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.

Two years Britain had a choice to stay in the European Economic Union or not to, there were plenty of advocates on both sides and in a vote, Britain decided to leave or Brexit. It might have been okay until the pandemic happened and the movement of people slowed or stopped. Britain relied on people from other countries to do the work in the supply system. The pandemic has not stopped and Britain’s supply system has not improved a great deal.

In an article by Stephen Castle and Jenny Gross of the New York Times News Service, to solve the supply problems of drivers, once a week a 32 rail car carries wine from the port of Tilbury about 200 miles to London. The train carries 650,000 bottles of wine for London’s supermarkets. One of the biggest supermarkets in London is Tesco and they are considering running the train daily to meet the wine demand.

Britain has been dealing with many supply chain problems including lack of food and gas, shortage of drivers, global shipping delays, product shortages, the pandemic, Brexit restrictions and we are in December and the holiday shopping.

The Cold Chain Federation, which represents firms that store and distribute frozen food, warned shoppers than there could easily be fewer choices this Christmas.

Richard Wilding, professor of Supply Chain Management at Cranfield University used the US military term VUCA to describe challenges facing British businesses. VUCA means volatile, uncertain, complex and ambiguous.

Patrick Adom, founder of the Very Puzzled which sells puzzles said this year he has shipped 200 puzzles down from 2,000 a year ago. The puzzles are made in China and then costs and delays happen. Cost of shipping containers has increased, when the puzzles arrive there is a lack of truck drivers to move the product, there has been fuel shortages, higher export fees and increased administrative hassles. Just when you are getting in a rhythm, new challenges present themselves. (in a music example – people had to learn to play jazz).

Linking to dividend paying stocks, people do not often think about how the product arrived on the shelf, where it was made and how it was transported to where the show room, because the supply chain system worked well. When the system is delayed or broken, it is important to know as an investor how does the company you invest in manage their supply system. We all live in just in time delivery, how well does it work?

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

When railroads were being built across the US in the 1800 and 1900’s, the way to ensure the bonds were sold was governments gave the railroads access to land. The railways ended up with millions of acres of land, at the time there were few people to take advantage of the land, but the railways held millions of acres of land which could be sold. As time went on and people went across the country to settle and make a living, the land became more valuable and it was possible to buy railroad stocks for the assets they owned as well as the movement of goods which was their reason for existence.

Governments often hold assets for years on a just in case basis. An example is the Strategic Petroleum Reserve (SPR). The US government owns oil which can be delivered to refineries to match supply and demand and try to keep gas prices at the pump from going too high. In an article from Reuters, the Department of Energy announced it would release up to 32 million barrels of oil from 4 sites which include Big Hill and Bryan Mound in Texas, West Hackberry and Bayou Choctaw in Louisiana.

Linking to dividend paying stocks, many companies that have been in business for a number of years have access to assets they held for business reasons but overtime the value has increased and could be sold for other purposes. In the case of railroads, they owned vast parcels of land in cities, sometimes they move tracks to expand and speed up deliveries, but what do they do with the land. It slowly is sold and every once in a while other income is important to the operations of the company. Part of your homework when you buy a company’s shares is to determine what assets are held on cents on the dollar that could be sold for full dollar. If the number is material to the company, then even if the shares go down there is value in owning the company’s shares. Land or another asset could be sold. Dividends held ensure stock prices do not go down too far because there are real assets holding up the value. What is the extra value in your shares?

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

Every sector of the economy has its own cycle and as an investor you need to know what cycle your company has. In the retailing sector, the big season is the the day after Thanksgiving or Black Friday all the way to Christmas or December 25. Then the big discounts come to the New Year. If prospects or forecasts are good, then profits can be made.

In an article by Anne D’Innocenzio of the Associated Press, the prospects for a good season are in place – companies have hired many people, the companies are paying higher wages and shoppers are returning to stores and buying all types of items.

There are concerns and they include the supply shortages, higher prices and staffing issues.

According to Aurelien Duthoit, senior advisor to Allianz Research, shoppers on average should b e buying 5 to 17% more on toys, clothing, appliances, TV as compared to last year.

The National Retail Federation is expecting holiday sales to be up 8.5% to 10.5%.

The biggest mall in the US, the Mall of America, its executive VP of business development and marketing Jill Renslow expects to see sales close to 2019 levels.

During the height of the pandemic a number of iconic retailers such as Neiman Marcus, JC Penney and Brooks Brothers had to be restructured with bankruptcy hearings, but big box stores such as Walmart, Target and Costco did very well. During 2020 the percentage of retailers who faulted on debt rose to 20%, this year it is 2%.

Coresight Research, a global research firm, noted there has been 5,057 store closings but 5,103 store openings. It was expected the number of store closing in 2020 might be up to 25,000 but the number was just over 8,000.

Linking to dividend paying stocks, every sector has a cycle and because we all have to shop somewhere we all can pay attention to retail stores. Whether you invest in the stores is up to you, but if you do, know the cycle and pay attention how sales are doing when you go to the stores. If you do not see the activity you think you should, you can easily look for alternative investments.

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

Sometimes when people think about dividend companies, they think about old, mature companies making profits paying dividends but little growth. People think it is sexy or the expression “keeping up with the Jones” to invest in growth companies. If you understand growth companies go up and down and for every successful growth company there are tens or hundreds of companies that did not grow for very long.

In an article from Reuters, global corporate dividends are set to reach a record high this year as a rebound in business activity and a rise in consumer demand boosted profits for most sectors than were hit by the pandemic last year.

According to a Reuters analysis of Refinitiv data for 3,394 global companies with a market capitalization of at least $1 billion (stock market price times shares outstanding) , their total payouts to shareholders are estimated to be $1.37 trillion in 2021.

The data shows European companies payouts in 2021 ae estimated at $252.4 billion, a 25% rise from last year. US dividends are expected to grow to $562.3 billion a 8.6% increase.

Globally 90% of companies either raised their dividends or held them firm – a very strong reading according to a Janus Henderson report.

Linking to dividend paying stocks, one of the goals of investing is try not to lose money and receiving dividends helps that process. With in the range of 3.394 global companies with a market capitalization of over $1 billion is companies which trade similar to growth stocks because of their field – whether they are linked to commodity prices or opening up the economy. You have many possibilities of investing. With the dividends you have more options to buy, do nothing or use the money for other purposes.

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

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.