The stock market is technically reachable for everyone, but for a long time it has an institutional basis. Then something happened – meme stocks.

In an article by the Associated Press, the Securities and Exchange Commission (SEC) released a report on January’s trading in meme stocks. The report noted some of the stock market’s plumbing was creaking, but the basic systems and operations remain sound.

If you go back a number of years, it was relatively difficult to open a brokerage account for small investors because of fees, if you had to pay $25 or more to buy and $25 or more to sell a stock, to make money that stock would either need a large capital gain or you bought it to hold it for a long time. (The writer remembers when some mutual funds were priced ona monthly basis, if you needed to sell you had better hope the month was a good one, now funds are priced on a daily basis) Commissions went down, but still brokerage companies made their revenues on number of times you traded your portfolio. Now some them charge a fee for service of 1 to 2% of your holdings. In the past couple of years some brokerage companies made it very easy to open an account and start trading.

In January, the meme stock of GameStop and a few other companies jumped in value and the newspapers were full of stories of people who were making a lot of money in a short time period. Regular people with some money in the bank rushed to open accounts and buy a meme stock in hopes of gaining a great return. Some did, but many bought at high prices and will never be able to recoup their losses. The meme stocks had a significant rally in June and maybe it will happen again.

The report by the SEC examined how the stock exchanges functioned and what improvements can be made given the increased volume of general public in the stock market.

Linking to dividend paying stocks, as an individual investor it is good that there is a wide variety of access to the stock market, but in reality more money is made by buying a profit making company and holding it for a few years than trading on a daily basis. It is important that both exists for when you wish to sell there is a ready market to sell to. It is good that there are many choices in which to invest and the stock market operations is flexible enough to handle the changes which the industry is constantly inventing.

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

All social media targets people to use their service and some become household names, but when a company is a household name it has to continually renew itself to keep the audience. In the case of teenage market, the service has to be cool and hip and catchy or teens will start to use another service.

In an article by Sheera Frenkel, Ryan Mac and Mike Isaac of the New York Times News Service, Facebook owns Instagram and the majority of its users are teenagers. This is very good for Facebook, but the task for Facebook is to keep teenagers, encourage young teens to use Instagram and then move its older people to its other platforms in order to keep advertising dollars flowing to Facebook company.

The market is Instagram has 1.3 billion users, TikTok has 1 billion users and Snapchat has 500 million users. For Facebook a marketing survey showed people who had left Instagram went to YouTube and TicTok before going to Snapchat.

During the pandemic the average person increased their time on social media to 3 to 4 hours a day compare to 1 to 2 hours a day. Adults typically spend 30 to 45 minutes.

Teens are an important segment to cater to because they spot and see trends and can spend more time on the site to be able to see more advertisements.

Linking to dividend paying stocks, the market is very competitive and every industry does similar things to try to attract and retain customers. When the large companies have sufficient size where 2 or 3 companies have 75% of the market, investors tend to be happy because they will attract and retain the bulk of the customers. The companies will fight for market share but investors, particularly dividend investors want consistency of recurring revenues to equal profits to translate to dividends.

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

If you are a dividend buyer of stocks, part of your holdings likely includes an utility or two because they produce regular profits, are regulated by people who tend to raise prices which allows the utility to make profits to pay dividends. This is a good thing for the investor.

Many years ago, there was an inherent policy that growth is good and any business which produces jobs and taxes for the community is a good thing. That idea is likely changing with more people saying growth is good, but at the right balance.

In the world of finance, bitcoins have come to mainstream and various financial institutions accept them and make products for people to buy, if desired. The bitcoin is made or kept value in servers, think about the big tech companies of Google and Facebook among many companies they have buildings that have servers to run their systems. If you wish you can buy Real Estate Investment Trusts (REIT) that the tech companies use or it is normal business activity.

According to an article by Michael Hill of the Associated Press, to have large scale bitcoin mining, the companies need inexpensive power to run the hug power gobbling computer arrays that create and transact cryptocurrency. The companies involved solution is to buy their own power plants. This has environmentalists alamed.

An example is the Greenidge Generation runs a gas plant near the shores of Seneca Lake in the Finger Lakes region on New York state (if you fly over them, the lakes look like fingers) to produce 44 megawatts of electricity to run 15,300 computer servers, any additional energy produced goes in the state grid system. The megawatts needed for the servers could power 35,000 average homes.

Environmentalists see a threat, the fossil fuel plant will add to the greenhouse gases and they are asking the state regulator to deny renewal of the plant’s air quality permit and put the brakes on similar products.

Bitcoin mines unlock bitcoins by solving complex, unique puzzles. As the value of bitcoin goes up, the puzzles become increasingly more difficult, and it requires more computer power to solve them. Greenidge said it mined 729 bitcoins over 3 months and each bitcoin was valued at $59,000. The mining company says it has brought 45 high paying jobs and made a significant contribution to the area in taxes and capital improvements.

