Governments are important and often they are important because of the direction they wish to lead the public. In reality, most of the public has limited access to credit and if the government gives an incentive, the public will eventually adopt it. There will be early adopters who see the value in the incentive and believe in the outcome. There will be others who will do the incentive because they see it as the right thing to do and late adopters because the price has dropped or they see others doing the incentive and join in because it seems a normal thing to do. The above happens in new product launches it is generally the way the public functions.

In an article by Kathleen Ronayne of the Associated Press, if you think about California, particularly southern California you will see many parts near Los Angeles are a desert or semi-desert conditions. For the past 26 years, California has a program to put solar panels on their homes. It is widely successful with over 1.3 million homes having solar panels and new subdivisions must be built with solar panels on the homes. The current incentives are if you have solar panels on your home in California, whatever power you do not use you sell back to the power companies which can result in a discount on your bill. The term is net energy metering and the incentives lower the amount of time to pay for the panels. At present the time is between 3 and 4 years. The power companies want to increase the time to between 10 and 15 years.

The issue for the power companies is the current program allows for customers to sell back into the power grid for more than it is worth. Utility power companies need to maintain power distribution across the state and while the incentives have been necessary for the public to adopt solar panels, the cost of the rest of the system is not being paid evenly. The utility companies are proposing the incentive to either be lower or a fixed rate for every customer, then everyone pays their fair share.

Linking to dividend paying stocks, there are government incentives for all types of businesses, most of them rarely are changed, when times are in downside the incentives become larger, but rarely do they go down. Ideally making a long term decision based on incentives is the not the correct process but everyone and companies do it. Cutting incentives by the government is very difficult because decisions have been made using the incentives. When it comes to your investments ask the company which incentives they are using and how much do they depend on them?

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

In mid December a very large tornado that was 200 miles long touch ground on a number of places leaving damaged buildings and lives in the process. Deanne Criswell the head of FEMA has called the tornado the new normal because of climate change. We all understand the destruction tornadoes cause and if you need to see a movie Twister staring Helen Hunt is a good indication of the beauty and destruction of a tornado. The issue is at one point there was a season for tornadoes and people knew and now the tornadoes can come anytime of the year.

In an article by Richa Naidu of Reuters, Amazon has distribution plants around the US and the world and they move goods and services. If you look at map of St. Louis, the Mississippi divides the city if you live on the west, you are in Missouri. If you live east of the river you are in Illinois. One of the suburbs of St. Louis is Edwardsville, Illinois and Amazon has a 500,000 square foot facility and there is a 1.3 million square foot in Republic, Missouri which is near Springfield. The company will continue to operate efficiently. The plant in Edwardsville had its roof ripped off and the concrete walls to collapse. Amazon responded correctly worried about the people first. Then supports when the people are safe and then rebuild.

Linking to dividend paying stocks, climate change is going to affect every company in your investment because the water, the wind, the soil, the micro climate is changing until such time it stabilizes. Most of us are attached to a piece of land, either we bought, grew up near the land and have memories of it. Climate change means people will have to leave and companies have to make decisions to relocate to areas where there is greater stability. There maybe calls to rebuild, but is that always the correct decision. Fortunately with large companies that can make profits, there are going to be alternatives and other choices in order to continue to function. As an investor you like that, as an individual you will likely be conflicted, which is okay.

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

One of the hallmarks of former Donald Trump’s presidency was the use of social media and perhaps through this people felt more in contact with him. Unfortunately the former President dived into conspiracy theories rather than the government operations and eventually Twitter, Facebook and all other social media companies had to ban him. However the former President still has a following and when there is a loyal following someone will want to monetize it.

In an article by Noor Zainab and Greg Roumelitois of Reuters, a social media company called Digital World Acquisition Corp was agreed to merge with Trump Media & Technology Group (TMTG). On the face of it, that is a good thing and people rushed to buy shares pushing the share price up and for a while the valuation of the company went from $875 million to $4 billion as the stock went close to $100 a share, the stock trades around $50 a share.

Senator Elizabeth Warren asked the SEC to investigate TMTG proposed merger with Digital World over potential violations of securities laws.

Digital World has made some lofty projections of the average revenue per user to $13.50 in 2026 with over 81 million subscribers. It should be noted, the beta testing for the app is expected to be launched in the first quarter of 2022.

Linking to dividend paying stocks, in the case above there is a plenty of hope and many companies on the stock exchanges trade on hope for a better day. The plans they have for the future will come true, and if you believe in the founders just maybe, the plans will come and they will gain transaction with the public and all the pieces will fall into place. It tends to be a long journey and other competitors will come into place, but hope is part of the stock exchange. For those who want less hope and more results, examining profitable companies that pay dividends is likely a more profitable way to invest. For the above, there are some who bought at near the top, the stock trades at half the price and the person has to hope for the best. If they bought a profitable stock that can pay a dividend, while they hope for the best the dividends roll in to give more options.

