Every country loves to have a surplus of trade going to other countries for foreign exchange and that is what free trade is important issue to every President of every country. The President of the country will travel to every country where the host country spends goods in order to ensure good relations and hopefully free trade. The other country has business people who over time develop competing goods and they believe theirs should be sold without tariffs.

In an article by Zhang Yan, Joe Cash and Christina Amann of Reuters, for decades European vehicles have been sold in China, but Chinese have built up expertise in EV vehicles. These Chinese automakers have urged Beijing to hike tariffs on imported European gasoline-powered cars in retaliation for Brussels’s curbs on exports of Chinese-made EV, the state backed Global Times newspaper reported.

China’s Ministry of Commerce organized a meeting attended by Science Applications International Corp., BYD, BMW, Volkswagen, Porsche, Mercedes-Benz, Stellantis NV and Renault SA. The main aim of the meeting was to put pressure on Europe and lobby against the tariffs the EU announced to shield its car industry from Chinese competition.

The Chinese auto market is the 3rd largest in the world after the US and Europe or billions of dollars are at stake. EU car exports to China were worth $28.5 billion in 2023, while the bloc bought about $14 billion of electric vehicles from China according to EU statistics agency figures. China accounts for 30% of German carmaker sales, which also accounts for employment and economic activity in various cities or many vested political interests.

The EU would imposed up to a 38.1% duty on imported Chinese EV. This is one of the reasons companies similar to BYD have announced plans to build plants in Europe and Mexico.

Linking to dividend paying stocks, tariffs and free trade are very important to companies to sell their goods beyond their borders. The issues are complex and every country believes in free trade as long as in balance the trade helps their businesses more than it hurts them. Over time every country’s policy lines shift depending on their economy and how it is doing, which is why tariffs are complex. Companies prefer relative stable legislation then they can allocate resources (build plants) in relationship to the tariffs and return on investments. If a company sees the competition bending the rules, one of the many ways to maintain its advantages is to see tariffs and free trade rules to fight the competition.

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

If you own more than one stock, when the time for companies’ Annual Meetings, there is a tendency to vote for as management recommends. For some companies, there is a button to choose what management recommends or the slate and in other companies to vote means to go through all the motions. One can imagine most institutional shareholders, unless the company is losing money, tend to vote for management. On the retail side, there are reasons why you own the company and the reasons for voting or not voting will be a little more complex than institutions. Thus is it not usual for the nominees to the Board of Directors receive well over 90% of the vote, often it is in the 97 to 99% range.

In an article by River Akira Davis of the New York Times News Service, when Toyota released its voting results, one person received 71.9% while the others received in the 95% plus range. The one person is Akio Toyoda, the grandson of the founder of Toyota and the Chairman of the Board for the past 14 years. Typically, in the past, Mr. Toyoda would receive 96% plus of the vote.

Ahead of the vote, several institutional shareholders had planned to vote against Mr. Toyoda. Andres Schelde, chief investment officer of Akademiker Pension said better governance is needed at the Board level.

Mr. Toyoda is not stepping back from the company and noted he would assume responsibility for addressing the problems the led to Toyota violating vehicle-certification tests.

Linking to dividend paying stocks, even though many large companies have multiple shareholders, there tends to be shares in friendly hands that very few boards ever lose votes. If there is a loss, the vote tends to closer to 90% or less rather than 96% plus. Boards take the voting seriously and present the results in news releases and posts on the website after they have taken place. To have a vote in the 70% means Mr. Toyoda, even though he is the grandson of the founder likely needs to consider letting someone else be Chair.

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

If you are a regular person investing in the stock market invariably you will have a combination of index funds or mutual funds and individual stocks. The reason you need both is because the best stock to buy tend to be closer to $100 or more and if you have limited funds such as $1,000, you can only buy 10 shares. You need the company to do very well to make lots of money. With an index fund, as the markets over the course of the year performs to expectations, you assets will increase. The secret to great performance is to be invested in the handful of companies that are leading the market and at some point you will need to sell some or most of the holdings as another sector does even better. The way to minimize the risk is to ensure the companies that you are buying pay dividends to reward you because the stocks will go up and down with the cycles of the economy.

If you are a retail investor, you will likely spend more time watching and learning about the stock market, while some of your friends are content to park their money in index fund or mutual funds and that is okay. How does a retail investor stay current with the trends on the market? the same way everyone does – social media.

In an article by Preet Banerjee of the Globe and Mail, recently read a study that examined the impact of social dynamics on retail investor trading behavior helps to quantify how these social influencers affect performance. Not surprising the results are not good for the investor, it is good for the fees made in trading.

One of the key aspects of the research was to look at something called upward social comparison or the tendency to compare ourselves with someone who appears to be doing better.

