In the stock market, there is what have stocks done lately attitude. Sometimes it is relatively easy to see or catch a wave and sometimes you need to sit back and wait.

In an article by Matt Phillips of the New York Times News Service, when the pandemic hit and governments asked people to stay home or socially distance themselves, some companies automatically were at a disadvantage and some companies benefited. The companies which benefited included Zoom Video Communications and Peloton Interactive Inc. Last year when people were at home, the companies only seemed to go up, but since the offices have or are opening up, the shares have decreased. The growth of the companies unless there is a shut down again have likely seen their best. The companies are still viable, just not growth companies.

The companies which did not benefit from the government’s health related actions are now performing better and they include airlines, live event companies, and commercial real estate firms.

When Zoom and Peloton was where the growth was the stocks increased over 400% however this year the stocks are down 22% and 64% respectively this year. It depends when you bought.

Eric Mintz, co-manager of the Eagle Mid Cap Growth Fund owned $136 million worth of Pelotron and has sold his stake. He is buying companies tied to infrastructure, home improvement, and health care.

Linking to dividend paying stocks, Zoom became a household name for video conferencing although Cisco’s Webex does the same thing. When something changes we all tied to find the phrase which helps us go through the changes. In the case of stay at home, people used Webex and Zoom but the phrase Zoom sounded catchier. Many governments went with Webex and smaller companies went with Zoom. If you invest in growth companies you need to stay in tune with popular expressions, if you do not you will tend to be late to the party. If you do not, you should tend to stick to large profitable companies who have people in the company trying to keep up with popular expressions. Buy for the long term with a dividend and you do not have to worry about what is hot and not, just what is good for you.

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

There are many advantages to investing in mature companies and one of them is when there is a crisis, the company uses its competitive advantage to ensure its supply systems continue to run. For months we have been hearing when the pandemic started there was an increased demand for micro chips because of people staying at home. In the old days, they may have watched TV, and people did watch more TV but it was tied to their computer. Many companies bought laptops for people to work at home. and while at home, there was a healthy percentage who played games on their computer. All the above drove the demand for micro chips. If you bought a car in the last couple of years, you would notice more features are tied to micro chips, the average car has about 100 micro chips. In the pandemic world there became a shortage.

In an article by Neal E Boudette and Don Clark of the New York Times News Service, the head of Ford Motor Company Jim Farley must have making the rounds of the micro chips makers and after talking to Thomas Caulfield of GlobalFoundries a semi-conductor supplier decided to collaborate on developing chips for Ford vehicles and explore ways to build the chips in the US.

Most micro chips are build in China, South Korea and Taiwan – the chips maybe developed in the US but the actually manufacturing takes place in Asia.

GlobalFoundries was formed in part through acquisitions of plants owned by AMD and IBM and headquartered in Albany, NY.

Linking to dividend paying stocks, often times the consistently profitable companies tend to be mature companies who have long established supply chains to ensure their products can be sold to customers. One of the advantages of the companies is they have excess capital to help their suppliers and as long as the company is profitable and can pay their bills, the supplier companies benefit from the relationship. If the large company is the majority supplier, one can ask about diversification risks, but the relationship can last for decades. The mature companies work to ensure their supply chains are running smoothly and can take steps to ensure that happens. It was good business for Ford to reach out to GlobalFoundries and we see what happens.

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

All of us grow up in different eras of the economy and that reflects our outlook, for a person of President Biden’s age, there was a golden age when people could leave high school and work at an auto plant earn a middle income salary or more and retire with a good pension. There were hundreds of thousands of jobs at the auto plants across the country and for many auto plants helped define their community as the auto plant was the biggest employer in the town. If you could not work for the auto plant, then there were supplier companies. At some point that began to change, automation was more important than people and wages were cut, but cars and trucks and what they mean to an individual freedom remain.

In the Build Back Better infrastructure bill, there is money allocated to helping the auto companies retool to build electric vehicles, there is also a rebate to bring the cost down to consumers. Whether the auto companies actually need the incentives particularly when they have all committed to having electric models by 2030 is another point, but politicians like to cut ribbons and cutting ribbons at auto plants is a good thing.

In an article by Joseph White and David Shepardson of Reuters, The Biden Administration is allocating $50 billion in tax breaks, incentives for government agencies to buy electric vehicles, loans for retooling factories and aid to automotive plant communities. (note: there are fewer parts in an electric vehicle than in gasoline vehicle, which means some plants will eventually close down).

GM’s head of global manufacturing, Gerald Johnson, told Reuters that federal spending could accelerate demand for electric vehicles, which means GM needs flexibility in its manufacturing. However when the plan does pass, it does not change what we are doing.

In terms of salary, Tesla workers in a new factory in Texas are expected to start at $47,000 while auto workers at GM start at $28 a hour or $56.000.

Linking to dividend paying stocks, all companies including profitable companies use government grants and tax breaks, however the issue is what drives the company. If the company is doing something and the government incentives help it, then it should use the incentives. If the company is doing the work because of the incentives, as soon as the incentives change and they do under different administrations, the work is cut. How does the companies you invest in use government help?

