When Charlie Munger passed away in late November, he had many fans and over the years because Berkshire Hathaway was extremely successful, everyone wanted to know what they did so well.

One person who knew both was Tony Keller and he wrote an opinion about Charlie.

To be a successful investment manager you need to know accounting – how to read an income statement and balance sheet. But above all, you need to understand people.

You have to accurately with the genius and the folly, the potential and limits, of humans and their works. You have to see them – and their companies they are running, the schemes they are pitching, the dreams they are dreaming in a true light. You have to see through the marketing moonshine and sincerely held beliefs.

And most important person you must understand is you.

Knowing your limits, including the constrained circle of your own competence was the foundational investment practice underlying 6 decades of success at Berkshire Hathaway.

Both Charlie and Warren read a lot, they are gluttons for learning.

The second was the recognition that even though they were very smart, it was limited. The list of sectors that they declined to invest in was very long. Until recently they did not invest in online businesses. Not because the business was not good, it was because Charlie and Warren were willing to admit to their own uncertainty about how to value these companies long term prospects. They did not follow the crowd, they were on the sidelines for years.

Declining to invest is what Berkshire mostly did. On most days (or weeks or months), Berkshire did not buy or sell anything. It watched and waited and waited for a rare winning hand.

Both gentleman says the real success in investing comes to only a handful of decisions over the course of decades. Great opportunities – the right job, the right spouse, the right investment- arrive only rarely. To seize one of those infrequent great opportunities, you need to self discipline to avoid gorging on the all you eat smorgasbord of poor opportunities.

Berkshire decentralized the running of the companies it owns. Berkshire put in trusted executives with almost total autonomy and aimed the people stayed there for life.

On the investment side, Berkshire did the opposite, decisions about its investment portfolio were radically centralized in the Buffett-Munger duo. Recently a couple of younger portfolio managers were added, but when you have a friendship and two pilots working together for so long, it will take a while to adjust.

Linking to dividend paying stocks, one thing you can learn from Charlie and Warren is not to day trade. Pick your investments over time, and as they do well, you do not have to do anything every day the market is open. Let the market help your success. Read, discuss with someone, and think about something before jumping in. The dividends help you keep from trading, just looking for alternatives, if needed.

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

After you buy shares in the company, you become an owner of the company and being owner means there are responsibilities associated with your holdings. For most of us, our shares do not have enough swing over close votes, but the principle is the same. Management spends a great deal of time and effort to present quarterly reports and all shareholders can vote at the AGM. One of the votes includes compensation for the top 5 or 6 senior executives. One expects if something happened to the top people a replacement would be found to perform at or the same level as the present executives. If someone dies or retires or moves to another company, one of the senior executives would take the place and the company would continue to operate and make profits.

In an article by Jonathan Stempel of Reuters, the Vice Chairman of Berkshire Hathaway Charlie Munger passed away at 99 years of age. Mr. Munger had worked with Warren Buffett for over 45 years and they were great friends. Mr. Buffett is 92 years old.

The good news at Berkshire is they have a succession plan for a long time or since 2006 it was announced. While the people who are expected to move up will be very good, they will not have the same relationship that Charlie and Warren had.

It is noted that the head office of Berkshire Hathaway employs 26 people, the companies that encompass the conglomerate have hundreds of thousands of employees. Berkshire runs a very decentralized operation with great autonomy for the Presidents who run their holdings.

Linking to dividend paying stocks, as a shareholder, one of the concerns you have is the President has cultivated very good people to step in when a vacancy happens at the executive level. One of the elements you invest in is management and you will get a feel for how they work together and who are the expected candidates if people depart. If the company is not family owned, the Board backed by shareholders should have fewer dramatics of who should be in succession process.

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

One of the ways to find success in investing is to buy companies with a economic moat. What is an economic moat?

In an article by Jason Del Vicario and Steven Chen of Hillside Wealth IA, Warren Buffett of Berkshire Hathaway explained capitalism is all about somebody coming and trying to take the castle. A good business is like a strong castle with a deep moat around it. I want sharks in the moat. I want it untouchable.

At the same time, Mr. Buffett acknowledged the difficulty of gauging how big the moat is. No formula in finance tells you the moat is 28 feet wide and 16 feet deep, it drives the academics crazy.

