In the world of marketing, the idea is to capture the consumer when they are relatively young and have them for them as a customer for a long time, there is a term called Customer Lifetime Value and through big data, companies are measuring it more and more. In some cases, the type of customer service will depend on the number. In the world of cigarettes, capturing a consumer when they are young, given some of the chemicals in the cigarette are addictive will ensure even though there are fewer smokers, the ones that do will smoke a lot.

In the era of fewer smokers, cigarette companies turned to something else and the something else was vaping. Vaping has a a high nicotine count which tends to mean those who vape will vape on a regular basis. This is okay for adults, but what should the rules for teens be?

In an article by Matthew Perrone and Dave Collins of the Associated Press, Juul labs has agreed to pay $440 million to settle a 2 year investigation by 33 states to the marketing of vaping products to teens. The money will be paid out over a period of 6 to 10 years with some going to education. The settlement total amounts to 25% of Juul’s US sales.

Juul had a variety of flavors of its vaping including fruit and candy which were clearly aimed at the teen market. Also included was restrictions on where Juul products can be placed in stores, age verification on all sales, limits to on line and retail sales, not using cartoons in advertising, not paying social media influencers and using billboards where 85% of the audience is adults.

Linking to dividend paying stocks, while Juul was doing its advertising, many teens tried and likely continue vaping and more importantly the company was sold to Philip Morris cigarette company. Over the past 2 years, Phillip Morris wrote down their investment but still sells vaping.

Linking to dividend paying stocks, all companies want to do what is legal and profitable and sometimes the closer to the line, the more profitable the product is. How close to the line of legal a company goes is often what determines its morals and ethics. The ideal is profitable companies stay well within the line of being legal and are sued for normal elements. Lawsuits consume time and energy and generally companies have to give up most of what they made by going across the line. In your investments, how active is the legal department?

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

Every household and business has fixed expenses to operate and generally the fixed expenses are in a range which is manageable. When one of the fixed expenses jumps in price, everyone has concerns because the income to pay the fixed expense did not jump. In Europe, due to Russia invading Ukraine, gas and oil prices have jumped and everyone has to pay more. The first thing companies and individuals do is try to find alternatives such as cutting back on usage, examining other forms of fuel but if the company uses gas and oil, it is difficult to find alternatives. The government when prices jump want to do something, but their budgets are stretched which means they have to rely on the large institutions to do something.

In an article by Valentina Za of Reuters, the government of Italy had discussions with Italy’s second biggest bank UniCredit to help its customers deal with the increased prices. The bank offered more financing for small businesses, credit card holders will be able to miss a payment without penalty, mortgage holders can change payments with their mortgages for the next 2 or 3 months.

Linking to dividend paying stocks, often the government will turn to these companies to help them because regulations tend to help the companies make profits. By doing something the government is there to help the bigger corporations when they need help. The relationship between the government and profitable companies is just not when things are going well, but shows the value when the cycle turns. What do your investments do when the economy is in slowdown?

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

In every portfolio an investor has something that they think is sexy and hopefully also profitable. If investors like cars and most do, then they want to own shares in the brand they either wish they own or would like to have. For sometime Tesla has been considered a sexy brand, but one brand that has been sexy or flashy for years is the Porsche.

In an article by Jan Schwartz and Emma-Victoria Farr of Reuters, Volkswagen or VW owns the Porsche brand and wants to have an Initial Public Offering or IPO of the company or it will spin it off. For VW, the Porsche brand is expect to have a valuation in the area of $78 to $111 billion. If it comes at the high end, it will be the largest in German history and the biggest in Europe since 1999.

Porsche’s status as a luxury brand able to raise prices makes it a money maker for the VW Group. Porsche’s operating profit jumped 22% as compared to the mass marketed oriented VW which was up 8%.

VW will decided to approve 25% plus one share of ordinary shares in Porsche AG to be sold to Porsche SE which would give the Porsche and Piech families a blocking minority.

Qatar Investment Authority which owns 10.5% of VW and 17% of its voting rights would be a strategic investor in Porsche AG preferred shares in the case of an IPO.

Linking to dividend paying stocks, there was a wonderful ad a number of years ago, the owner said I liked the product so much I bought the company. In this case if you like or love Porsche cars you can own shares. As a luxury brand it can raise prices and its loyal customer base will continue to buy and profits will be made. Expect the IPO to be over scribed.

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

Every company and consumer uses a supply system and often times if the organization has a long history of reasonable good service, both sides are satisfied to keep the relationship going or renewing on a regular basis. When the relationship was entered into, both sides believed the service they were getting was fair. It is the same with countries, they try to do what is good for their citizens. In the case of Europe, after the Berlin Wall fell, European countries agreed to buy Russian oil and gas and in many countries the percentage that Russia supplied reached 40%. The system worked well until Russia decided to invade Ukraine and European fearing Russia’s possible next move imposed sanctions on Russia. Most people thought Russia would find a way to retreat or save face or not continue the invasion since they were losing or had not accomplished whatever objectives they set out to do.

