As an investor it is important to read and understand how markets work and although you may have a bias towards larger profitable dividend companies, it is still important to thing about the small companies. One book of many on the subject is called How to Become a Microcap Millionaire written by Justin Waite, published by Harriman House, Hamshire Great Britain, 2024.

Always Check the Cash

One type of business will, in general, always be riskier that the other. 1. Profit-generating and 2. Loss-making.

If a company is loss-making, you should break it down into 2 further categories are 1. revenue-generating and 2. pre-revenue.

If they are revenue-generating I analyze 6 metrics:

1. Growth – looking for double-digit revenue growth, ideally closer to 20%
2. Value – a market capitalization of less than 2 times its revenue and less than 20 times net revenue (P/E)
3. Health – ideally a company will have a little debt and net cash
4. Efficiency – gross margins to exceed 40% operating margins to exceed 10% and net margins to exceed 5%
5. Momentum – there are 3 basic states a share price can exist in 1. downtrend 2. range and 3. uptrend What you are trying to do is avoid a downtrend.
6. Potential research, research, research, companies that fulfill the 1-5 filters.

When researching loss-making companies, the most important metric to look for is cash.

The cash flow statement is broken down into 3 areas: 1. operating activities 2. investment activities and 3. finance activities.

A company is either generating cash or using it. If they are loss-making, they are using it. To be on the safe side, the author likes to make sure a loss-making company has more than 12 months’ worth of cash.

Linking to dividend paying stocks, all investors have a system and that system involves continuous learning to fit your metrics. Whether the stock is large or small in price, the idea is not to lose money and overtime ensure compound interest works for you.

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

As an investor it is important to read and understand how markets work and although you may have a bias towards larger profitable dividend companies, it is still important to thing about the small companies. One book of many on the subject is called How to Become a Microcap Millionaire written by Justin Waite, published by Harriman House, Hamshire Great Britain, 2024.

How many stocks should you hold?

If you hold a low-cost, well-diversified fund, then you are diversified. It’s important to remember that.

The more stocks you hold, generally, the less risk there is to your portfolio value. That is because holding many stocks means they take up less of a percentage of your total portfolio value. If a stock only takes up 1% of your total portfolio value and the business goes bust, you have only lost 1%.

The author personally finds it hard to manage more than 20 companies. You are investing in businesses. Everyone is unique, with different management, products, services, and financial metrics. There is a lot of information to absorb on each one. Jim Cramer of the Mad Money on CNBC talks about the best in the breed, quality over quantity.

Maximum exposure?

There is no hard and fast rule to this but as long as a company’s share price keeps going up, you should keep buying it- but there are 3 caveats to this:

Caveat one – as long as the company keeps releasing excellent financial results showing they are still growing at a good rate, and they are not overvalued.

Caveat two – 1-3%, but that is not the same as having a company take up more than 10% of my portfolio due to its share price rising.

Caveat three – if you are investing in a microcap, you should always pay attention to the average daily volume of that company. You do not want to be unable to sell if you want to sell.

Limit your downside, never limit your upside – let your winners run. If you manage to find a company that goes on to be a superstock – or rises by 1,000 or more, if you play it correctly you only need one big winner in your lifetime. Superstocks are rare.

A superstock formula or traits

1. Revenue – all these companies generated revenue (not hope, hype or potential)
2. Growth – all these companies experienced revenue growth
3. Value – all these companies were of a good valuation
4. Momentum all these companies’s shares prices had momentum
5. Size all these companies’s market capitalization sat below $100 m when the journey to 1,000% began

You should not fight the market; it will always win.

Linking to dividend paying stocks, no matter what company you buy, doing your homework and buying quality, for the idea is to lose less money. You can always learn from the small companies because they have hope, hype and sometimes actually revenue.

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

As an investor it is important to read and understand how markets work and although you may have a bias towards larger profitable dividend companies, it is still important to thing about the small companies. One book of many on the subject is called How to Become a Microcap Millionaire written by Justin Waite, published by Harriman House, Hamshire Great Britain, 2024.

The book has 3 parts – What – fundamental analysis; When – technical analysis and How – portfolio management.