An example of a moat is Microsoft’s Operating System or OS. It has a 75% market share. It is always possible to buy another operating system, but people would have to learn it and that is the issue.

When it comes to finding a durable moat, look for the obvious signs to begin with 1) consistent market dominance; 2) consistent market share gains; 3) consistent superiority in business financials (e.g. profitability, return on capital, per employee revenue, maintenance capital intensity).

Notice the word consistent, you are looking towards the future.

Looking back tells us about the past, but not necessarily about the future. note Warren Buffett owns the Buffalo Evening News, then the internet came along. Kodak had a great moat, then digital cameras in smartphones came along.

Traditional textbooks discuss brand, scale, intellectual property and network effect. Along with customer, supplier, competitor, regulator and corporate culture.

Linking to dividend paying stocks, a company with a moat is music to the ears of dividend investors because the company should be profitable to pay dividends for a number of years. If they can do that, then the monitoring is to ensure the margins of the company are being maintained and the company is profitable. If yes, then only regular monitoring has to be done, if something has changed then the process to look for alternatives begins. It is important not to expect just because a company has a moat, you can hold on forever, homework never ends.

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

After a person leaves high school or post secondary education, the lessons they learn will not be a graded but whether one was a success or failure. Since most of us are not perfect, life will give some successes and failures along the way, the issue if you are to lead is what did you learn and how will try to avoid it the next time. After the education system society in generally measures success and failures in monetary terms or did you make money or lose money? There are many paths to success and failure, but what road is taken when a failure results?

Sometimes the sons and daughters of the more influential people in society should have more options or seemingly more knowledge about risky paths than others, in reality there are many examples of sons and daughters losing money.

In an article from Reuters, the President of the European Central Bank Christine Lagarde, who through her job has access to great amounts of information about banking in Europe and what financial assets are to be avoided, given the first rule of investing – try not to lose money. Ms Lagarde said he sons who are in their 30’s, contrary to her speeches and public stances invested money into crypto money and managed to lose 60% of their money.

Linking to dividend paying stocks, often people have to lose money or invest in stocks that have terrific years then over the next 5 years give all the gains back to be almost flat. Few people set up to lose money, but they invest in the hot sector and they have gains but do not sell. The stock markets turn to the next hot sector and the previously hot sector’s total return begins to turn downward. Investors hold on to their shares because it could go up, there are valid reasons for the sector to go up, but because it is no longer hot, the demand is not there. Eventually, investors examine dividend paying companies and realize investing in profitable companies that can pay dividends over the years increases your total return, which is a very good lesson to learn.

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

In America there is the constitutional right to free speech, which implies you can say or write anything you want except going over the line to violence. This is wonderful for individuals and sometimes there is an accountability to the individual. Many people have posted comments on social media and in later years, someone examined their posts and they may or may not be promoted or the company they are representing not win the contract because of their posts. The important element to society is the person has the right to post the information.

In an article by Kate Conger and Tiffany Hsu of the New York Times News Service reported there is a difference with companies and posting information. If a company needs advertising as revenues, it has to respect the aims of the advertisers. If the image the advertiser is seen to be damaged, advertising will be changed to other companies. The issue is the ongoing conflict in the Middle East – Israel and Palestine. With every conflict there is both good and bad on both sides, but sometimes long-standing prejudices and conspiracies will enter the space.

In the case of X formerly Twitter, major advertisers have paused their spending as the backlash of Elon Musk’s endorsement of an antisemitic conspiracy theory on the platform. Companies such as Warner Bros, Sony, IBM, Lionsgate, Paramount Global which owns CBS stopped advertising.

Social media companies such as X are essentially advertising companies, however major brands do not want their ads next to posts with offensive or hateful speech. An organization called Media Matters said X had put ads besides tweets that promoted the Nazi Party. Elon Musk said a review of X’s data says there were only a handful of ads placed beside the posts of the Nazi Party. Mr. Musk said the company will sue Media Matters.

