One of best investors by any definition is Warren Buffett, over the years Berkshire Hathaway has consistently had great results. The company is a cash machine and has over $140 billion in cash to look for value and grow the company. Every year, Mr. Buffett and his partner Charlie Munger discuss Berkshire Hathaway’s values and what they see and expect in the next year. Given the consistency of earnings for Berkshire, many people have gone to the AGM over the years. Berkshire major divisions include: insurance, tech (Apple shares), and energy (including shares in Chevron and pipelines), financial services and manufacturing.

In an article by Ross Kerber, Jessica Dinapoli, Jonathan Stempel of Reuters wrote the audience and shareholders are beginning to change. Mr.Buffett does not like bitcoin, bank-cheque acquisition firms (SPAC) and wild bets on trading app Robinhood and shareholders agree. However when it comes to ESG (environmental, social and corporate governance) standards they disagree.

Shareholders typically vote overwhelming for management, listening to a couple of annual meetings there was over 95% vote for all the motions; during the Berkshire AGM two motions on ESG 25% of the votes were against management. In most AGMs. the Chairman and President count votes before hand knowing the directors often control 35% to over 50% going into the meeting.

What is important is who voted against management – BlackRock, world’s biggest investment management, California Public Employees Retirement System – the largest US public pension fund, and Federated Hermes – has $625 billion in assets under administration (AUM) where among the sponsors of the motions and one expects voted against management.

Mr. Buffett said the ESG motions would not fit the decentralized model the company runs and impose restrictions on their ability to function, however if you believe in climate change you want to see the companies you invest in trying to mitigate their contributions. If the companies are doing it then it works through the supplier systems to stay suppliers.

According to proxy solicitor Georgeson, shareholder proposals on ESG at S&P 1500 companies average 28% support up from 20% in 2017.

Linking to dividend paying stocks, companies do not operate in a different silo than the rest of the economy, they are both part of the solution and part of the problem. The supply chains have moved to particular responses for both financial and practical reasons, to change means an investment to change which may or may not result in an increase in sales. However, companies need to relate the needs of its customers.

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

Dividend stock buyers are attracted to utility companies and many operate pipelines to move oil and gas. The reason is our economy is dependent on oil and gas and there tends to be a steady stream of usage which translates in stable earnings. In addition, the regulators of the utilities tend to listen carefully to the utilities and offer the ability to raise prices once a year, which continues to produce regular income streams. As an investor you like that.

In an article by Richard Valdmanis of Reuters, the pipeline operator Colonial Pipelines which transports about 2.5 million barrels of gasoline and other fuels from the refiners on the Gulf Coast (which over 50% of the refinery capacity in the US is) to consumers in the mid-Atlantic and south eastern US. The Pipeline was hacked into by ransomware and forced the company to shut down. Gasoline supplies will be limited and prices rise for consumers and the bigger issue is will the company have to pay the hackers to have their company again. The pipeline carries 45% of the gas used in the eastern US and runs straight from Houston to New Jersey. It also carries aviation fuel for airports including the busy airport of Atlanta.

Commerce Secretary Gina Raimondo has enlisted the government officials and cybersecurity firm FireEye to help solve the problem. There is another pipeline which carries a third of what Colonial does, however any lenghty shortage would increase tanker and truck volumes. The good news for consumers is the White House has a number of actions they can do and are doing. Perhaps because Colonial is headquartered in Georgia, Governor Kemp suspended state taxes for a week.

In a follow up, it took a week before Colonial Pipeline was up to speed again and the best news was the company was did the hacking was shut down and the money taken from their bank accounts. By who, no one is quite sure but it was likely related to the government of the US or Russia.

Linking to dividend paying stocks, many are the lifeblood of their communities and during AGMs it would be good to ask about cybersecurity.

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

If a company experiences higher costs, what are the options? Try to cut costs? Raise prices? Absorb it so margins are less? There never is a perfect answer but it generally all the above. When prices rise, inflation is a concern.

In an article by David Randall of Reuters, during the end of April earnings season many companies have mentioned inflation and the effect of it on the recent earnings calls, according to Bank of America Merrill Lynch. Saira Malik, chief investment officer of Nuveen’s global equity division, said short term, the struggle will be to reopen. However as demand comes back faster than expected it is leading to logistical and supply-chain issues.

At the moment, equity investors do not appear to overly nervous about the prospects of inflation, with expectations it will be transitory rather than persistent. Consumer prices rose 0.6% in March, while over the past 12 months inflation is up 2.6%.

Federal Reserve Chairman Jerome Powell expects inflation to be in the 2% for several quarters and then falling as the labor market and supply chains readjust to economic recovery.

Frank Rybinski, chief macro strategist at Aegon Asset Management noted as long as the higher input costs are moderate and not excessive for a long period of time, it is not a bad thing.

