Most of us by nature or our outlook are a glass half full type of people and when we invest we tend to think about growth of the company, can it continue to make profits and pay dividends and that is a good. However in all investing there are people who are only in for the money that will flow directly to their pockets and everyone else be dammed. These people have the ability to jump on the latest trend and make a compelling story which sounds true. An easy example is climate change is coming and companies have to do something to reduce their carbon footprint, what we do not know but firms will be pitching all types of solutions, some of them are frauds.

In the public stock markets, one requirement is information must be released on a regularly basis of how the company is doing and how does it make its money. Because the information is public, there are numerous people trying to determine is it true or reflect reality or is it made up? Investors like to think that because reputable firms are behind the work, the numbers reflect reality, but it does not always happen.

In an article by Matthew Goldstein and Kate Kelly of the New York Times News Service, the writers profiled Nathan Anderson’s firm called Hindenburg Research. The firm analyzes hundreds of public companies to see what they are doing and write reports if they believe the numbers are fraud or very suspect. At the same time the firm establishes a short position in the company and if enough people believe, the share price will fall and the company makes money because the truth came out.

Nathan Anderson of Hindenburg Research, Carson Block Muddy Waters and Andrew Left of Citron Research are three of the leading names you might see in the media and their companies and all of them had various success. Hindenburg Research highest profile is the fraud at Nikola Motors. The former President Trevor Milton was charged with securities fraud. The company has been restructured and may produce an electric vehicle for production as opposed to Mr. Milton’s lifestyle.

Mr. Anderson said in the world of SPAC deals, there is a lot of fraud, but it is important to remember the basic lesson from starting a small business (revenues – expenses = profits). It is easy to have expenses, it harder to have revenues which cover expenses without raising more money to pay for expenses. Remember how does the company make money? is it making money? When you are examining companies with the latest trends try to be a half empty type of person.

Linking to dividend paying stocks, one of the rules in investing is try not to lose money. One method to do this is buy profitable companies which can pay a dividend, as long as the dividend is being paid, you have little to do but look leisurely for alternatives.

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

Hopefully this summer, you were able to see and possibly go boating on a lake or ocean. If you live near the ocean, there is fish in the sea. People from time started have gone to the lake or the sea to catch fish and sell it. Fish are generally good for you and many years ago, one of the Popes said to Catholics (at the time Catholic meant any person who believed in Christianity) to eat fish on Friday. This created demand for fish all over Europe.

If you watch movies. George Clooney, Mark Wahlberg made a movie called The Perfect Storm based on a novel by Sebastian Junger published by HarperTorch, NY, 1997. The movie and paperback novel came out in 2000. It is a good movie. In the novel, the descriptions of the way of life of fishing are equally as compelling as the feel of the boat and waves in the movie.

In the novel, 12 years after Columbus discovered North and South America for the Europeans, the area of the Grand Banks were discovered full of cod. The Grand Banks are at a point where warm water from the south and cold water from the north meet and the plankton grows. The food small fish eat is plentiful which attracts bigger fish which attracts even bigger fish. A few years after being discovered, there were so many Portuguese ships on the Grand Banks, the King of Portugal imposed an import tax in order to protect the fisherman at home.

For a long time, it was easier to catch the fish, salt them on the boat and return back to Europe, no need to land on the rocky shores of North America. In 1523 a ship was financed by the Dorchester Company, a group of British investors from London who wanted to tap the riches of the New World. Some ventures are successful, some are not as commodity prices or fish prices declined. Eventually people did land on the new world and fish communities grew up including in Gloucester, Massachusetts.

For a long time, fisherman used to go the the Grand Banks and find plenty of fish and it was entirely possible to make a reasonable living fishing. If you owned the boats, fishing was a good industry to be it. Then something changed, there was fewer fish or the fish being caught were smaller or less profitable. What had changed? Technology had changed. The quick freeze technology was applied to fishing and boats became larger and were essentially factories at sea. The bigger boats had bigger nets to catch more fish and depleted the stock faster.

For fishermen, they had to change the way they fished and go further out to sea and be more vulnerable to the the weather changes including storms.

Linking to dividend paying stocks, in some industries it is easier to see technology change the business. In fishing, first it was easier to go be to Europe, then it was easier to open up plants to sell the packaged fish to Europe and as the market became larger to the US. Technology of quick freezing took more fish out, without worry about the number of fish in the sea (it is a big sea, but fish do not go everywhere). When the commodity is harder to find, the risks to find the commodity are greater, which is the reason why we have fish farms. The risk reward system has been part of the season for generations and will continue to be.

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

Each of us has a moral compass which we go about on daily, weekly, monthly and yearly basis and that is a good thing. Each of us knows what is right and wrong, but in the grey area when increasing large amounts of money are involved, what is the right thing to do? There is no easy answer and those with access to funds and those without tend to have slightly different answers. (one can see that with proposals on wealth tax).