In the study, participants were divided into two groups: one group was presented with information about top traders, while the other served as a control group. All the participants had better than average knowledge of investing. The researchers used a dynamic trading simulation that mimicked trading activity on real world online platforms to observe the participants’ behavior.

The results – the group exposed to top traders took significantly more risk, traded more actively and had higher overall trading volume compared to the control group.

The participants who traded more actively, did not match the best traders’ performance leading to decreased satisfaction with their own performance.

The social trading can be completely automated and big business. For example, eToro advertises a copy trader feature which allows you to have your account execute trades that mirror another user in real-time proportion to your account. The most copied account is a former trader managing his own account and his 23,700 followers.

There is a large role in social media in learning about stocks and investing and that is the good news. The harder part is realizing that one of the most important tasks of a retail investor is to take your time, learn and invest for the long-term will minimizing your risks.

Linking to dividend paying stocks, the reason you buy these stocks is the price of the stock tends to trade at a higher multiple than the rest of the market and every quarter the company pays you money to your account. With that money you can reinvest in more stock, you can buy something new, use in your daily lifestyle or your have options. The best traders have multiple strategies and making a little everyday, while trading millions of stocks is a good return. Most of us can do that, what we can do is try not to lose money or limit risk while enjoy a good return on your money.

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

Across the world there are disasters and when they happen the government of all levels open the piggy bank and ensure the people will get through the disaster. On a personal level, it is your rainy day fund or something of that nature. Governments have resources backed by taxes and if desired they can marshal those resources to bring things to what is considered normal.

In an article by Lea Skene and Brian Witte of the Associate Press, in March a freighter hit a support of the bridge and the bridge fell on the ship and into the shipping channel in Baltimore, Maryland. The port has over the years become the leading bridge to import and export cars and farm machinery or very important to the manufacturing industry across the US.

The first step towards recovery was the use of $60 million in federal emergency funds to open 3 smaller channels to have some ships use the port.

When the port was shut down, thousands of longshoremen, truckers and small businesses were affected by the collapse. State officials helped establish several relief programs to keep people employed and business afloat in the aftermath.

Officials estimated the salvage operations will cost up to $75 million, while the Coast Guard has spent $24 million to open the main channel. A new bridge is estimated to cost $2 billion, funding is still awaiting approval from Congress.

The shipping channel in Baltimore is now about 50 feet deep and 400 feet wide, although in is widest area it is 700 feet wide. The depth and width is enough to accommodate the largest commercial vehicles.

Linking to dividend paying stocks, we all know that disaster will and do happen, and when they happen on a large level the government is often willing and able to help mitigate the worst of the disaster effects. The important element is it takes time and people will be affected. The good news is the resources that are available to help bring back and likely improve the situation, in a disaster many things can be improved particularly if the federal government is paying the bill.

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

If you think about Apple, one thing that will you may think about is people love their apple products. If people love the products, they are very likely to be loyal to the products if and when they upgrade. For Apple that reputational advantage is almost something you can take to the bank. In recent months, the news broadcasts and print stories have been highlighting AI, but you did not often hear Apple’s name. Apple traditionally is not have the first product on the market, but in their users mind, they often have the best products.

In an article by Aditya Soni and Stephen Nellis of Reuters, Apple unveiled its new Apple Intelligence technology across its suite of apps including Siri and partnering with OpenAI to bring ChatGPT to its devices.

The AI features were announced at its Worldwide Developers Conference. This conference is an annual event and Apple showcases its own apps and operating systems as well as to show developers new tools they will be able to use in their apps. The developers of the apps are encouraged to use AI in their apps.

Apple has sold over 1 billion iPhones and the newest phone to come in the fall will have AI features. The potential for Apple is those billion users of iPhones will upgrade to new iPhones powering the iPhone revenue stream as well as the services that are offered on iPhone.

Linking to dividend paying stocks, these companies typically make profits every year and there are very practical reasons. Yes they are good companies, but if customers are loyal, then they continually buy the products and services. In a company similar to Apple, it has the potential that half the users will upgrade and if they upgrade the recurring revenues for Apple will allow them to make profits and some may see the company as a growth stock which pushes up the price.

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

For all young people the barrier to entry to pay basketball or soccer (football) is very low. A ball is needed and the town or city provides the field to play in. If a youngster falls in love with the sport, there are professional leagues to dream about. The barrier to entry means many people will be exposed to the sport and as they grow up will be the primary targets of watching the sports on TV. While only a very few will be able to make a living, as long as the knees are good, many will play for years to come and then possibly with their children. This is a ready made market for the professional leagues to monetize.

In an article from Reuters, the NBA is closing in on media deals with Comcast owned by NBC, ESPN owned by Disney and Amazon that would generate over $76 billion in media revenue over 11 years.

