marks, the founder of Oaktree Capital Management. Mr. Marks has written a number of books and every once in a while, he publishes his thoughts on Oaktree Capital Management website. Mr. Marks has made money buying low and selling high and wrote a book called Mastering the Market Cycle, published by Houghton Mifflin Harcourt Publishing Co, NY, 2018.

The reasons why you study the cycles is to:

Cycle positioning – the process of deciding on the risk posture of your portfolio in response to your judgements regarding the principal cycles

Asset selection – the process of deciding which markets, market niches and specific securities or assets to overweight or underweight

Aggressiveness – the assumption of increased risk; risking more of your capital; holding lower quality assets; making investments that are more reliant on favorable macro outcomes; and/or employing financial leverage

Defensiveness – the reduction of risk: investing less capital and holding cash instead; emphasizing safer assets; buying thing that can do relative well in the absence of prosperity; and/or slamming leverage

Skill – the ability to make these decisions correctly on balance through a repeatable intellectual process and the basis for reasonable assumptions regarding the future.

Luck – what happens on the many occasions when skill and reasonable assumptions prove to be of no avail

A market will do what it will do.

At Oaktree we strongly reject the idea of waiting for the bottom to start buying:

1st, there is absolutely no way to know when the bottom has been reached. The bottom can only be recognized only after it has passed.

2nd, it is usually during market slides that you can buy the largest quantities of the thing you want, from sellers who are throwing in the towel and while the non-knife catchers are hugging the sidelines. Soon the selling dries up and would-be buyers face growing competition.

What you need to do is continually do your homework and consider what are good values for stocks and bonds which you are interested in. If you are correct, values will rise and you will be wealthier.

Linking to dividend paying stocks, when you bought your stocks you bought them for a reason. When markets decline, the stocks you own you likely know best and what values are good because you are a long-term holder. If you can buy more that is a good thing, because you can use the dividend to reinvest in the stock for you or average down. In the meantime, if the dividend is safe along with profits, there is always opportunity no matter what the cycle is.

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

If you invest the goal is to have more and the easiest and hardest way is to buy low, hold on to your investments for a period of time, sell some of it when it is high and buy more when it is low. That is a cycle. The way a cycle works is when you look backwards, it is easy to see. When you look forward it is very hard to know what and when the top or bottom is. One person who has tried to use cycles as an investment philosophy is Howard Marks, the founder of Oaktree Capital Management. Mr. Marks has written a number of books and every once in a while, he publishes his thoughts on Oaktree Capital Management website. Mr. Marks has made money buying low and selling high and wrote a book called Mastering the Market Cycle, published by Houghton Mifflin Harcourt Publishing Co, NY, 2018.

How can you tell where we are in the cycle?

Things to watch out for

Economy Vibrant Sluggish

Outlook Positive Negative

Lenders Eager Reticent

Capital Markets Loose Tight

Capital Plentiful Scarce

Terms Easy Restrictive

Interest rates Low High

Yield spreads Narrow Wide

Investors Optimistic Pessimistic

Sanguine Distressed

Eager to buy Uninterested in buying

Sellers Happy to hold Rushing for the exits

Markets Crowded Starved for attention

Funds Hard to gain entry Open for anyone

New ones daily Only the best can raise money

Recent performance Strong Weak

Asset prices High Low

Prospective returns Low High

Risk High Low

Popular qualities Aggressiveness Caution and discipline

Broad reach Selectivity

Available mistakes Buying too much Buying too little

Paying up Walking away

Taking too much risk Taking too little risk

For each pair, check off the one you think is most descriptive of the current market. And if you find of your checkmarks are on the left-hand column, hold onto your wallet. If on the right, buying is a good thing, because you should be able to find good values. You will need to estimate what intrinsic value is and then have the fortitude to have your estimate of value proved correct.

The checklist is easier to do if you are in the industry but you can change it to reflect what you are exposed to. For example, can a small business get a loan with the bank or it is harder to do, almost need to show you do not need the money to get the loan?

Linking to dividend paying stocks, the cycles are a tool to help you when you invest. There is nothing wrong with waiting if you think the market is turning to bearish. However, the issue is always when do you buy? Often times people wait till the market has moved upwards, but they missed the easy profits to be made. If you are going to follow understand market cycles, you have to be do your homework on what is good value for a stock and wait till the market allows you to buy. If you buy a profitable stock with a dividend it is entirely possible for the dividend payments to help make up paying a little more for the stock and waiting.

