The last Presidential election cost over $1 billion and in many ways, it was money well spent. If the desire is for as many people to vote as possible, then the Presidential election was an overwhelming success with over 80 million voting for President Biden and 74 million voting for Mr. Trump. For a billion dollars, that is very heavy fundraising and both parties turned to corporations for their major funding. All smaller donations are wonderful and needed to ensure the grassroots turns out to vote, but the large donors play a significant factor. It is one of the reasons why most politicians are wealthier than the average voter and fundraising is a 12 month exercise, not just before the election. One election finishes, another one starts.

Each of the 2 parties Democratic and Republican policies tend to attract some companies over the other. It is not that the companies can not work with the other, in some industries it is much easier than others. The classic case is the oil industry has given more to Republicans because the Republicans start with liking the oil industry, the Democrats tend to tolerate it. There are industries that both parties find it easier to raise money.

All major companies have Political Action Committees (PACs) and they all have government relations departments to ensure legislation is helpful rather than harmful to the companies.

In an article by Reuters, for political activity, companies disclose their actions to the Federal Election Commission. They are regular filings, similar to companies filing at the Securities and Exchange Commission (SEC). In January companies including Microsoft, Walmart, AT&T and Comcast did not donate to 147 Republicans who voted to support former President Trump after the January 6 assault on the US Congress. The reason why the companies did not give money is former President Trump had not declared he lost fair and square. In the world of business and politics the game has moved on without former President Trump.

During the last 2 year cycle, those 147 lawmakers would have received more than $2 million from the PACs. In January 2017, the 10 company PACs donated $190,000 and during the 2019-20 election cycle, the PACs gave $10 million.

Linking to dividend paying stocks, if you wonder who finances political activity, it is the same companies who make profits and pay dividends. There are valid reasons to giving money, guaranteed access and to ensure people vote to do no harm, which can save money for the company. Making profits and paying shareholders is the reason to own the shares, but companies can and do more in the outside environment.

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

Prior to the pandemic, there were a number of companies taking large amounts of space in office buildings, the companies were in the co-working industry. The wonderful thing about the internet is if you have a laptop, you can start a company. The challenge is to find paying customers, but you have all the tools to start the company. One of the tools you did not have was the great office place to meet clients. Clients are still reasonably impressed if you have a seemingly solid place to hang your hat or address. Along came companies such as We Work, IWG and others who rented space in office buildings and you could have access to a private office, a board room, the attributes which lead creditability to the permanence of your company. The desire was for people to meet generally downtown, partly for the infrastructure supports and ability to socialize to further your business. The pandemic comes and people started working from home, who needs the office downtown?

In an article by Rachelle Younglai, IWG the world’s largest co-working company is trying to adapt its business model to reduce its exposure to long-term office leases. These co-working places paid the rent on the building and charged their customers rent for the space. The rent varied between the classes of real estate A was the highest and C the lowest and in many cities there was plenty of choice. The problem is the business model needed many short-term subtenants to use the space and with many working for home, the ability to work in the shared spaces is limited, because of the 6 feet of distance. Many of the co-working spaces depended on shared spaces and meeting in board rooms, now there are enhanced software programs to do it on Zoom.

IWG brands include Regus and Spaces has 3,300 locations in 110 countries and anyone can sublease. (a number of years ago working on a political campaign, we used the space and it worked well. We had a office, because you need a office, the use of the boardroom for events and gatherings).

IWG has slashed prices and noted demand in the suburbs has increased, while downtown are facing more immediate challenges or low demand. As companies slowly move back to what was considered normal, the co-working places may be an alternative for the larger companies which downsized there office space needs.

Linking to dividend paying companies, all companies have business models and they work because they are in business and continue to expand because the business model works given how the economy works. When the economy is changed business models have to be changed. It is good IWG is changing its model, as a large player in the industry, they see the demand for their product just not the way it was. Will the business model change again? how will the company tap into the new reality? Fortunately sometimes the large players have larger credit lines to ensure they can get through the changes, but as an investor, you can move to alternatives and watch how the new reality shapes up and then get back into the stock if you desire.