Rights to the widely watched professional basketball league are a prized possession for media companies. Sport content continues to attract a reliable and loyal audience at a time when traditional TV businesses are losing millions of subscribers to cord-cutting or people no longer subscribe to cable channels.

NBC would pay $2.5 billion a year for 100 games with half on Comcast’s Peacock streaming services. Amazon would pay $1.8 billion a year for regular season and conference finals. ESPN would pay $2.6 billion a year including the NBA Finals. ESPN is in the process of launching its direct-to-consumer streaming service in 2025.

Linking to dividend paying stocks, the NBA is the premier professional basketball league and its starting players all earn a million dollars a year plus. More importantly for the owners, because the media deals continue to increase over the years, the franchises are worth more every year. The process starts with a lack of barrier to entry to be exposed to the game and as more money flows into the system, the barriers to entry at the highest levels is very restrictive. If you can find companies that follow the same pattern, then they can deliver profits and pay dividends.

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

In all economies there is a cycle, but the understanding is when does the economy move from negative to positive. For the average person in the economy, there has to be hope the market improves. For the investor with options, being aware of lower asset values and when will the market is expecting to move and advance positively is the holy grail of investing or value investing.

China has the second largest economy in the world but it has a large problem – the real estate market. The government spent on infrastructure and the country has some of the best infrastructure in the world, but China allowed the property market to be 25% of the economy. In an article written by James Griffiths of the Globe and Mail and Alexandra Li of Reuters, according to official data, China has some 390 sq m of completed and unsold homes, equivalent to 6.6 Manhattans. One survey found the number of properties for sale was 20 times higher than the number of transactions that month.

A property bubble in the 2000s and 2010s saw local governments across China make vast amounts of money selling land to developers, who paid hefty premiums safe in the knowledge that apartments would be snapped up by investors. The property sector has grown to account for 25% of China’s GDP and a staggering 70% of all household wealth.

The biggest property developer was Evergrande defaulted on $300 billion in debt. Resales have fallen 7% year over year as well the price of new homes has fallen 11%.

China’s central bank has set up a $42 billion fund to buy excess inventory with the intention of turning it into affordable housing.

In a book called Banking: A very short introduction written by John Gooddard & John O.W. Wilson, published by Oxford University Press, 2016, the authors outline some of the previous panics and how long they took to recover. The Swedish Banking crisis in 1991 – it took the Swedish government to guarantee all bank deposits and creditors of 114 Swedish banks. The initial cost of the rescue was 4% of Swedish GDP.

The US Savings and Loan crisis in the mid-1980’s resulted between 1986 and 1995 more than 1,000 savings and loan companies was subject to closure or some other form of resolution. The US government step up the Resolution Trust Corporation in 1989 to allow slow disposable of the assets of the failed Savings and Loan companies.

The Japanese banking crisis end after a boom in property values which ended in 1990-1. Following a weak recovery in mid-1990’s, Japan felt a further downturn at the onset of the Asian crisis in 1997. For 2 decades, the Japanese economy experienced a protracted deflationary spiral.

The global financial crisis of 2007-9, mortgage-backed securities were held in portfolios and banks around the world and they all lost value. You can be the judge when the economies finally left the losses behind.

Linking to dividend paying stocks, economic cycles happen but if there is a crisis, to recover from the crisis will take time, but if you can invest when things are reasonably weak, you will be reward when the economy improves. Banking is about confidence and in a crisis very few people have confidence. One thing you can be confident in as holding stock in a profitable company that can pay dividends. The price of the security will likely fall, but the company is paying a dividend and one way you can use the dividend is buy more of the shares or average down. At some point the shares will trade at a higher multiple than the competition and you will be rewarded.

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

Every stock goes in a cycle and usually that cycle is related to its business cycle. The easiest way to see it is in leisure stocks. For example, when the weather warms up people go to theme parks to go on the roller coaster and enjoy the park. The theme park brings in more revenues during the warm weather, in the cooler months of winter, less people go to theme parks. If you invest in the theme park company, you need to watch the weather and attendance records, if the average spend at the theme park is consistent, then you should expect the stock to move upwards during the warm weather. The point is in many companies, they have natural cycles. The same is true of growth stocks, at some point the straight-line forward growth will level off, is Tesla at that stage?

In an article by David Randall of Reuters, some of the institutional shareholders are convinced although they like Tesla, if the day’s of dizzying growth are over, there are other alternatives to consider.

For many years, Tesla has been valued as a tech company rather than as car company. The people who like Tesla always talked about valuing Tesla similar to Apple or Alphabet, rather than GM. In early June it was trading at 64 times future earnings. For comparison GM trades at 4.7 times, Ford trades at 6.4 forward earnings and Toyota trades at 10.1. If Telsa now resembles more legacy auto company the stock should fall from $176.29. One question is what is fair value?

