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.

In the world of capitalism, the desire is to accumulate a large amount of assets and then many options are available for you. Everyone in the world knows how much money they need to live a comfortable lifestyle, there is likely another amount for a barebones lifestyle. For some who accumulate well more than the comfortable, there become other choices what to do with the money. In many families, foundations are set up to give away some of the money. When the amount is large, trusts are set up for the money to last for a long time and hopefully into generations. For those in the billionaire category, most people in the world have ideas of what they should do with the money.

In an article by Elon Musk, chief executive of Tesla is one of those billionaires and he has more money than he needs to be comfortable. He is worth upwards of $250 billion as he owns 23% of the shares of Tesla and it is worth a trillion dollars. His holdings is 170.5 million shares (with some stock options) his brother (Kimbal owns over 600,000 shares for $750 million and recently sold 88,000 shares. Kimbal is a Board member on Tesla).

Mr. Musk was considering selling 10% of his shares and asked people on Twitter what he should do and the vote is in 57.9% said yes to selling. Mr. Musk (unlike former President Trump believes the vote is illegitimate) says he accepts the outcome.

The 10% holding amounts to $21 billion, but Mr. Musk does not say what he will do with the money. He has suggest donating $6 billion to the United Nations food program to help solve world hunger, but we do not know.

Linking to dividend paying stocks, one of the reasons people buy the stocks is to have regular dividend income and overtime increased capital gains. This allows you to have options – to buy more stock, to donate the money, to have options. We know that many wealthy families have internal fights about money and lawyers receive generous fees, but we do not know when the threshold of too much comes into full contact force. As you accumulate stocks to generate dividend income have some idea of what you want to do with your money or do not want to do with your money. The last thing you likely want is family members fighting over income. Planning and wills are good.

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

When a government is in power and wants to take away regulations, what that means in the corporate suite is different to what it means to individuals. Often times, the government seems to talking to the small business owner about supplying less statistics to the government. What it tends to mean for the large businesses is to buy companies to minimize competition or perform similar to a regulated utility. A case in point in the publishing business.

In an article by Tali Arbel of the Associated Press, the US Justice Department is suing to block a $2.2 billion book publishing deal that would reshape the competition.

The story is German media giant Bertelsmann Penguin Random House wants to buy Simon & Schuster. The competition is HarperCollins, Hachette Book Group and Macmillan.

The players in the story include the Authors Guild who believe less competition will lower competition for author’s manuscripts. The other book companies who may be interested in either the whole or parts of Simon & Schuster including media company News Corp which owns HarperCollins.

The industry has been consolidating because the biggest bookseller is Amazon and they can dictate prices.

The CEO of the Author’s Guild noted during the past few years, the Department of Justice has done little to block mergers and acquisitions, however under President Biden has called for greater scrutiny of mergers and the DOJ is doing that.

Linking to dividend paying stocks, all companies have to work within the environment of the government of the day, sometimes it is easier to do, sometimes is takes more time, sometimes the company needs patience until the government changes. As an investor, you want your company to make profits, as an individual you might have different views what is good for the long term.

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

Oil and gas companies have played a major role in the world’s economies as our society developed methods to use and demand oil and gas. The biggest company was Standard Oil owned by John D Rockefeller which was broken up and became 7 large oil companies the biggest being Exxon. As time went on the oil producing countries formed their own companies and now the biggest oil and gas company is Saudi Aramco. The company was owned by the Saudi government but it decided to sell some to investors and now the Saudi Aramco trades on stock exchange.

In early November the company reported its 3rd quarter profit and in an article by Isabel Debre of the Associated Press, the company reported a profit of $30.4 in the 3rd quarter. When Exxon was losing money, Saudi Amamco made $11.8 billion, now that oil and gas prices are up, the profits continue to roll in.

Aramco chief executive Amin Nasser described the results as exceptional. His team is optimistic that energy demand will remain healthy for the foreseeable future.

In every commodity company as prices rise with demand, there is a desire to increase output, not to lower the prices but to capitalize on the higher prices. Saudi will increase production by 400,000 barrels a month to a total of 11.5 million for the year.

Linking to dividend paying stocks, in commodity companies as an investor you are looking for a low cost producer which can sell at market rates for a the commodity. Ideally the market rate is well above production and distribution costs so if the price fluctuates the company still makes a profit. Saudi’s production is less than $5 a barrel and sells for over $80 a barrel. As an investor, it is long term hold.

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

In the world of investing, if you invest in a commodity based company and the price of the commodity goes up, the revenues and profits go up, it is really that simple. The trick is determining when the price of the commodity will go up. In the case of oil companies, the price of oil fell during the first years of the pandemic, but once economic activity became to resume, the demand for oil drove up the price. If you had bought oil companies a year ago, then you would have done well.

An article from Reuters from the end of October, Exxon Mobil reported net income of $6.75 billion or $1.57 a share in the 3rd quarter, the highest since 2017. A year earlier, the company had reported a loss of $680 million or 15 cents a share. The reason oil and gas prices have doubled in the past year.

With the increase in profits, ExxonMobil will increase the stock buyback which has been suspended since 2016. The company was once the largest US corporate repurchaser of shares. (When a company repurchases shares, there are less shares and if earnings remain the same the earnings per share (EPS) is higher which if the company trades at the same multiple to earnings, the share price should increase)

Linking to dividend paying stocks, the large oil and gas companies have for decades have been some of the consistent profitable companies which pay dividends. It was hard not to own them, as the world transitions to using less energy the oil and gas have a role to play. It is a personal choice if you want to own them directly or indirectly but the results of the company can be easily seen by watching the price of a barrel of oil. If it stays steady or goes up, the higher revenues and profits means the dividends will flow into your account. Similar to all investments there are alternatives and if you do not wish to own the oil and gas directly, Microsoft overtook Exxon as the biggest dividend payer in the US.

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