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

Every year we as a society embrace more and more technology in our everyday lives, 99% of the time we want and need the technology. This Christmas weekend many will receive or have bought electronic devices. If you own Apple stock that should be a good thing, if you own Nvidia that should be a good thing, and the list goes on. One of the biggest players in the use of the internet is Amazon. On the ground Amazon uses the internet to ensure the packages are delivered to the correct place; over the internet, Amazon’s cloud services or AWS is the dominant player in the space. One of the newer companies looking to join the cloud is the NASDAQ and they have chosen AWS.

In an article by Eva Matthews of Reuters, in the middle of December Amazon’s cloud services AWS was temporarily down. The effect was streaming services such as Netflix, Disney+, Amazon’s own e-commerce websites and brokerage company Robinhood was down. For Netflix 26% of its traffic was down.

Amazon’s Ring, mobile banking app Chime, vacuum cleaner iRobot all were down because they use AWS.

Fortunately for thousands of people, the AWS system was not down for very long, but if you were using it at the time, as a customer you would feel frustrated.

Linking to dividend paying stocks, more and more of us use the internet all the time and when it works which is very often the service feels almost instantaneous and we expect the service all the time. When the service goes down, our expectations about the time and frustrations go up because of our normal expectations of use of service. Even though the time maybe short, what are your expecting? In our investing, if we buy and stock goes up, well we think it is normal, but in reality all stocks go up and down and most go down. Often times only the best stocks go up over a long period of time, an interesting aspect is to look at the top 20 companies rated by Forbes in 1990, 2000, 2010 and 2020. Notice the change.

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

A few months ago, President Biden met other world leaders in Europe prior to the climate change meetings to sign on to the Corporate Tax Deal which 130 leaders signed. The deal was to ensure multinational companies pay their fair share of tax.

In an article by Tom Bergin of Reuters, President Biden said the deal will eliminate incentives to shift jobs and profits abroad. The article asked tax experts to analyze the deal.

Counties such as Ireland (and their our many others) in return of having head offices in the country allow tax allowances which permit multinationals with a a presence in the country to sell intellectual property, such as patents and brands, from one subsidiary to another to generate deductions which can be used to shield profits from tax.

Companies such as Adobe and Oracle have and do use the tax deductions to reduce their taxable income by over $10 billion. Both companies say they conform to relevant tax rules.

Ireland has phased out the world’s best known corporate tax loopholes known as the double Irish, it allowed companies to deduct the intangible assets which was $4 billion in 2014 and by 2019 was $60 billion. (if the companies you invest in has a Irish subsidiary it was likely using the deduction).

Linking to dividend paying stocks, as shareholders you want your companies you invest in to accumulate as much profit as possible to pay shareholders, however if the taxation in the overall tax pie falls, someone has to make up for it. Should shareholders? no then it likely should be some sort of fair taxation on companies. But what is fair is an age old question.

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

Companies go to stock exchanges to raise money, they sell shares to investors, report on their accounts and investors as a group determine if the company is to be held, traded or avoided. The large Chinese companies do the same thing as the large American companies and being on the NYSE is both prestigious and important because of the requirements to be listed and stay listed. The important aspect to Chinese companies is the Chinese government, the companies need to ensure the Chinese government is onside with what they are doing or the Chinese government has levers in can and does pull to ensure the company does what the government desires it do.

In an article by Julie Zhu and Kane Wu of Reuters, the Chinese government after 5 months Didi Global went public on the NYSE, to delist itself and move to a stock listing on the Hong Kong Stock Market.

Didi went public raising $4.4 billion and did a review of its data practices. The Chinese government was not happy with Didi and the Cyberspace Administration of China (CAC) ordered 25 of Didi’s mobile apps to be removed from app stores. The company could not register new users (given a business model built on apps to one of the most heavily cellphone countries in the world, that was not good) The CAC cited national security and the public interest reasons.

Didi apps provide access to ride sharing and in China financial services, as they announced they were moving to Hong Kong, the CAC gave indication the apps to be used for new users is coming very soon

Didi Global’s main shareholders are Softbank’s Vision Fund with 21.5% and Uber Technologies with 12.8%.

Linking to dividend paying stocks, all companies are dependent on the government where their headquarters are. For American companies, you can expect the government to give them flexibility to operate. For Chinese companies, the government is a partner whether it owns shares or not. It is one of the reasons most of are bias towards the country we live in. The bias is good, and most of us have majority holdings of companies head offices which are reasonably close to us even though all companies do business around the world. It is just easier to see government influence in some countries more than others.

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

If you want to affect change you can do it from outside or inside a company. when buying shares often times you need a number of shares to be consider more than a gadfly, in which your issue can be brought to the AGM because you own shares but the company can do or not do. In the case of a hedge fund called Engine No 1, they were able to buy shares and in an upset move gather enough shares to have 2 representatives join the Exxon Board of Directors.