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

Every company tends to have a strong quarter than the other 3, ideally one would like to see consistent sales but reality is one quarter is traditionally stronger than the others. In the retail world the 4th quarter is the most important with the first quarter the least important or should have the lowest sales. For every company if the 1st quarter is very good then the year should be very good. If you own a retail company, your expectations start with what does the holiday season (the season from Black Friday sales to Christmas look like). If they are strong, then all is good with your stock.

In the case of Walmart, the biggest retailer in the US, in an article by Aishwarya Venugopal and Richa Naidu of Reuters. Walmart raised its annual sales and profit forecast because of strong demand for its goods.

Walmart as the biggest retailer and operates one of the best supply system for its stores, is not struggling with supply system. It had the ability to charter its own ships, ordering well in advance to go to warehouses in the US and rerouting ships to less crowded ports.

CEO Doug McMillon said we have the people, the products and the prices to deliver a great holiday season. (Walmart has hired more than 200,000 workers in the stores and supply chain system.) Mr. McMillan said with its constant desire to have lower prices, fighting inflation is in our DNA.

Walmart expects full year US same store sales to be 6% higher and adjusted profit to be around $6.40 as opposed to $6.25. Total revenue for Walmart should be in the $140.53 billion.

Linking to dividend paying stocks, as investors you are concerned about the dividend but understanding the normal revenue flows of the company can you. If the company you own has a flat quarter but it is expected that is ok, if it has a good quarter when it should have a good quarter that means you do not have to do anything but collect the dividend. If the quarter is off when it should be good, then it is time to seek alternatives. With dividend paying companies, as long as the company can make profits and pay dividends you do not have to do anything.

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

Every organization needs a nay sayer or someone who see the world as half empty as opposed to half full. Most of us are more optimistic than pessimistic because we are generally taught there when the sun comes up that is a good thing. We are ready to face the new day, tackle the problems, find solutions and do it all again. In the stock market, there is a mechanism to be negative to see the glass half empty it is called short selling.

In a recent article by Stan Choe of the Associated Press, the short sellers are not in the front lines because the stock market in general has been doing very well. Is it too high, can it go higher and why should go one way or another.

Carson Block of the firm Muddy Waters Research believes the reason the stock market can go higher is the Federal Reserve decision to keep interest rates at ultra low levels. The low rates means investors have moved money from bonds and interest bearing notes to the stock market seeking higher returns. One day it will change and the money will move towards interest bearing securities. Mr. Block specializes in rooting out fraud, and he sees companies which engage it, but the stock market is going higher.

Marc Regenbaum, a portfolio manager at Newberger Berman Long Short fund tries to use shorting as a hedge to offer investors a smooth ride. There is no value in investing in a fund which has 40% increases than losses 35% and next year is flat because that is a 5% return over 3 years. If you were fortunate to own at the beginning. Many would have bought later and had losses. How does the fund protect – use insurance or shorts.

If you listen to politicians you know the midterms are happening next year or 2022, do you believe the fed will raise interest rates before the mid terms?

Linking to dividend paying stocks, the stock market has done very well and part of the reason is the low interest rates and what asset class is doing well. It was a good thing to shift money from bonds to equities. In a number of years that will change, however for now buying quality stocks which pay a dividend offers you both upside potential and downside protection. You may or may not have wonderful returns but you should have realistic returns which you live with. Given one of the rules of the stock market is try not to loss money, dividend paying stocks helps with the rule.

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

Sometimes in life the stars line up and the wind is at your back and it looks like there is smooth sailing ahead. In the case of Rivian automotive that appears to be the case. Think about global warming and one of the solutions is to reduce the number of fossil fuel vehicles and replace them with electric. In the days before the shares of the company went public, the climate change conference was going on and leaders from around the world were trying to deliver commitments to lessen global warming. In Washington, the infrastructure bill was passed and part of the money will go towards ensuring more electric cars are on the road.

In an article by Matt Orr of the Associated Press, the electric truck maker Rivian issued shares on the Nasdaq and the value of the shares jumped 53%. The shares closed at $100.73 which meant the market value (number of shares outstanding x market price) was $85.9 billion. That value put Rivian higher than Ford and a little less than GM.

The valuation is stretched because Rivian has produced 150 vehicles, Ford and GM produce millions. Although Ford invested 500 million in the company in 2019, the shares are worth $10 billion. The other large backer is Amazon which held a 20% stake (the shares are worth $17 billion).

Tesla has sold 627,300 vehicles is worth a trillion dollars.

Rivian has 55,400 vehicles in preorder (for $1,000 down payment) and Amazon has placed 100,000 order for delivery vans.

The trucks sell at $67,500 at base price, the SUV is $75,500, there are many other options to add $10,000 plus.

According to Jessica Caldwell of the website Edmunds, said Rivian is first to market on the trucks, but how big is the $70,000 truck market?

Linking to dividend paying stocks, stories such as Rivian are exciting and fun to read, but investing in the stock is high risk. The less riskier way to invest is to buy the major companies that pay dividends and has the supply lines to actually do the job. The big three are protecting their sales and spending billions on the ability to make both fossil fuel vehicles and electric, however once demand comes they will be selling millions of electric. Which of the big 3 you choose is from your research or what type of vehicle you drive. With the big 3, you can also go by the showroom to see if your like their product line.