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

If you invest the goal is to have more and the easiest and hardest way is to buy low, hold on to your investments for a period of time, sell some of it when it is high and buy more when it is low. That is a cycle. The way a cycle works is when you look backwards, it is easy to see. When you look forward it is very hard to know what and when the top or bottom is. One person who has tried to use cycles as an investment philosophy is Howard Marks, the founder of Oaktree Capital Management. Mr. Marks has written a number of books and every once in a while, he publishes his thoughts on Oaktree Capital Management website. Mr. Marks has made money buying low and selling high and wrote a book called Mastering the Market Cycle, published by Houghton Mifflin Harcourt Publishing Co, NY, 2018.

The market cycle of the markets is:

events in the economy and in corporate profits turn increasingly positive

positive events feed investor psychology and investors’ tolerance for risk rises

rising psychology causes investors to be less demanding in terms of risk protection and prospective return

the combination of the above causes asset prices to rise

eventually the process goes in reverse. Events fail to live up to expectations

Cooler heads conclude that prices have reached levels that are unjustified, or prices soften for no apparent reason

Prices fall when events are less positive or come to be reviewed less positively

Having turned downward, asset prices continue to decline until they fall so low that the stage is set for recovery

repeat again and again

3 Stages of a Bull Market

the 1st stage, when only a few unusually perceptive people believe things will get better

the 2nd stage, most investors realize that improvement is actually taking place

the 3rd stage, when everyone concludes things will get better forever.

If you buy in the 1st stage you will find bargain prices which substantial appreciation is possible. If you buy in the 3rd stage you will pay a high price and likely lose money as a result.

(a quip from Joseph Kennedy – after making money during prohibition he became a Wall Street investor – when you get tips from the shoeshine boy it is time to sell.)

What the wise man does in the beginning, the fool does in the end.

Every investment trend eventually is overdone and bid up too far, so the buyer in the end pays for potential that is overrated.

3 Stages of a Bear Market

1st stage – a few thoughtful investors recognize that despite the bullishness, things will not be rosy

2nd stage – most investors recognize that things are deteriorating

3rd stage – when everyone’s convinced things can only get worse

There is nothing as disturbing to one’s well-being and judgement as to see a friend get rich (Charles Kindleberger – Manias. Panics and Crashes: A History of Financial Crisis, 1989)

Linking to dividend paying stocks, when stocks prices in general move upwards and you are rewarded more than you expected to be, it opens up opportunities and dreams for you. There is nothing wrong with taking profit. If you reinvest it another stock it can open up more dividends or you can diversify your portfolio which means if the market goes down, you are affected but not by much and it can quickly rebound. It is important to understand markets go up and down and when you see many signs of too much froth in the market, it is okay to sit in cash or cash equivalents and wait till the market falls to buy good dividend paying stocks at wonderful values.

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

If you invest the goal is to have more and the easiest and hardest way is to buy low, hold on to your investments for a period of time, sell some of it when it is high and buy more when it is low. That is a cycle. The way a cycle works is when you look backwards, it is easy to see. When you look forward it is very hard to know what and when the top or bottom is. One person who has tried to use cycles as an investment philosophy is Howard Marks, the founder of Oaktree Capital Management. Mr. Marks has written a number of books and every once in a while, he publishes his thoughts on Oaktree Capital Management website. Mr. Marks has made money buying low and selling high and wrote a book called Mastering the Market Cycle, published by Houghton Mifflin Harcourt Publishing Co, NY, 2018.

Superior investing does not come from buying high-quality assets, but from buying when the deal is good, the price is low, the potential return is substantial, and the risk is limited. The slammed-shut phase of the credit cycle probably does more to make bargains available than any other single factor.

The economy runs on credit or bank financing. When it is plentiful the door is open to give loans and increase loan sizes. When it is closing, few loans are given (banks will have a number for their loan officers to give – usually it is less than the demand for loans). and only those seemingly without need of the money will be given credit increases. When this happens the economy contracts.

The key to dealing with the credit cycle lies in recognizing that it reaches an apex when things have been going well for a while, news has been good, risk aversion is low and investors are eager. That makes it easier for borrowers to raise money and cause buyers and investors to compete for the opportunity to provide it. The result is cheap financing, low credit standards, weak deals and the unwise extension of credit. At this time investors should proceed with caution.

When the reverse is true and it is very hard to get credit, the lender has all the options. It is at this time, investors should be moving into an aggressive mode.

The opportunities to profit in distressed debt are highly cyclical and determined by developments in other cycles. An example of this high yield debt:

At the start, appropriately risk-adverse investors apply stringent credit standards to the issuance of high yield bonds.

the same healthy economic environment that facilitates bond issuances makes it easy for companies to service their existing debt (or defaults are scarce)

the returns convince investors that high yield bond investing is safe, attracting more capital to the market

Increased capital for investment translates into increased demand for bonds. Wall Street never allows demand to go unmet, more high yield bonds are issued.