Linking to dividend paying stocks, as an individual you can have whatever view you wish to have as long as you do not cross the line to violence. With a company, it has to pay attention to the wishes of its customers, because unlike governments, companies can limit who the customers are. Part of the organization is a determination who the customers are and who the customers are not. Usually, companies are lagging behind the changes in the demographics of the country, but the President has a choice one way or another and generally try to stay in the middle where the company supports both sides. It is one of the reasons companies support the United Way and minimum wage requirements, they want it both ways. Whatever company you invest in, there will always be a pro and con with the company but with the dividends you can decide where you want to spend the money.

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

On Wall Street and many other streets around the world, there is an expression money talks. On Wall Street, investors are hoping money talks to them and good results happen, but whether there is a merger or other transaction, the company board or investors on the other side will say show me the money or money talks. If a merger price is considered low, raising the price will sway the suits. In labor relations, it is the same, offer enough money and there is labor peace.

In an article by David Shepardson and Ben Klayman of Reuters, the United Auto Workers (UAW) negotiated with management and then the union has to show the offer to the member of the union. With any large group some want more, others will be happy, and if the union received higher wages and benefits they will believe the higher is the new normal or standard of other companies.

For the UAW, they had a 6 week campaign of targeted strikes and auto companies determined how much money they lost for their workers being on strike and how important it was to settle. The UAW workers received higher wages after years of stagnant wages and a reduction in the tier wage rates. Workers will receive a 25% increase in wages over the life of the contract.

Even with higher wages, 7 of GM’s assembly plants rejected the deal however GM’s largest assembly plant in Arlington, Texas along with plants in Detroit, Fairfax Kansas and Lake Orion, Michigan voted for to have a 55% margins to 45% against. At the time of the writing, 67% of Ford workers and 66% of Stellantis (Chrysler) workers have voted in favor.

Linking to dividend paying stocks, all 3 companies pay dividends and all 3 companies have an important role in the economy for the general public likes cars, trucks and SUVs. For the auto companies trucks and SUVs make the bulk of their profits. Similar to Wall Street, investors like to buy low and sell high and money talks or results matter. All throughout the wage scales money talks.

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

In the stock market, not every company goes up or down at once, often times the companies move up and down according to themes. The most popular theme is AI, but themes are consistent throughout the market. There are potential new weight loss drugs, when interest rates go down it is possible more people will buy homes which helps Home Depot and Lowes among other companies. There are macro trends which tend to affect some companies more than others. One method to be in the group is to buy an index fund tied to the theme. The index funds have relatively low cost, the funds should have some diversification within the group, and when they are introduced to the public there is great hype and positive results. Some of the funds are successful, but how are the performances in the long-term?

In an article by Bansari Mayur Kamdar of Reuters, Morningstar Research used their wide ability to do analysis of the funds and many investors left over 2/3s of the potential gains on the table due to badly timed trades.

One of the problems with buying a theme fund is the first desire of the investor is to make money. How much money is the issue. Theme funds have doubled their assets under administration (AUM) since 2018, Morningstar Research data shows.

In a 5-year period, theme funds had an annualized 7.3% return from June 2018 to June 2013, but investors saw a 2.4% return according to a report by senior analyst Kenneth Lamont.

The S&P 500 index returned 14% annually.

The report attributed the disparity in earnings to poor market timing. Results were bad in more volatile funds where investors tended to trade more frequently and bought high and sold low.

Linking to dividend paying stocks, investors in these stocks tend to have a longer horizon period to expect better returns. With the S&P 500 index, the index company takes out the losers and replaces them with winners twice a year, which tends over the longer term to allow the funds to have better returns. Theme funds do well when the market is pushing them, but they tend to go out of favor and prices fall until they are back in favor. Sometimes boring is better.

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

Every industry has conferences, some are local, some are regional, some are national, and a few are international. If you are in the industry, you should know what conferences are important to the company and which ones will solidify the operations for the future. In the world of passenger aircraft, the most important airshow is the British French air show which alternates between the two countries. In the world of passenger airplanes, 2 companies dominate the industry Boeing and Airbus.

With the rise of OPEC countries and their desire to diversify from oil wealth, although their economies are still dependent on oil and gas exports. If you were an economic development planner, you would want to ensure your country is a hub country which means multiple airlines fly into your country and the airport. The airport, the hotels, the retail uses, and distribution facilities all create and maintain permanent year around jobs. The government of Dubai is trying to do that.