In an article by Geoff Mulvihill of the Associated Press, the lead lawyer for Purdue Pharma Marshall Huebner said to the judge, accept what is on the table, it is reasonable or fair or be prepared to face decades of law suits which could last decades before any money is paid to victims.

If you experience deep pain in any part of your body on a daily basis you would want to take something to dull the pain, that is a normal reaction by people. Purdue Pharma produced a pill which helped with the lessening of the pain, but over the years changed the formula to make it more addictive. Once you were on it, it was very hard to come off and many people have died because of the addiction.

Purdue Pharma has admitted fault and in a proposed settlement, the family would contribute $4.5 billion in cash and control of a charitable fund. They would lose their ownership in the company and the new company would be formed to ensure profits helped the victims and fight the epidemic. Much of the funds would go into treatment centers or things over departments of health have to pay for.

In the lawsuit, there are many defendants and some states have agreed, but others want a scorched settlement on the family, to bring the family down from billionaire status to less than millionaires. The problem is the family still having the money they can stretch the litigation for years and stay wealthy.

Linking to dividend paying stocks, one of the great advantages of the companies is they have access to great resources to go after the competition, to ensure lobbyists ensure government and regulations do not change too much to make the company less profitable and a host of other elements. As an investor you like this, if you did not like the company for a reason, it is hard to fight a giant, not impossible, but hard. (remember the story of David and Goliath – it is possible). As an investor, you tend not to worry about those that do not like the company for one reason or another, as long as from your moral compass the company is doing good.

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

When COVID happened and companies around the world had to shut down because of health concerns, one of the prudent things which happened is companies began to conserve their cash or cut both dividends and buybacks. Many companies managed to come through COVID doing very well, there are some which still struggle but for a company which could operate there were some cost savings but having the workplace work from home – particularly on the travel and leisure expenses.

In an article by Stefano Rebaudo of Reuters, global money manager Janus Henderson released a report which forecasted global dividends to rise to $1.39 trillion this year, up slightly from a previous estimate because of the stronger recovery in the company payouts.

The increase would be up 2.2% at just 3% below prepandemic levels.

Underlying growth – adjusted for special dividends, changes in currency, timing effects and index changes was 11.2%. On a year to year basis, 2021 growth is expected to be 10.7%.

Dividends from companies restarting payments totaled $33.3 billion and accounted for 75% of the growth in the second quarter. The majority of these payments was more the financial sector which regulators had limited dividend payouts.

Booming commodity prices helped miners, with industrials and consumer discretionary coming back strongly.

Defensive sectors such as telecoms, food, food retail, household products, tobacco and pharmaceuticals registered characteristic low single digit growth rates.

Linking to dividend paying stocks, the reason you buy these types of companies is for the dividend and making compound interest work for you . With the dividends and continuing profits over the long run you wealth should increase and that is a good thing.

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

Every country which has a commodity that can be sold to the world looks to sell it the world, however in the world of geopolitics, not every country is going to be in good standing or in favor with the biggest economies of the world.

In an article by Bozogmehr Shafafedin and Julia Payne of Reuters, in the case of Iran it has the 4th largest reserve of oil and gas in the world, but the US has imposed sanctions on it. Oil and gas are being sold, often through third and fourth suppliers but China and Japan are buying Iranian oil. Iran had been suppling parts of Afghanistan with oil and gas, but with the recent changes in administration, it was shut down for fears of safety.

Iran has resumed fuel exports to Afghanistan through Iran Oil, Gas and Petrochemical Products Exporters’ Union The Taliban sent messages to Iranian traders and an Iranian Chamber of Commerce which has close links to the government. The government agency Islamic Republic of Iran Customs Administration (IRICA) has taken off the ban of selling the oil.

Iran has been selling oil to Afghanistan before the administration to the tune of $367 million of imports, mostly fuel between March 2020 and March 2021. The next two important suppliers are Turkmenistan and Uzbekistan with trade of oil valued at $257 million and $236 million respectively.

Trade between Iran and Afghanistan is expected to increase, because of the sanctions it was limited in public visibility and now with the change it should be more open.

Linking to dividend paying stocks, all companies want to deal with consumers who are buyers of their services and products, sometimes governments for reasons will want to limit markets until something better happens between the 2 countries. If the consumers demand the products, sometimes where there is a will, there is a way. How does your investments deal with global political concerns?

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

In every commodity there is different methods to transport the commodity from the place where the commodity is found to the markets which can use the commodity. There will and always be conflicts with different governments on which method to move the commodity.

If you think about the country of Russia, it is one of the biggest producers of oil and natural gas in the world, which essentially means you could classify the country as a Petrocurrency – as the price of oil and natural gas so does the economy. The least expensive way to move natural gas is through a pipeline. The use of pipelines the world over has a long history and it is reasonably safe. However pipelines must go through multiple country lines from the producer to the consumer.