Greenidge said it in compliance with its permits as it has bought carbon offsets.

Linking to dividend paying stocks, we all need electricity to continue our normal life and how that electricity is generated is a concern for many. The easiest ways are water, sun and wind, but some sort of fossil fuel will be needed into the distance future. Environmentalists sometimes see the world as black and white, utilities see the world needing a product and regulators often sided with the utilities. In the near future, that could alter or make the decision process longer, however utility companies have time on their side.

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

In general, growth is good at least stable growth is good for the banks. As long as you are personally ok in your work life, one of the methods to see how the economy is doing is looking at the big banks. The big banks besides offering a multiple of services for you, also offer multiple services for corporations and governments. If the parts of the bank are doing well, then the economy must be doing ok. The banks like reasonably stable growth which allows people to take out loans and pay them back, the higher the payback ratio, the lower loan losses have to be and the higher the profit for the bank.

In mid October, the banks reported on their 3rd quarter and all did very well, producing greater profits for shareholders.

In an article by Anirban Sen and Elizabeth Dilts Marshall of Reuters, the biggest US bank is JPMorgan Chase and because the economy was growing in a stable fashion and loan losses provisions were lowered, the bank’s profit was 24% higher than the same period last year. The bank’s average loans, deposits were higher (money flowing into the economy), credit card spending was higher (an indication of consumer expectations).

The highlight of the bank was its Corporate and Investment Bank division where advisory fees almost tripled due to strong performance in Mergers and Acquisition (M&A) and equity underwriting, thanks to new issues on the stock market.

Overall, JPMorgan’s profit rose to $11.7 billion or $3.74 a share compare to $9.4 billion or $2.94 a share a year ago. Analysts were expecting $3.00 a share profit. The difference was the reserve was lowered by $2.1 billion.

Revenue rose to $30.4 billion just above the $29.8 billion analysts were expecting.

Linking to dividend paying stocks, the big banks are a staple in dividend stock portfolios because they make profits on a consistent basis. In JPMorgan’s case a bad quarter would have been $9 billion, a good quarter $10 billion and and a great quarter $11.7 billion profit. It is hard not to own the shares either directly or indirectly through index funds. As long as the economy grows to allow for people and companies to pay back loans, the banks are a long term hold.

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

In investing prior to the allocation of your dollars, homework needs to be done to ensure that you lose as little money as possible. Analysts all over the world examine the financial records and try to determine what the next quarter, the fiscal year and a 5 year outlook. In some industries it is relatively easy to do because they operate similar to utilities. In over industries, as long as you can justify your expectations, you need to estimate and hope.

In the property industry, because of lead time and access to capital, the expectations should be closer to the reality. Analysts can track sale of homes, lease of space, or how the industry typically makes money. In China, the property giants have sold millions of apartments and houses and still vast towns and cities are vacant. Who paid for those was never quite determined but they exist.

In an article by Andrew Galbraith and Marc Jones of Reuters, the Chinese property developer giant Evergrande Holdings has affected the entire Chinese property markets and bond prices are falling drastically. The Chinese high yield bond market is a $5 trillion sector and helps drive the Chinese economy. Now that Evergrade is close to defaulting, the Chinese Premier who originally was proud of the work of the company is examining the large lenders to see if they were too close. The large lenders include Citic. Evergrade owes $300 billion in liabilities and that is at risk.

Companies such as CST Group, Modern Land, and Sinic Holdings are now saying they may default on their loans. The bonds have decreased in price by 75% and are trading near 30 cents on the dollar. Companies that were supposed to be better grade such as R&F Properties and Greenland Holdings and seen 20% wiped off their bonds.

Harbin, the capital of northeastern Heilongjiang province was one of the first cities to announce measures to support property developers and their projects.

Linking to dividend paying stocks, when the giant of the industry group is in trouble the whole group will be affected even thought there might be great quality in some of the names. This is when you have to do your homework, at some point in the future the group will sort itself out, with the larger names selling assets. Who buys the good assets at below replacement value are the names to invest in. Eventually, the whole group will become investable again, but for now in an effort to try not to lose money, watch from the sidelines but be ready to pounce on the good stocks at low prices. Eventually quality companies rise in value.

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

Shortly after the oil spill off the coast of Orange County, those politicians who do not like offshore drilling made a pleas to ban to ban offshore drilling.

In an article by Jessica Resnick-Ault and Daniel Trotta of Reuters, the good thing the politicians did was to trill to determine what caused the the pipeline to burst. About 3,000 barrels of crude oil spilled into the Pacific Ocean killing wildlife and closing beaches south of Los Angeles. In reality the offshore drilling off LA could be closed because at the moment there are 23 rigs producing 12,000 barrels of oil a day. If you think about the Daniel Day Lewis movie There Will Be Blood, there were hundreds of rigs and California produced more than 200,000 barrels a day.