The same conditions that allows larger amounts of bonds to be issued – strong investor demand – invariably also allows bonds of lesser creditworthiness to be issued.

Something happens in the economy which cause corporate profits to decline such as a recession. Profits decline, those bonds that had little lack of margin begin to default. Due to the outlook for the recession, credit window closes up and debt can not be refinanced and more bonds default.

The default leads to investors who were risk-tolerant not becoming risk-adverse.

Buyers become scarce and sellers predominate.

Eventually the economy begins to recover and the credit market reopens. The default rate slows and prices begin to rise rather than fall. Balance sheet restructurings restore companies viability and value is unlocked. The cycle begins again.

Linking to dividend paying stocks, most investors are interested in higher values in the future or the stock price increases after you bought it. As long as you are positive in the stock, it feels good and you can sell at a profit. All stocks throughout the year move up and down in price, in addition depending where you are in the cycle they will move up and down. Quality stocks tend to bounce back first after the market falls, which is why you should own the best in breed or profitable stocks in your portfolio.

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

If you invest the goal is to have more and the easiest and hardest way is to buy low, hold on to your investments for a period of time, sell some of it when it is high and buy more when it is low. That is a cycle. The way a cycle works is when you look backwards, it is easy to see. When you look forward it is very hard to know what and when the top or bottom is. One person who has tried to use cycles as an investment philosophy is Howard Marks, the founder of Oaktree Capital Management. Mr. Marks has written a number of books and every once in a while, he publishes his thoughts on Oaktree Capital Management website. Mr. Marks has made money buying low and selling high and wrote a book called Mastering the Market Cycle, published by Houghton Mifflin Harcourt Publishing Co, NY, 2018.

There is a theory that investors are rational people. It can be true based on doing your research and knowing what value is, then you reach the investor psychology. Investors will bounce back and forth or have pendulum swings between: greed and fear; optimism and pessimism; risk tolerance and risk aversion; credence and skepticism; faith in the value in the future and insistence of concrete value in the present; urgency to buy and panic to sell. These pendulum swings are seen most at the top and bottom of the cycle. Somedays it will feel everything that was good yesterday is bad today and vice versa.

Risk and return is an important element of investing. There is a graph with return on the y axis and risk on the x axis and the line slopes up to the right. Mr. Marks says it should be interpreted as Investments that seem risker have to appear to promise higher returns, or else no one would make them.

The Chicago school of finance essential assumption is most people are risk averse or they would choose a 7% guaranteed rate or a possible 7% return. This risk aversion is the main element that keeps markets safe and sane.

After an investor has been exposed to risk, there attitudes can and do change.

When economies are doing well, people in general relationship to risk changes to taking on more risk based on the idea that things will continue to do well.

For Mr. Marks the greatest source of investment risk is the belief that there is no risk. The reason is cycles change and they are marked by the extremeness on both ends. Once the good times stop, investors become overly cautious which contributes to markets going down. This negativity causes prices to fall to levels from which losses are highly unlikely and gains could be enormous. But the sting of the prior declines tends to increase risk aversion and send investors to the sidelines just as prices (and their risk) are at the lowest.

(there are many examples but a recent one was during COVID, oil prices fell because of no travelling, and the oil stocks fell in price. Once travelling could be done, demand for oil went up, prices went up and oil price stocks essentially doubled.)

Linking to dividend paying stocks, investing is about risk and reward. Buying an equity and the price rising and receiving a dividend overtime is a good thing. If you pay more attention to the profitability of the company and its ability to continue the dividend then even the price moves, for the time you own the stock it is less important. The reason is total return on your investment – price increase plus all the dividends you collect every quarter.

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

If you invest the goal is to have more and the easiest and hardest way is to buy low, hold on to your investments for a period of time, sell some of it when it is high and buy more when it is low. That is a cycle. The way a cycle works is when you look backwards, it is easy to see. When you look forward it is very hard to know what and when the top or bottom is. One person who has tried to use cycles as an investment philosophy is Howard Marks, the founder of Oaktree Capital Management. Mr. Marks has written a number of books and every once in a while, he publishes his thoughts on Oaktree Capital Management website. Mr. Marks has made money buying low and selling high and wrote a book called Mastering the Market Cycle, published by Houghton Mifflin Harcourt Publishing Co, NY, 2018.

The investing dynamic will always be in a cycle. People will often ask me what caused the cycle to begin or are we close to the end of the cycle. Cycles neither begin nor end. Better questions might be what caused the current leg up to begin? or how far have we gone since the beginning of the up cycle? Cycles have no beginning or ending because they never end, the wave continues.