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

All products have a conventions tied to them, and generally the convention business is a multi billion dollar business. The prime example is Las Vegas which people think about gambling, but its most important business is the convention business which draws people to gamble. In the world of aviation, the biggest airshows are in England and France but closing behind is Dubai. At the aviation convention not only are the new products offered, but some deals are designed to be signed. The more deals that are signed and announced the more important the trade show.

In an article by Aya Batrawy and Isabel Debre of the Associated Press, the Dubai Air Show included the announcement by Airbus of a sale to Indigo Partners of 255 new aircraft. Indigo Partners operates low cost passenger flights including Wizz Air, US Frontier, Volaris from Mexico and JetSmart. The 255 aircraft will cost about $30 billion.

In the world of military aircraft, for example the US spends over $8 trillion on the military, Russia has a fighter jet called Checkmate which costs $35 million less than the F-35. The company which is producing the Checkmate is United Aircraft Corporation which is a holding company of state owned Rostec. Production is expected to start in 2025.

Boeing, Lockheed Martin and Raytheon are at the show. Boeing was showing its new 777-9 passenger jet which will be both the world’s largest and fuel efficient twin-engine jet. The Middle East’s largest carrier Emirates has ordered 126 planes but delivery is not expected till late 2023.

Last year Israel formalized relations with the UAE and Isralei companies displayed their hardware including manned and unmanned naval and aerial drones.

Airlines are a multi billion dollar business and last year lost $138 billion, this year the International Air Transport Association forecasts a net loss of $11.6 billion and nearly $52 billion in losses.

Some of the passenger planes have been converted to freight planes to help with the bottlenecks in the supply system.

Linking to dividend paying stocks, all products tend to have cycles and conventions to highlight the expected next year. Whatever you invest in, one method to understand the industry in general is to read or watch or find information about the convention and then you will have an idea of where the industry is headed and what the expectations are. Conventions can be fun, but there are learning experiences to be had.

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

Opioids are a big problem in the medical area because while they work, many people become addicted and once addicted many lives spiral out of control with some dying. From a pharmaceutical company perspective the fact they work means it is worth selling, but how does a company insure it is not liable for the negative effects.

In an article by Ken Miller of the Associated Press, Johnson & Johnson had appeal a lower court ruling of $465 million in damages to the Oklahoma Supreme Court. The issue is courts found Purdue Pharma controlled the supply chain from making to distributing the product. It used a host of devices to sell more product which brought it billions of dollars in revenue to the company.

The courts found J&J while it made opioids had no control or little control of the distribution channels including to wholesalers and distributors, they disbursed to pharmacies, hospitals and physicians’ offices who prescribed by doctors to patients. The court asked the question did J&J’s marketing and sale of opioids create a public nuisance? For J&J, opioid sales represent less than 1% of all Oklahoma opioid prescription.

Linking to dividend paying stocks, there will be many concerns over products and services and some will be the responsibility of the company and some will not be. The issue is how does the company react and go forward, do they hunker down and think everyone is for us or them? do they own up to some of the concerns and be part of the solution. For companies, solutions take time, while opponents want action right away.

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

GE is one of the largest manufacturer companies in the world and it started with a light bulb. Every business is often faced with opportunities that it may or may not want to do. The company starts it hopefully makes a profit and one of the supplier chains has an issue and management believe we want to control more of of our destiny – it buys a stake in the supplier. If things go well, maybe that stake goes higher and the company owns it. During an economic cycle downturn, the company says it should diversify its revenue streams during the next expansion. The company finds something with similar management focus and hopefully profits are steady. All companies do the exercise and sometimes they have to sell assets or break apart the company because the business model no longer fits.

In an article by Michelle Chapman of the Associated Press, GE is an example of the above. During the 1980’s the Chairman was Jack Welch and he was all over the news because his results of his work at GE were outstanding. Through the 1990’s the stock returned 1,120.6% of investments. The company grew 5 fold and the company value increased 30 fold. At the time all companies look at what GE was doing including 6 sigma.

Then the financial crisis happened and GE Capital which was raking in the profits, suffered huge losses tied to the mortgage backed securities crash. Shares fell 80% in 2008 and only now have GE recovered.

GE is a conglomerate and the Board has decided at this time the business model of a conglomerate does not work – the synergies and diversification is not a plus and a decision to split the company into 3 has been reached. The company will split into aviation (its most profitable unit), health care and energy. The aviation unit will keep the GE name and the others will have new names in 2023 and 2024.

Linking to dividend paying companies, although everyone loves to own a company growing at 1,000% over a decade, the reality is at some point that growth will be slower. Ideally, the desire is to own a company that is doing well on a consistent manageable basis, for you as an investor to be able to look at some easily to see metrics to determine if you want to continue to hold the shares. Often times people hold shares because they lost money and are waiting, ideally you want to hold shares in profitable companies which pay a dividend which over the long term increases your size of your portfolio.

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