In an article by Susanna Twidale of Reuters, Europe has accused Russia of weaponizing energy supplies with the result prices of natural gas have increased 400% and winter is coming. Russia through Gazprom sends gas to Europe through the Nord Stream 1 pipeline and it has been running at 20% capacity. Russia blames Western sanctions and technical issues for supply disruptions. The technical issues including somehow the people at Gazprom have forgotten up to keep the pipeline running, because the pipeline is slowed down for maintenance issues. Russia forgets other countries including Germans know how to run pipelines.

Since the invasion, all the European countries have been looking at other options and suppliers, but gas is moved by pipelines and it is hard to change pipelines and refineries to fit other countries. Germany which had pledged to shut down nuclear facilities have extended their lives.

Klaus Mueller, president of the Federal Network Agency regulator, said in August that even if Germany’s gas storage were 100% full, they would be empty in 2.5 months if Russian gas was completely halted.

Linking to dividend paying stocks, all companies have supplier relationships and one hopes that they are long lasting and each company helps the other to be able to help each other in times of crisis. When you look at your investments, do you see good relationships?

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

Former President Trump had a policy called America First which was designed to encourage manufacturers to have some manufacturing in America. The results were tepid at best but it did make good copy at his rallies. President Biden wants computer chip manufacturers to manufacturer in the US and has come up with $50 billion to encourage the actions. Meanwhile, big tech companies including Apple and Google have been shifting some manufacturing from China but they went to Vietnam and India.

In an article by Daisuke Wakabayshi and Tripp Micke of the New York Times News Service, for the past 40 years or more China was the number one place to go to lower costs on manufacturing. The rising geopolitical tensions and the pandemic-induced supply chain disruptions have sent the high tech electronics to other countries besides China.

China has the dominant position of well over 90% in consumer electronics manufacturing, but companies are slowly moving to other countries. Apple is producing iPads in northern Vietnam, Microsoft is producing Xbox game consoles from Ho Chi Minh City, Vietnam and Amazon’s Fire TV devices are made in Chennai, India. These devices used to made in China and the effect is according to purchasing managers survey, factory activity in China has fallen for 2 months.

Foxconn, Apple’s largest contract manufacturer recently signed a contract to expand their facility in Quang Chau Industrial Park located outside of Hanoi, by $300 million which will generate 30,000 jobs. The pay in Vietnam is $300 a month for an entry level position which is good pay relative to farming but is more than 50% less than the $650 Foxconn pays in Shenzhen, China.

Linking to dividend paying stocks, all companies develop links or partnerships with other companies and for the most part the consumer does not fact in where the product is made, but does it work and how easily can it be fixed. In the world there is always a country will lower wages, China is finding out with a rising middle income group, there are other countries than can do manufacturing for less. One would think with the advent of more robots, they could be done closer to the head office, but things move relatively slowly, until there are consistent problems then options are examined. For your investments how much are your concerned where the manufacturing is done?

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

The internal combustion engine for the world meant mobility to the masses however one of the consequences is the gasoline powered car produces exhausts which contributes to climate change because of the numbers. Part of the solution is to move towards electric where there is little direct exhaust for climate change. There will be other concerns what to do with millions of batteries, but one solution first.

In an article from Reuters, Toyota Motor Company announced it has plans to invest $6.9 billion in plants to make batteries in both Japan and the US.

This follows the announcement by Honda that it had partnered with LG Energy Solutions to build a $4.4 billion lithium-ion battery plant for electric vehicles in the US.

All auto companies will need batteries particularly because the largest market of California will not allow new sales of internal combustion engines after 2030.

Linking to dividend paying stocks, all companies react to government regulations, some are leading edge, some wait until they have to, and some in between. Ideally a profitable company can and will stay up to date with the latest trends and they have the resources to buy companies that are leading edge to maintain their market share. What do your company investments do?

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

When Russia invaded Ukraine, the G7 countries decided to punish Russia without shooting its bullets and one of the ways it did that was to put sanctions on the country. The sanctions including financial considerations – if a bond was US payable, the Russians would have to use their internal mechanisms to pay the bond because the US put on a hold on their money outside of Russia. All countries have some money in other countries for diversification. The holds on the money outside of Russia caused concerns and worries and technically Russia defaulted on some bonds, because even though Russia had the money, the transfer agents could not allocate interest payments to the bond holders.

In an article by Alexander Marrow of Reuters, Russia had some options up its sleeves. In July the Russian President signed a law to give companies until the end of 2022 to issue bonds in a simplified procedure on the local market.