How to Buy: Portfolio Management

1. Put a meaningful amount of your trading capital in a low-cost diversified fund. This means you’re guaranteed to capture a chunk of market performance no matter how the rest of your portfolio does. It takes pressure off. Everything else is gravy.
2. Aim for 10-20 low-risk companies with meaningful potential. Low-risk is more important than high potential, because high potential is by definition not highly probable. And diversification is your ever-present help in times of trouble.
3. Avoid denial when things go wrong. Cut losses. Learn lessons. Move forward.
4. Make equal bets by giving initial weights to your investments. And avoid risking everything by keeping those initial positions small 2-3% of your trading capital.
5. Don’t neglect your portfolio. Trim losses, secure wins – stop losses will do both for you automatically. Set them 20% away. Do not sell your winners – guarantee them by moving stops us as they grow.

We all want to make money on the stock market, but reality is some decisions we make will lose money. What do you do? You need discipline armed with facts.

This is the gain you need to breakeven a drop

% drop % rise to breakeven

10 11

15 18

20 25

30 43

40 67

50 100

If a share price drops 50%, you need a 100% gain to get back to breakeven. This is an uphill struggle. Sometimes you have to accept you got it wrong and move on. The financial press which shows a stock market in a newspaper has a column % gain over the year. How many are over 100?

One solution is to use stop loss, because investing is about avoiding big losses. Then it’s about making gains. Big losers wipe out gains, so wipe out the big losers and you are left with the gains.

Eggs and chickens

The author invests in eggs (microcaps) with the hope they will hatch and grow into chickens. However, by investing in a big fund, which owns mature companies you get the benefits of owning chickens.

1. Stability – it reduces portfolio volatility. Holding many big companies will always be less volatile than a few small companies.
2. Diversity – holding a fund means you can achieve instant low-cost diversification.
3. Probability – you will have a higher chance of a positive return.

Linking to dividend paying stocks, at the early stage of investing you looking to make money but the reality is that you need an anchor which takes time to build up. Along the line, it is very hard not to look at microcaps but before you jump in have an anchor if the price of the stock price goes down. The dividends allow you choice but the discipline and portfolio management skills need to be complemented.

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

When industries are going through disruptions, some will see the industry as half empty and others will see it as half full. The half full means companies will consolidate in order to grow differently. One of the industries that is changing is the movie industry. For generations it meant going to the movies and with the internet it became streaming. This means all kinds of things although people still enjoy and want movies to tell stories.

In an article by Michelle Chapman of the Associated Press, Paramount Skydance launched a hostile takeover offer for Warner Brothers Discovery of rival bidder Netflix.

Warner Bros Discovery is the studio behind HBO, CNN, DC Studios and much more. Recently the Board of Directors of Warner Bros Discovery accepted Netflix’s $72 billion purchase.

Paramount Skydance offered $108.4 billion and willing to buy all of Warner’s business including the cable business that Netflix does not want.

The deal includes more cash than Netflix – $18 billion. and Paramount Skydance noted it is more likely to pass antitrust scrutiny from the Trump administration.

Netflix offered cash and stock valued at $27.75 a share or a total of $82.7 billion

Paramount Skydance has offered $30 a share and has gone to the Middle East for partial funding tapping into Saudi Arabia’s Public Investment Fund, Qatar Investment Authority, Affinity Partners, the investment firm run by Jared Kushner, and the largest owner of Oracle Software – Larry Ellison who is the father of Paramount SkyDance CEO David Ellison.

Linking to dividend paying stocks, when mergers are announced they are often backed by the stock price of a company, if people do not want to keep the shares they can sell and some do because they own a different company in the same business, they see opportunities elsewhere, mergers take time before the results are seen, so you can watch from the sidelines and then possibly buy down in 6 months to a year at a lower price or you will need to do portfolio management and that is a good thing to have to do.

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

For every investor, the cost of money or interest rates pays an important factor in the investment decision. If you could receive 15% return for buying bonds, would you buy stocks? conversely if returns for buying bonds are 1% why would you not buy stocks? We all know what we would do if interest rates are very high or very low, what about the middle? One of the people who influence the interest rate is the Chair of the Federal Reserve.

In an article by Jeff Mason, Howard Schneider and Katharine Jackson of Reuters, President Trump says we already knows how he will pick to lead the Federal Reserve as Chair. Next May, the present Chair Jerome Powell mandated 10 years is up and he will not be reappointed.