In an article by Pratima Desai of Reuters, the head of Engine No 1 Chris James gave an interview at the Reuters Next Conference about being on the inside of the largest oil company in the US.

Mr. James noted while ExxonMobil has some of the most talented engineers in the world, management has prevented them from unleashing their power they have to create value in energy transition. Instead Mr. James said ExxonMobil has invested in new projects in the oil and gas arena that should not have been approved and wasted capital.

On the other side of the coin, is since November 2020, Exxon’s shares are up 60%. Exxon says it evaluates our investments across a range of scenarios – including net-zero pathways- and we look forward to sharing more details in the coming months.

Linking to dividend paying stocks, oil and gas companies for generations have been long term generators of profits and dividends and ExxonMobil is the second largest dividend payer on the stock market. What balance should it take in regards to the climate change in the world? Given most of us still need oil and gas to drive our cars and heat our homes?

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

For most of us, we do not see the interiors of how buildings, cars or planes but we can see the exterior, which means if we are inspecting or looking at buildings, cars and planes and we see paint peeling, we know there is something off. In a car it might mean rust is -underneath, in a building we would suspect moisture behind the wall and in a plane – if you saw it do you really want to fly in the plane?

In an article by Tim Hepher and Alexander Cornwell of Reuters, there are 2 major manufacturers for airplanes – Boeing and Airbus and airlines buy planes from both countries. However if one is not up to standards, the airlines will buy more from the other company.

There is a dispute between Airbus and Qatar Airways over paint and surface flaws on A350 jets and at least 5 other airlines are having the same concerns. Airbus says there is no risk for the plane’s safety and has labeled the issue cosmetic. It may well be, but it is easy to see.

The real issue is every year, the material the planes use are lighter than before and the decision now contains carbon mesh. The carbon mesh is needed because carbon fiber is not conductive to lighting strikes. Also, unlike metal carbon does not expand and shrink as temperatures change. Paint does resulting in a tug of war between paint and the carbon mesh. Paint loses and peels.

Airbus is examining whether a system called Perforated Copper Foil would be a better alternative. The issue is what does a airline do with the peeling paint?

One alternative is order planes from the other manufacturer – Boeing, however Qatar Airways needs to planes for the World Cup to be played in November to December 2022.

Linking to dividend paying stocks, companies can deliver complex systems, but most people will only be able to tell if they work from the outside. Most people will not know the workings of a system, but look for tell tale signs, if they see it then they will know there is something wrong with a company. A number of years ago, an analyst went into a Sears store and saw a manikin wearing a dress but the stockings had runs in them. Nobody seemed to be concerned with the flaw, hopefully he saw it over a couple of weekends. It was a small thing, but then it lead to other decisions the company had made which lead to recommending selling the stock. If the company does not do the little things correctly, how is doing on the bigger aspects of the company?

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

One of the many functions, shareholders have at the Annual General Meetings is to cast a vote for management and their salary structure. Although for most profitable companies, who is the CEO is not as important as we all make it all to be, as a shareholder you are concerned with who it is. For that reason we pay attention when there is a CEO change.

In an article by Kate Conger and Lauren Hirsch of The New New Times News Service, one of the high visible social media companies Twitter, its co-founder Jack Dorsey stepped down again. Mr. Dorsey was replaced by Parag Agrawal, the former chief technology officer.

Mr. Dorsey was a well known name in Washington circles, partly because he made the decision to shut down former President Trump’s twitter account after January 6. Some in the Republican party believe social media has tried to silence conservative view point.

Mr. Dorsey is a founder of payments company Square and he will be continue to be busy. When he left Twitter, he noted he worked hard to ensure the company could break away from being a founder led company. Also Twitter has not been a high flyer in the stock market and over the past year has gone up and down and back to where it started 2021. Twitter said its revenue grew by 37% in the 3rd quarter to 1.28 billion but it lost money $537 million.

Often times even though there is more than one player in a sector, either one company tends to lead or seems to lead or puts out more press releases or its CEO is available to talk to the press more than other companies. As long as the stock price goes up, people are happy, when the stock price does not, rumblings begin. For Mr. Dorsey he became a counter weight to the former President, on what should and should not be posted in Twitter. How much fact checking should a company do to the President of the country?

Linking to dividend paying stocks, for the most part even though as a shareholder you are interested in the CEO, it is hoped that the person could be changed and profits continued. While the person in the office is important, as long as the strategies to move the company along to stay profitable and pay dividends, the person might not be well known to the general public. When the person is known to the public, it is a double edge sword – sometimes good, sometimes not so good. The issue is whether when the person leaves the job, how does the market feel about it – it is good, bad or indifferent?

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