According to Ekaterina Nagaeva, director of the bourse’s listing department, they hope the first issue of bonds happen in late September. Replacement bonds would be a substitute for the Eurobonds that Russian companies can no longer service because of sanctions.

The bonds can be issued in rubles or in foreign currencies allow one term allows for the lender to demand repayment in rubles, rather than the foreign currency.

The Moscow Exchange is trying to go back to what was consider normal, but many investors will not be involved due to sanctions.

Linking to dividend paying stocks, events happen all over the world and companies must adapt to the events. The issue is how long does it take to adapt? In the case of Russia, their economy is based on oil and gas and prices went up which means there is money in the system. If there is money in the system adaption takes a little shorter time, in this case 6 months. When an event happens to your investments, you have to consider how long will the company adapt or is it best to seek other alternatives and watch the company on the sidelines till you believe it is adapting?

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

In the north east were the writer of this blog lives, we do not think about water too much because there are numerous fresh water rivers and lakes. However, we do see droughts affecting Europe, the west and southwest and that leads to thinking about water. Without water there is no civilization, many communities in the past, ceased to exist because their source of water changed or dried up and without water humans do not exist. If you are surrounded by fresh water, you do not expect not to have water.

In Israel, the country was formed in a desert, realistically most of Israel is desert and one of the reasons why the country was formed the way it was because no one wanted the land but the founders of Israel did. For generations the government of Israel has been working on ensuring their citizens have water to live, to grow food and to be a vibrant society.

In a book titled Let There Be Water by Seth Siegel published by St. Martin’s Press, NY, 2015, solutions about living with a lack of seemingly fresh water is written about. The book offers hope for countries around the world to learn to do some of the things Israel does.

The tips include:

using drip irrigation for watering of crops (70% of the water usage is by agriculture, drip irrigation lowers the number by being more effective)

desalinate salt water to gain fresh water (Israel uses this water for their drinking purposes)

treat nearly all the sewage to a high level of purity and reuse it for agricultural purposes

demand all appliances be water efficient

replace infrastructure before leaks begin and fix them when they show up

give financial incentives for technologies that save water

There are more but those are the biggest ones which can both save water and use water more efficiently to allow the society to grow.

Linking to dividend paying stocks, all companies start with coming up a solution to a problem. Once the problem is solved the company has the choice to grow and see if others both inside the country and outside the country have the same problem. Israel and its water companies are becoming a trusted source for other countries to ask for and receive solutions to their problems. It is the reason why there are ETFs which track water companies. Water companies can help solve the lack of water by saving water and the companies are becoming billion-dollar companies.

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

If you are a small to medium sized investor, one of the many ways to continue determine what your asset mix should be is to read. The are multiple publications both on line and in print for your work or to earn an income. But if you read other things you may pick up an interesting idea. For example going to the public library is a good thing to do.

Recently picked up a book called The Secret Life of Groceries by Benjamin Lorr published by Penguin Random House Books, NY, 2020. Most of us who do not work at the grocery store do not pay attention to what is on the shelf and how it gets there, but people in the grocery stores do. Some of it is interesting, some of it is background information rarely to come to the foreground.

One of the interesting pieces concerns something that almost everyone has in their home – the cardboard box. In the 1850’s, the cardboard box was invented. Life did not change until the1890’s when cardboard boxes were used for gentleman’s hats. Then a shift begins.

If you think about the western movies, in the town was services including a bar, hotel, law office, sheriff’s office and jail, barber shop and a general store. Most things in the general store were sold in bulk, which is why there were people to get whatever you wanted. After the cardboard box was being used for hats, there were many other technological changes including the preservation of food to move from fragile, expensive glass to cheap and hardy tin. Card stock, the thinner version of corrugated is perfected on an industrial stage for cereal and cracker boxes. By the 1900’s, the shift is momentous: packaged food is responsible for 1/5 or 20% of all manufacturing in the US.

The boxes eventually get a name or advertising on the box. Nabisco Brands begins to sell Uneeda Biscuit and it is a blockbuster, soon the company is selling more than 100 million packages of Uneeda Biscuits a year. The bulk items change to packaged items which gives the customer – choice. In 1916, the first grocery store offering self-service is opened, the store is called Piggly Wiggly and expands to become a chain. By 1930 there are more than 2,500 stores across the land. The chain is smaller today, but it still operates. In the 1940’s the grocery store grew in size from 6,000 sq ft to 9,000 sg. ft to 18,000 sg ft in the 1950’s to today’s Walmart and Costco of 200,000 sg ft.

Linking to dividend paying stocks, there are an incredible number of good ideas in the marketplace, but it does not necessarily to translating into national brands unless a number of other things that complement the process happen. The cardboard box is invented but it takes years before the logistics chain uses the cardboard box to its fullest degree. Often time you want to keep an eye on how logistics works for your investments.

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