Treasury Secretary Scott Bessent along with President Trump has led the search process. Mr. Bessent does not want the job. The leading contenders are Kevin Hassett, Michelle Bowman, Christopher Waller, Kevin Warsh and Rick Rieder.

Secretary Bessent says he has completed 2 rounds of interviews with each of them and plans a narrowing of the list to President Trump later in December.

President Trump favors someone who will lower interest rates.

Regardless of who leads the Fed, the first order of monetary policy is determined by economic conditions, James Egelhof, Chief Economist for BNP Paribas said.

Linking to dividend paying stocks, when buying dividend stocks the total return of dividends plus capital gains are the reward for the investor. In down markets, dividend stocks go down the least, why in up markets they trade at higher multiples because they are profitable. What is not to like?

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

If you are an investor, ideally you like to own shares in companies that have monopolies or near monopolies, to ensure there is a floor for the commodity prices. The floor means prices of the commodity should not go lower than that, if they go higher so much the better. Sometimes the ideals of the investor and the ideals of the consumer are opposite.

In an article by Ahmad Ghaddar, Alex Lawler and Oleysa Astakhow of Reuters, the OPEC companies offer a monopoly. Ever since 1973, OPEC has influence prices, before that it was the 7 largest oil companies at that time.

OPEC or the Organization of the Petroleum Exporting Companies is combined with the + which is allies led by Russia. (Russia’s number one export is oil and gas).

Having oil in the ground and not being in the G7 countries, is the entrance way into OPEC.

Since April of 2025, OPEC+ members have released 2.9 million barrels a day into the market.

OPEC+ has about 3.24 million b/d of output cuts in place, representing about 3% of global demand. The cuts are in place until the end of 2026.

The process for 2027, is an outside company will assess capacity at 19 of the 22 OPEC+ members. Capacity in the countries under sanction such as Russia, Iran and Venezuela will be assessed by a different company or by using an average of their oil output for August through October 2026.

With quotas, there are always some companies that either want to produce more or want higher quotas such as the UAE and others that resisting quota cuts because their production capacity as fallen such as Angola.

Linking to dividend paying stocks, many industries are complicated because the players have different influence over the industry. In the oil industry, the OPEC countries produce more than they consume, so they need to sell to other companies. The companies have consumers and consumers wish to pay as low as possible. On top of that the major oil companies produce oil domestically and offshore in non OPEC countries but all are influenced by the OPEC desirability for a range of prices. As an investor in the oil business this ensures oil companies make money, the issue is how much?

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

Every industry has trend lines, and one of the lines in the world of trading is the trend is your friend until it is not.

In an article by Mike Dolan of Reuters, trillions of dollars of AI investment spending earmarked over the next 5 years hinge on a belief that a grand technological transformation of the entire US – and likely global – economy is under way.

Strategists at the world’s biggest asset manager BlackRock unveiled their annual outlook, which showed just how difficult it would be for even this sort of tech metamorphosis to knock off the US off the steady course it has mapped over a century and a half.

The report from BlackRock Investment Institute noted the US sits at the global economic frontier. All major innovations of the last 150 years – including steam, electricity and the digital revolution – were not enough for it to break out of its 2% growth trend. Doing so is a tall order.

By that they mean AI could begin to generate, test and improve new concepts of its own- accelerating and driving scientific breakthrough in materials, medicines and tech.

Blackrock’s charts maps US GDP per capita growth stretching back to 1870. Aside from the big swings around the Second WW II, the two notable periods of above-trend were in the late 19th century and the 1990s. But it never strays far from the 2% line.

Maybe this time it’s different.

While we wait for AI’s long promise to unfold, the immediate economic horizon is likely still constrained by that 2% trend line – to the extent that bottlenecks in the labor market or existing supply chains or construction capacity still exist.

Linking to dividend paying stocks, if you are a trade then the trend is your friend until it is not. If you are long term holder, it is important to know what the trends are and have been to decide whether to reinvest or ensure your portfolio is well diversified.

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

While the President and some members of his Cabinet may not think there is climate change going on, insurance companies do. The insurance companies determine the premiums to insure they make money on both ensuring the premiums and investing the surpluses. If a natural disaster happens more than the once in a 100-year scenario, the AI data means the price of home insurance premiums increase unless the amount the person has to pay first increases. The insurance company are in the risk allocation business, and they like less risk to themselves.