In the country of Russia, the government of Russia once turned off the taps of the pipeline to another country for geopolitical purposes. Since then every country which deals with Russia knows this, but they have lots of supply of oil and gas and it is good for countries to de dependent of more than one source of supply. The other big supplies of oil and gas comes from the Middle East including Saudi Arabia.

In an article by Andreas Rinke and Pavel Polityuk of Reuters, the head of Germany, Chancellor Angela Merkel prior to leaving office made a trip to Russia and the Ukraine. The country of Ukraine was once part of the USSR and in 2014, Russia took over a piece of the Ukraine called the Crimea. Russia wants to build a pipeline through the Crimea into Germany called Nord Stream 2. They have a pipeline going through the Ukraine but want a second one so they are not dependent on being good neighbors to the Ukraine. Chancellor Merkel was in the Ukraine to say even when the pipeline is built, Germany will be a valued partner with Ukraine.

Linking to dividend paying stocks, in many cases a relatively simple commercial transaction has implications of local and even global politics. The company just wishes to deliver a commodity to consumers and that is what they are focused on, however politics can be intertwined with the commercial transaction. Companies with a long track record have dealt with the issue before and came out ahead, as a shareholder that is what you want to hear. Remember politicians change and sometimes the issue changes, companies even though they report their results quarterly do have the limited luxury of time on their side if profits can be seen at the end of the deal.

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

In politics it is not unusual to parties to change which means some policies automatically change. Many do not, but some do.

In an article by Mark Thiessen and Becky Bohrer of the Associated Press reported a federal judge threw out Trump administration approvals for a large planned oil project on Alaska’s North Slope. The 110 page ruling noted the federal review was flawed and did not include a multiple of mitigation measures.

The former administration believed in domestic oil production at all cost and it is well known there is oil in Alaska, although some of it is underneath protected lands. Late in the administration, the approvals were coming fast and furious for all projects in the hope some would stick, but some were flawed.

The project could produce up to 160,000 barrels of oil a day with about 590 million barrels over 30 years. More than 1,000 jobs during peak construction and 400 jobs during the operations.

The environmental groups were pleased with the ruling.

Linking to dividend paying stocks, governments can change and some policies will change when governments do, but profitable companies have consistently shown they can roll with each administration. There are good things and not so good things about any government and companies need to work with the government. Companies hire lobbyists to ensure the change is at least beneficial to the company. Sometimes the administration will do anything to help and sometimes the administration puts up roadblocks, but it is up to the company to work with the government. Does your company investments?

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

A few years ago, politicians and business leaders could get away from discussions about climate change, but times have changed and everyone has noticed climate has changed. Whether we change enough so climate changes back to what was normal is a different part of the equation, however everyone and every business has to do their part.

In an article by Brenna Hughes Neghaiwi of Reuters, the Swiss government passed a timeline that companies have to disclose the risks they face from climate change. Companies will need to disclose the actual and potential impacts on their business.

In June, France became the first country to make the rules binding as it set targets that will require investors to declare how green their assets are and set greenhouse emissions goals every 5 years from 2021 onward.

Britain has proposed British companies meet the Task Force on Climate-related Financial Disclosures (TCFD) in 2022. (shortly after the November UN climate conference in Glasgow, Scotland).

Switzerland says it rules will apply to both financial actors as well as to public companies with more than 500 employees or more than $27.6 million in Total Assets or $55 million in turnover.

Linking to dividend paying stocks, climate change is something which is happening and to combat it, public companies need to have an green program. The rules may help more consultants prepare the plans and lawyers to ensure the plan is effective, but companies that sell products around the world need to be doing something good on climate change. If they do, the shares will trade at a premium; if they do not expect the price to be a little lower. In addition, expect climate change interest groups to file briefs with regulators which the companies have to respond to.

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

Prior to the pandemic there were millions of people who commuted to work and they accepted it as normal. The commute was part of normal life. When COVID happened and public health was the most important aspect of society, the vast majority of commuters stopped commuting and stayed at home to do something including work. After a few weeks which turned into a longer period of time, vast numbers of people said I would like to change my home settings and with the money they normally spent on commuting, they started renovating. This lead to increased sales as home improvement chains and the better companies benefitted greatly.

In an article by Uday Samptah Kumar of Reuters, Home Depot said same day stores sales estimates for the first time in 2 years fell. The sales were very good, but they fell 5% from the year before.

Home Depot’s strength is the contracting market, not the Do It Yourself or DIY market, but other chains need this group for growth. As long as the housing market is doing well, Home Depot will continue to do well.

Home Depot chief financial officer Richard McPhail told Reuters that sales in the first 2 weeks of August were comparable to the second quarter, but they were not seeing any affects from the Delta virus.

Many companies want to bring employees back to the offices for a wide variety of reasons in the fall which means home renovations would likely slow anyways or the business model needs to change.

Linking to dividend paying stocks, all companies have to adapt to change, the best ones can execute when circumstances change. There usually is good reason why good companies can easily change, the issue is when the change does not come easily or they do not pivot as well as they used to, watch for the signs.

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