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

On the stock market, most days there is limited speculation but on some days it is easy to find. Most people investing in the stock market are not doing it to speculate, because when you speculate some days you win and some days you lose money. Therefore the challenge is to limit market risk. If you want very limited speculation, you should restrict your investments to stocks similar to dividend producing stocks. However in every market there is opportunity to speculate.

In an article be Saquib Iqbal Ahmed of Reuters, it is possible to buy very leveraged and inverse exchange traded products (ETPs) which magnify the moves of an underlying index or stock several times. It should be noted, these products only account for 1% of the $5.9 trillion universe of exchange traded products.

We all look for funds that have done very well, we compare them to our funds and think maybe I should put some money into those funds. We all tend to forget the past performance does not guarantee the future performance, but we are people and when you read about a fund that is up over 1,000% in the last 11 months, tongues wag. It should be noted throughout the history of the stock market whenever a sector does well, money flows into the sector. The PHLX Semiconductor Index is the bases for the Direxion Daily SemiConductor Bull 3X Shares which seeks to amplify daily moves in the chip index threefold.

Other funds which seek to do the same with other indexes include the ProShares Ultra VIX Short Term Futures ETF, the ProShares Ultra Pro QQQ, not surprisingly millions of dollars have flooded into theses funds. Whether the risk is understood, it is a debatable question, but the desire to have the return is evident, for sometimes the losses can be quick and staggering or large.

Experts or people who spend their days in front of a screen trading, say the ETPs are designed to be short term trading vehicles and not to hold them long term.

Linking to dividend paying stocks, there will be and always is speculation in the stock market, sometimes people win and sometimes people lose. If you are willing to take the risk, then go ahead, however over the long term investing in profitable companies which pay a dividend is very rewarding with limited risk. If you make 50% this year and lose 45% next year or you can make about 10% total return over the 2 years which is better? The answer is Option B because over 2 years the return is 5% and 10%. If you did do Option A, it would be quite a ride, but Option B increases your wealth over the long term.

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

Through the history of oil and gas production around the world, the oil and gas is found in places where there are not many people. The oil and gas needed to be transported, first by the railroad and the railroad is a good alternative, then by pipelines. Transporting by pipelines is the less expensive for the oil companies and for the pipeline, as long as the oil and gas flows, the company can pay dividends.

Across the world, the building of pipelines has become more complicated as people weigh the advantages and disadvantages of the pipeline crossing their lands and of course political considerations come into place. Some see pipelines in black and white differences, others see the grey.

In an article by Vladimir Soldatkin of Reuters, the situation in Europe is more complicated than the US because of the rise of Green Parties or environmental parties. However, the reality is Russia has enormous supplies of natural gas and needs to export it to finance the country. There is a pipeline to Europe going through the Ukraine and often there is where geo-political considerations come into play because the US can influence how much gas flows to Europe.

In the commercial scene, Gazprom from Russia, Germany’s Uniper SE, BASF SE, Anglo-Dutch Shell, Austria’s OMV AG and French based Engie SA are building a pipeline under the Baltic Sea and it crosses various countries borders. The part going through Denmark to Germany is completed. The pipeline has a capacity of 110 billion cubic meters of gas and politically Germany has said the project is a commercial project and wants it to go forth.

Linking to dividend paying stocks, once the pipeline is in place, the pipeline will produce a consistent return of profits and dividends to the owners because there is a need for the oil and natural gas. The drama of how the pipeline was built will be long over and customers will use the products. All developments have back stories but often times they become less important to users as time goes by.

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

Most of us do not really think about how companies operate or receive their inputs because we expect the companies are competitive because they control their costs and can achieve a market share to earn profits. In an article from Reuters, the climate think tank Ember noted China’s aluminum sector must shun dedicated power capacity equivalent to more than Germany’s entire coal fleet over the next decade to keep Beijing on track to meet its carbon pledges.