In an artice by Claire Brown and Mira Rojanasakul of the New York Times News Service, a homeowner in Lafitte, Louisiana which has been in the family for 5 generations, has seen the premium increase to $8,312 more than doubling in the past 4 years. The house is on a small coastal community and has been raised with stilts.

The homeowner is considering selling, but the home values have fallen 38% since 2020 as people cannot afford the higher insurance premiums, the area is dotted with for-sale signs.

New research shared with the New York Times on where insurance costs have risen the most and how they are affecting home values. Since 2018, a shock in the home insurance market has meant that homes in the ZIP codes most exposed to hurricanes and wildfires, would sell for an average of $43, 900 less than they would otherwise found. The research analyzed tens of millions of housing payments through 2024.

Changes in the reinsurance market is a helping drive the trend. Insurance companies purchase reinsurance to help limit their exposure when a catastrophe hits. Global reinsurance companies have been raising the rates.

Benjamin Keys at the Wharton School of the University of Pennsylvania and Philip Mulder of the University of Wisconsin-Madison analyzed 74 million home payments between 2014 and 2024. The researchers found a rapid repricing of disaster risk had been responsible for about 1/5 of overall home insurance increases since 2017. Another 1/3 could be explained by construction costs.

The researchers found that in ZIP codes most vulnerable to catastrophes rising insurance premiums weigh down home values by about $20,500 in the top 25% of the most exposed ZIP codes, if you go to the top 10 ZIP codes the number is closer to $43,900.

In the parts of hail-prone Mid-western states, insurance now eats up more than 1/5 of the average homeowner’s total housing payments which include mortgage costs and property taxes. Remember without insurance no mortgage. In Orleans Parish, La the number is closer to 30%.

Higher insurance premiums and higher interest rates are making it harder for first-time buyers to afford to buy new homes.

According to Census Bureau data some 13% of US homeowners are uninsured, that is expected to increase and higher payments out of pocket if and when a disaster happens.

Linking to dividend paying stocks, similar to most things in life there are multiple parts that need to exist in the market is in order. While you may or may not like climate change, insurance companies are putting increasingly putting the risk on homeowners. As investors you need to look to the companies that adapt changing circumstances to continually make profits.

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

Politicians love slogans such as President Trump’s drill baby drill. While just about every voter has a good idea what that means, the question is are the companies doing more drilling?

In an article by Lisa Friedman of the New York Times News Service, according to Kenneth B Medlock, an energy economist at Rice University’s Baker Institute for Public Policy in Houston, the answer is no,

There are reasons, oil is a commodity business, and the price has fallen from $75 to in the $60’s. That direction means the oil companies needed to find more efficiencies rather than drilling more. When President Trump imposed tariffs on steel and other commodities, oil companies need for wells and other equipment, costs went up.

President Trump has repealed dozens of environmental regulations that added costs to oil companies. He has also opened up millions of ecological sensitive lands in Alaska to drilling and is poised to deliver millions of acres of offshore ocean waters.

One area where the President has delivered is President Trump’s tax and policy law is projected to deliver at least $18 billion in government subsidies and tax breaks for oil, gas and coal over the next decade.

Bob Ryan, who runs the Ryan Commodity Insights consulting firm said the first year has been too confusing to be positive for most companies.

Taylor Rogers, a White House spokesperson, credited President Trump’s agenda with lowering gasoline prices and improving energy security. According to AAA the average gasoline price was $3.069 a gallon versus $3.056 a gallon a year ago. (no one is positive where President Trump fills his tank for $2.00 a gallon).

There are reports that the peak of the shale oil productivity expansion will be 2026 and after that prices will tend to go as the US needs more imported oil.

In terms of electricity prices that everyone pays, they have gone up 11%, partly due to the demand for AI data centers.

Linking to dividend paying stocks, the oil companies have been and continue to be some of the best dividend paying companies in the US. For investors, it is good that oil companies can drill for oil, but oil is a commodity and when you are investing in the company, you need to know whether the company can make money at $60 a barrel? if yes and the price increases then your total return will be enhanced no matter what the politics are.

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