According to Martyn Willsher CEO of Amplify Energy, the pipeline was moved more than 30 meters from where it should have been. Possibly an anchor move it for the US Coast Guard Captain Rebecca Ore said the pipeline was moved laterally.

Linking to dividend paying stocks, whenever there is an accident, the reason behind it needs to be investigated and hopefully it does not happen again. There is a reality in owning companies that drill in the sea offshore, accidents do happen. What as an investor you need to do is see how the company deals with the accident and inspires confidence that it should not happen again.

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

Whenever a state or country wants to encourage a business to relocate to their area, one of the levers they use is to lower the corporate tax rate. The trade off is the workers would be on salary and they would have to pay state taxes. However, the math never adds up equally and on balance the workers pay more in taxes and the corporations pay less. This idea has been going on for years and generations but it tends to mean government coffers are in deficit because they do not collect enough money. Most states can not run a deficit or the process of tax reduction continues.

In article by Reuters, there are talks in Paris, lead by Chairman of the Reserve System Janet Yellen (as opposed to the cuts made by President Trump) to have a floor across all countries of 15% tax rate.

Ireland is the lowest corporate tax rate in Europe and many multinationals have their home in Ireland at least during the AGM time period. Ireland objected the legal language of at least 15% and to appease the Irish, the Irish wanted a floor not a starting place of 15% only to see it be raised. Given that countries around the world have a multitude of governments orientation, Ireland did not to see the tax go higher than 15% which would mean an increase from the 12.5% at the present.

Linking to dividend paying stocks, we all hear the phrase let them pay their fair share; what the fair share is what the meetings in Europe are about. Every President and CEO will tell you the same thing, but then they go the CFO who gets a bonus if taxes are as low as they can be and will tell you all the other taxes the company pays. It is hard to see low taxes going being changed soon.

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

If you look at the Forbes 400 Richest People in the US or the World, you can rest assure only the tiny minority are not using tax havens somewhere in the world. It used to be European countries, then it expanded to Caribbean Countries and now there are countries around the world how offer tax havens. It turns out some US states are also becoming tax havens, even though there are few billionaires in the state. The leading states are South Dakota, Florida and Delaware.

In an article by Randall Chase of the Associated Press, a key reason why many wealthy people turn to a certain tax is that lawmakers have abolished the rule against perpetuities. Eliminating the rule has allowed the establishment of dynasty trusts in which wealth can be passed from generation to generation while avoiding federal estate taxes.

One might guess why the law changed in South Dakota – to allow farms to be passed onto one generation to the next. However the dynasty trust has attracted billions of dollars. Another law in South Dakota and Delaware allows for asset protection trusts, which protects wealth from claims of creditors. Such trust can be attractive to wealthy lawyers and doctors as a measure to shield their assets from malpractice claims. Trusts can also protect assets against ex spouses, disgruntled business partners or angry clients. The trusts can be changed as the trustees desire it to be changed.

Delaware has a long history of corporate protections and many of the fortune 500 companies are incorporated in Delaware or have assets or trusts in shell companies set up in Delaware.

Linking to dividend paying stocks, while most of us expected the companies we invest in to be good corporate citizens, they are also likely to have trusts designed to protect the wealth and most CFOs are well aware of the use of tax avoidance. There is a reason why Apple has a Ireland address. Papers such as the Panama Papers or the Pandora Papers shed light on how the elite and the corrupt use offshore accounts and most companies use them. The tax havens likely will be with us for many years to come.

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

Most Annual General Meetings (AGM) are relatively calm affairs, with management taking a great deal of time to ensure they have more than 50% of the votes to elect the new Board of Directors. In widely held companies, once in a while what the public wants is reflected and there is some questions but the AGM goes in management’s direction. Once in a while there is a change and last December was once in a while. A hedge fund called Engine No 1 led a charge for 3 board seats and won 2 of them. The biggest institutional money managers agreed with the hedge fund in regards to ExxonMobil. The decision made waves of publicity for the hedge fund.

In article by Ben Klayman and Seva Herbst-Bayliss of Reuters, Engine No 1 announced it had bought shares in GM as it makes its transition to battery electric vehicles. According to Refinitiv data, Engine No 1 bought 400,000 shares around $50 a piece. When a fund makes an investment, it speaks to senior management and Engine No 1 said it had constructive and collaborative 2 way conversations or they agree on the strategic direction of GM and their CEO Mary Barra.

GM has announced it would spend $35 billion on electric and self driving vehicles through 2025 and will outline what 2030 will bring forth at investor conferences.

Linking to dividend paying stocks, whether you buy one share or multiple shares, when you buy a company you either like or dislike their strategic directions. Hopefully the more shares you buy the more homework you do in the strategic directions and where you see the company going to ensure it is profitable and can pay a dividend. Doing your homework whether you are a hedge fund or small investor is still the most important part of trying to avoid the first lesson in investing – try not to lose money.

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