In North America, the key to manufacturing of aluminum is relatively inexpensive hydro costs or the reason why you find the aluminum plant is because of hydro dams nearby. In many instances, the hydro is partly owned or highly dedicated to the aluminum plant first. Then the power can be used by the community or exported to other areas on the grid.

In China, much of the aluminum manufacturing is in Shandong province although it should be in Yunnan which has abundant hydropower resources. It is of course easily to move in theory, it is harder in reality because the assets are built. In Shandong, the aluminum makers have long relied on the off-grid captive power plants for the energy intensive smelting process. The aluminum companies account for 65% of the power used. Essentially, China has built many coal plants to produce power and coal has a problem of emissions. In China’s case the plants have emitted more than some countries such as Indonesia and Brazil.

In China, more than 45% of China’s inefficient captive coal capacity is in the smelting heartland of Shandong province, with more than a 1/3 or 17 GW belonging to top private sector producer China Hongqiao Group.

Linking to dividend paying stocks, in the coming years and it is starting now, investment managers are deciding to include environmental impact in their decision making to own stocks or bonds in companies. Some of the biggest banks in the world are saying they will not lend or use their investment banking abilities for some industries. It means that besides making profits companies have to be doing their part to ensure the planet stays healthy. If the environmental impact is “too high” then the cost of financing for the company will be higher compared to its competition.

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

For generations or ever since the mass production of the Model T by Ford, an easy and profitable investment was in the oil companies. In the early days of the oil business, John D Rockerfeller through Standard Oil controlled the oil industry from production to refining and made himself the richest person in America. For those who own Standard Oil and then the company was split in the 7 sisters, it was an easy investment in your portfolio. The biggest portion of Standard Oil eventually became Exxon and it was the largest generator of dividends in the world. BP or British Petroleum made 7% of dividends in the UK. The wealth that came from the oil companies was great and return on investment was terrific. Then can the pandemic.

The world is slowly moving to non fossil fuels, but slowly and in some places kicking and screaming, but change is coming. In an article by Clifford Krauss of the New York Times News Service, the first change is Exxon – the company reported it lost $22.4 billion compared with a profit of $14.3 billion the year before. Much of the loss came from a write down of assets of $19.3 billion. Exxon bought lands that have natural gas at a higher price, the price dropped and the write down reflects the lower price of natural gas.

BP reported it lost $5.7 billion, its first lost in a decade. (the last time it lost money it had to made payments for the oil spill in the Gulf of Mexico). The company is cutting jobs and selling $25 billion in assets.

Exxon offers hope for the 2021, as chief executive Darren Woods says there is opportunity. Exxon’s share price has climbed from the $31 in November to the mid $40s because oil prices have increased. Oil prices have increased due to winter conditions and demand for oil and natural gas for heating and Goldman Sachs is predicting the price could increase another $10 a barrel to $65 in July. That is much lower than the $140 a barrel a decade ago.

It has to be noted, President Biden will be passing the Green New Deal and GM will try to be on batteries by 2030 ish. The $140 barrel is not likely to come back.

Linking to dividend paying stocks, big oil has a role to play in the economy, most of us who heat our homes with oil or natural gas still need oil or natural gas. Most vehicles are more fuel efficient than a decade ago, but they are still the internal combustion engines, it will take time before the big change over. Big oil was an easy investment for dividend paying investors, they will still make money just not like before, alternatives include utilities to ensure the power to drive the batteries.

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

If you think about advertising and the dollars that are allocated by firms around the world, the number one place they send those dollars to is Alphabet or Google. Google generates more revenue from internet advertising than any company globally and advertising revenue accounts for 81% of the the $56.698 billion in the 4th quarter sales.