All cycles have a midpoint and when the investment world is there, is a happy medium or a rational midpoint. The further from the midpoint means booms and bubbles are followed by harmful busts, crashes and panics. Then the cycle turns. (in September the market fell and then came back after a week and commentors noted how fast it went down and then back up).

Although every industry has cycles, they are all a little different. For example: sales of industrial raw materials are directly responsive to the economic cycle of supply and demand. However, everyday necessities such as food, beverages and medicine are not. If you normally buy a loaf of bread, with more money in your pocket you will not likely buy 2 loaves, if there is less money in your pocket you will likely trade to a different brand at a lower price, but still only one loaf.

The linkage between economic growth and profit growth is highly imperfect. One of the main reasons is that most businesses are characterized by leverage of 2 types. These are elements that magnify the response to the profits to a change in sales. First is operating leverage. Profits equals revenues – minus costs. Both revenue and costs do fluctuate. Most businesses have some costs that are fixed, semi-fixed and variable.

Operating leverage means the increase in operating profits will be considerably greater that the increase in sales. In general, it is more for companies whom a larger percentage of costs are fixed and lower for costs that are more variable.

Operating leverage is great for companies when the economy does well and sales rise. But when the opposite happens, it is less good.

The second form of leverage is financial leverage. Given most companies are financed with both equity and debt. If a decline in operating profits affects equity first as debt is fixed which translates to a larger decline in net income.

Linking to dividend paying stocks, often those that own dividend paying stocks tend to use margin to buy the stocks, given it is a long-term hold. If you do not use margin, then what cycle in the market really does not matter, prices will go up and down and when the prices go down as long as the company remains profitable, the yields on your dividends go up. There are many advantages to holding dividend paying stocks in a cyclical market.

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

If you invest the goal is to have more and the easiest and hardest way is to buy low, hold on to your investments for a period of time, sell some of it when it is high and buy more when it is low. That is a cycle. The way a cycle works is when you look backwards, it is easy to see. When you look forward it is very hard to know what and when the top or bottom is. One person who has tried to use cycles as an investment philosophy is Howard Marks, the founder of Oaktree Capital Management. Mr. Marks has written a number of books and every once in a while, he publishes his thoughts on Oaktree Capital Management website. Mr. Marks has made money buying low and selling high and wrote a book called Mastering the Market Cycle, published by Houghton Mifflin Harcourt Publishing Co, NY, 2018.

From a practical point of view, the timing is very hard because we all hear stories or read stories about someone making a lot of money in the up cycle or when markets are going up and we want to ensure we get a piece of the rising prices. When prices go down, you need both cash or cash equivalents to buy low and wait till prices go up. To do that you need to have to be doing your homework on why a stock price has sold off too much and under normal circumstances will go back to the normal.

Both Ray Dalio of Bridgewater Associates and Mr. Marks believes in cycles. Mr. Dalio has done You Tube videos of cycles. Mr. Marks writes books. The books will help you determine how to manage the cycles.

The cycles can be as simple as following the weather patterns. More people go to the beach and enjoy the sun in summer than in winter. In the colder months, the sun shines, the beach is open but the weather is cold and there are very different aspects of the snow and how animals adapt to the cold. The weather plays a part in the construction field or if there is more work during the spring, summer and fall, this means stock prices should be higher. The time to buy is in the winter when the natural cycle means less revenue and lower stock price, but an anticipated stock price rising when the weather warms up.

The cycles Mr. Marks refers to is economic cycle relating to the markets which tend not to be tied to the weather.

Most people that invest will do a combination of 3 things

trying to know more than others about what Mr. Marks calls the “knowable” the fundamentals of industries, companies and securities.

being disciplined as to the appropriate price to pay for a participation in those fundamentals

understanding the investment environment, we are in and deciding how to strategically position our portfolios in it.

The first 2 are recognized by security analysis and value investing.

The third is calibrating your portfolio’s position in terms of risk between defensive and aggressive stocks.

Mr. Marks is speaking to a portfolio of stocks and what risk you should you have to both not to lose money and at the end of the year to be worth more than you are today.

Part of the answer, as Mr. Marks see it is understanding where you are in the investing cycle.

Linking to dividend paying stocks, there are many adages of how to invest and over time you will hear many of them. The simplest is to invest in profitable companies which pay dividends and over time the combination of the quarterly dividends and the stock trading at higher multiples due to making profits will help you be more wealthy than when you started. The great thing about dividends is you determine what you want to do with the money – reinvest it, expand your portfolio, use it to enhance your lifestyle, it is good to have choices.

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