Ross Gerber, whose LA based firm of Gerber Kawasaki Wealth & Investment Management bought 500,000 shares a decade ago. Mr. Gerber has cut his holdings to 300,000 and believes it should be 40% less than their current value or about $100. His other shares, he has made large capital gains and expects to give some of his stock to a charity to allay the consequences of selling or use them to sell put options, which allows him to raise income without incurring tax penalties.

Tesla stock had 14 times increase in share price in the past 5 years, which encourages people to hang on to some of their shares. Is this time different?

John Belton, a portfolio manager at Gabelli Funds sold its entire position of 65,900 shares, because he believes the fundamentals were becoming detached from reality.

Someone who has been buying is Cathie Wood of ARK Innovation who has increased her shareholding to nearly 12% of the fund’s assets. She bought $100 million worth of shares in April, according to Morningstar data. During April, Ms. Wood said Tesla is worth closer to $2,000 a share by 2027 or worst case scenario $1,400 because of the exciting future it has it front of it.

Graham Tanaka of the Tanaka Growth Fund has owned Tesla since 2011 when its shares were $2, sold its position, because the risk is high in Tesla and you have a great play in Nvidia trading at half the valuation.

Linking to dividend paying stocks, the wonderful thing about the markets is there are many differing opinions who all look at the same data and see something that either reaffirms their idea or tells them to stay away. Only with time do you know who is correct. If you want time to help you, buying a company that pays a dividend while you wait is a good thing to do.

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

In a book called Firefighting – The Financial Crisis and its Lessons written by Ben S Bernanke, Timothy F Geithner and Henry S Paulson published by Penguin Books, NY, 2019. The book offers lessons from a crisis. The 3 authors were the lead news daily in 2008 through 2010 as the financial industry went through losses, destabilization, recession and recovery. The 3 people had to come up with a variety of tools to fight the fires and to allow for recovery. In all industries including finance, regulations are there for the last crisis not the current one. If the crisis is worse this time, the regulations are less effective because all industry change from the last crisis. Finance is always a little different because much of finance is about confidence. Banks lend money, they have to have a level of confidence the counterparty will repay. When the confidence falls, investors run will their money to something safer. When money goes to something safer, it effects regulatory levels.

Not surprisingly, the 3 authors noted the system is more complex than ever and when they tried to do something, they quickly realized the tools in the toolbox were not sufficient for the job and needed to persuade politicians to give them better tools.

None of us, nor any of our accomplished colleagues, had ever lived through a crisis like this. Despite Ben’s expertise on the Great Depression, Hank’s feel for financial markets and Tim’s experience with crisis abroad, none of us were ever sure what would work, what would backfire, or how much stress the system would be able to handle. There was no standard playbook we could consult for guidance, no professional consensus about best practices. We had to feel our way through the fog, sometimes changing tactics, sometimes changing our minds, with enormous uncertainty about the outcomes.

Although it could well have been worse, the crisis was still extraordinary damaging both for the US and the world. Millions of Americans lost their jobs, their businesses, their savings and their homes. One crucial lesson of 2008 is that financial crisis can be devasting even when the response is relative aggressive and benefits from the formidable financial strength and credibility of the US. The best strategy for a financial crisis is not to have one. And the best way to limit the damage is make sure crisis managers have the tools they need to fight before things go too bad.

Financial crisis will never be entirely preventable, because they are products of human emotions and perceptions. as well as the inevitable lapses of human regulators and policymakers. Finance depends on confidence and confidence is always fragile. While it is vital to try to rein in excessive leverage and risk taking on Wall Street, that leverage and risk taking is generally a reflection of excess optimism in society as a whole. Mania and panic both seem to be contagious.

The US was not prepared for the crisis in 2008, but a decade later is it better prepared? We believe yes and no. There are better safeguards in place to avoid a panic in the first place. But the emergency authorities for government officials to respond are in many ways weaker than they were in 2007. The government’s ability to respond to a collapse in economic demand with monetary and fiscal stimulus has also been significantly depleted.

The authors outline what needs to be done and could be done, but with a divided government where do you think the two parties would co-operate?

The book has charts from pages 135 to 212 that are interesting to look at.

Linking to dividend paying stocks, all stocks go up and down or fluctuate, but some less than others. In times of optimism, you want to play offense, but when things are tough, defense is the name of the game. There are always conflicting emotions to investing, but receiving dividends is something to look forward to. In the book, Firefighting, very few people thought the economy would go into crisis or what were the signs? when should you play defense? Often times if a dividend paying stock cuts its dividend, then you know you need to move to alternatives, but did you miss the signs? too optimistic? what are the alternatives to move to?

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