In an article by Jon Gambrell of the Associated Press, the government through Emirates is connecting cities on all continents non-stop to Dubai.

Emirates opened the Dubai Air Show with a purchase of $52 billion of Boeing aircraft which includes 90 Boeing 777 aircraft, 55 of them are 777-9 and 35 will be 777-8.

Its low cost sister airline, Fly-Dubai, spend $11 billion to buy 30 Boeing 787-9 Dreamliners.

When the last plane is delivered, Emirates will have 205 Boeing Dreamliners.

According to the International Air Transport Association, Middle Eastern airlines, air traffic is now up to 97% of pre-COVID levels.

Emirates the company announced a record 6-month profit of $2.7 billion which is up from $1.2 billion a year earlier.

In terms of Boeing and Airbus, according to Phil LeBeau of CNBC Auto and Airline Industry Reporter, Boeing has a 7-year backlog and Airbus has 9-year backlog. Boeing reported its October orders were 117, the year to date is 841, October deliveries were 34 and year to date has delivered 405 airplanes. That is good news if you are a Boeing shareholder.

Linking to dividend paying stocks, all companies make announcements but sometimes companies showcase the announcements at conventions to gain maximum media exposure. If your industry tends to do that, then you can compare what happened a year ago. In the case of Boeing the passenger aircraft is the largest part of their business and having a 7 year backlog is a good thing to know and begin your homework if you want to own shares in the planes you fly in.

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

Every community has an economic development fund to help bring jobs or investments into the community. Given every community has an economic development fund, we as taxpayers must believe it is a good thing to do or why would we fund it? The economic development does a SWOT – strengths, weaknesses, opportunities and threats analysis and hopefully by focusing on what is existing and what has existed with strengthen the existing economy in the area. After focusing on the local, the economic development looks at the state and federal government to see what types of businesses those administrations are focused on. Once in a while, the economic development department will examine what types of grants (government money) is available and will any of those companies relocate to the community? Sometimes it is the incentives that moves the CEOs to make a decision positively for the community.

In an article by Ana Swanson and Jim Tankersley of the New York Times News Service, one such area of development is the manufacturer or production of solar panels. When you think about the advantages of the US, you often think about the technology-based companies and industries that seemingly could take the technology and translate into manufacturing plants. In the case of the solar panels, the biggest manufacturer of solar panels is China. The government of China has been pushing the solar manufacturing plants with a combination of government research grants and development, committing to the solar panels on government lands and helping push down prices and using export markets to dominate this space. This has resulted in China as the greatest exporter of solar panels around the world.

The folks in Washington wanted to change that focus and they established higher tax breaks for companies to work in manufacturer in America. Since the introduction of the climate law, more than $8 billion in new investments in solar has been announced. If you believe it is more than normal. you correct, according to data from Mass Institute of Technology and the Rhodium group.

The biggest plants to announce production are Suniva will make solar cells in Norcross, Georgia; REC Silicon will start a polysilicon plant in Moes Lake, Washington; and Maxeon Solar Technologies will build a plant in New Mexico to build solar cells and modules at a cost of $1 billion. In each of those announcements, the executives noted the driving factor was the Climate Law.

In 2018, US employment in solar panels at 38,000 workers; by 2020 more than 1/5 of the jobs were gone. With the new incentives from the Inflation Reduction Act, more jobs are expected.

The Inflation Reduction Act directly helps the solar industry as well as credits for customers to install solar and if the panels are made in the USA a further credit of up to 10% is added.

Scott Lincicome who studies trade policy at the Cato Institute, a libertarian think tank, says you can always subsidize and protect your way into have factories but at what cost?

Linking to dividend paying stocks, the biggest user of the solar panels will be the utility industry and they want to provide electricity at low cost and a healthy margin to make profits and pay dividends. Due to the investments the Chinese government has made, the costs of solar panels continues to fall every year and it is in the utility interest to have power from solar panels. Whether those panels come from the US or China maybe a different manner. As an investor you can own the utility, but as you do your homework you may want to own companies that are supplying to the utilities and if government grants are helping to maintain profits, so much the better.

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