In an article by Paresh Dave and Munsif Vengattil of Reuters, chief executive officer Sundar Pichai updated the company’s 4th quarter performance. If you think about the pandemic and the biggest advertiser deal with travel and entertainment, but in many areas they were very limited as restaurants closed, people were encouraged to stay home. In that environment, Google’s sales rose 23% from last year. The retailers who were driven online made up the difference, because once you have an online ability, you need to tell the world that you exist and people can buy from your site.

Analysts were expecting an increase of 15.31% or $53.129 billion, but Alphabet made $56.698 billion.

The company is not perfect, similar to Microsoft and Amazon, Google is on the cloud, unlike the other companies, Alphabet is losing money, they lost $1.24 billion in the quarter. Cloud sales were $3.831 billion for the quarter or $13.059 billion for the year which meant an increase of revenues of 46%. The loss over the year increase 21% to $5.6 billion.

Overall, the company’s quarterly profit rose 43% to $15.2 billion or $22.30 a share, compared with the estimated $10.895 billion or $15.95 a share. Revenue which has been consistently growing at 20% a year decreased to a still healthy 12.8%.

Linking to dividend paying stocks, when you look at Alphabet it makes its money through advertising through search engine,YouTube and the cloud and one expects in 2021 as the economy opens across the country and the world the travel and entertainment sectors will be spending money on advertising. Much of it will come through the Alphabet company. When you examine your investments you should see core holdings of where revenue will be made through any cycle and hope for the future, because every company can execute better.

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

If you think about China, the country was not wired with land line phones so when cell phones became available people bought them. People communicated more than ever, but adding technology soon meant apps were available and Alibaba was one of the most popular. The app has continued to be the most popular in China as the number one e-commerce sites. When you have a large market share, it is time to branch out to over products and services and Alibaba branched out. In fin-tech, Alibaba came out with Ant Group which has become the number fin-tech in China.

In an article by Julie Zhu and Brenda Goh of Reuters, Ant Group became a threat to some of the commercial banks which incidentally some governments and their agencies own. The banks complained to the regulators and more importantly to the Premier Li. He waited until Ant Group was going to go public before sending in the regulators.

Recently Ant Group has agreed to the restructuring plan with Chinese regulators under which the fin-tech giant will be turned into a financial services holding company. Bloomberg News reported this will potentially a major step toward easing founder Jack Ma’s regulatory woes.

This means the fin-tech will have similar capital requirements than banks have and should allow the banks to compete against Ant. The company Ant has been a leader in China for small loans of $100 or more. When the regulatory structure is in place, if and when Ant Group becomes a publicly traded company, the valuation between a fin-tech and another banking company will be lower.

Linking to dividend paying stocks, the regulators are important to every industry but sometimes management tends to skirt the laws until it needs them to beat the competition. Government has regulations and most companies have lobbyists to help ensure the competition is both fair and stable and when the rules change, companies run to the regulations and try to change them for a fair playing field. Regulations matter.

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

One of the best companies to own as a dividend investor is P&G, sales are very good, they have over 20 billion dollar brands and they have raised their dividend for years. The company is also doing things to capture the consumer market whether that is at home or hopefully when we are all able to move around again. Sometimes the company is lucky and sometimes the company has the resources and ability to make a pivot or change and still make profits.

In an article by Joseph Pisani of Associated Press interviewed Marc Pritchard, P&G chief brand officer.

The lucky part was Microban 24, the company had been working on the product for years and they launched right when the pandemic hit. Sales have been very good.

The launch of Dawn dish soap that sprays? The idea came from observing consumer behavior and seeing people wash one dish at a time. How do you make it easier? The product makes the process easier, you do not need to scrub, you just spray it and then either wipe or rinse off.

P&G is using less plastic and less water in their products? People care about the environment and P&G is changing.

Linking to dividend paying stocks, P&G constantly changes, although the brands are still very popular which means P&G invests in consumer research and putting capital dollars to change the processes to match consumer demand, which is a balancing act for management.

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