Companies in the S&P 500 are expected to report a total profit margin of 12.3%, the highest of any first quarter since 2006, according to data from S&P Dow Jones Indices.

Linking to dividend paying stocks, there are always some things you know and some things that need to be confirmed by the market. Is the Federal Reserve Chair correct? why would there be an adjustment? maybe he is wrong? when you invest in the dividend the price of the security will fluctuate, but the overall value over the long term is the reason why you invest. If inflation jumps to over 3% and bonds give you a 5% plus return, it is an easier decision to move money, but when rates are low, what are the alternatives?

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

When people look at the market and the valuations, often there is a reference to the dot com bubble on 2000. If you go back 20 years, people looked at the internet and how to many money from it, there was a theory the more likes or the more people had access to your website somehow the more money would flow into the accounts. At this time a company called AOL using this theory sent hundreds of millions of discs with their information and people could use their email. People did use the email and the stock of AOL rose to allow it to merge with Time Warner as equals. Time Warner is a media company with billions in dollars of revenues, but it was seen as a non internet company and valuations on internet companies were the thing. Time Warner continue to produce billions in revenue, but AOL did not monetize because advertising were not rushing to the door just because the company had potentially millions of users. AOL revenues never materialized, companies such as Facebook and Apple and Google came in and swept up the billions of dollars of revenues which made them the giants they are.

Companies have assets, AOL was sold to Verizon Communications which itself is very good at making money from the telephone and mobile phones. They thought the cross selling would work, spent a great deal of money and time to make money in the media and advertising world. In an article from Reuters, Verizon decided while AOL and Yahoo have value, Verizon will not be able to grow the business at multiples they expect and sold the companies to Apollo Global. Verizon wrote off $4.6 billion in 2018 and sold the business at half at what they bought it at.

Linking to dividend paying stocks, during the dot com bubble, multiple companies arose to be the next big thing because Wall Street buyers were buying a theme of number of people who see you website or viewers; the only thing is viewers do not translate into buyers. Some do which ones? When Budweiser advertises, some people will drink Bud, but everyone? When prices rise on the “greatest thing since slice bread” you have to be cynical or be able to remove your money from the table quickly. The theory will be everywhere you look but does it make money for the company? If all you see is cash burn or using cash to stay in business, then the money you invest should be speculative money not stable money. For stable money look to companies which can make profits every year and use the tools to continue to make consistent profits. In all industries it takes time to figure out which company will dominate and which ones are an idea to be tested.

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

The stock market has been on a record run and that is very good, in all likelihood because the fed is keeping interest rates low, the bull run will continue. When things are good, people and money flow into a winning formula. Some of that run will be new money and new ideas are always welcomed on Wall Street.

Wall Street has been dominated by institutional investors for years and the retail investor or the average person has been using pension funds or mutual funds or index funds to invest in the market. In an article by Tara Siegel Bernard of the New York Times News Service the retail investor component according to Piper Sandler is now 22% up 13% from a year ago. The prime reason for the increasing number is the 0 commission accounts.

Robinhood has millions of people downloading its apps; Charles Schwab added 866,000 retail customers up 81% from 2019 and half were younger than 41, most with less than $10,000. 1/3 of the growth is from people under 35.

The young people are watching investment manager Cathie Woods, there are reading Reddit and many are watching videos over TikTok. Similar to other areas on the internet, marketing campaigns by investment firms are using influencers to sell their products and services.

Linking to dividend paying stocks, when everyone first invests they want to make money or change a thousand to tens of thousands to hundreds of thousands. It does happen in the rare instance, if someone is fortunate and used margin and likely more risk than normal. The reality is over a long period of time investing in profitable stocks with a dividend will be more advantageous but it takes time to understand how compound interest works. Those who want to make money help ensure there is plenty of trading and that is why stocks go up and down, but the real winners are the long term winners, and patience is part of the strategy.

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

When politicians around the world talk about an global economic rebound and it actually happens, the laws of supply and demand are not far away. In the laws of supply and demand, when there is great demand for a good or service the price goes up until new companies come into the market and cause too much supply and then the market sorts itself out. As prices rise, alternatives are found to ensure all those in the supply system can actually make money. If for example, it something was a component costing 10 cents and now it costs a dollar, research and development will find another material doing the same thing costing less because some companies can not pass the higher prices to their consumers.

In an article by Tim Shufelt, Goldman Sachs released a report saying Copper is the new oil. The price of copper on the London Metal Exchange is close to its record high set in 2011, at the writing it was $9,965 a tonne. The reason for the increase is the demand from China.

While some factories left China, many have remained and China’s factories are operating while the rest of the world is in semi-shutdown. In the rest of the world, copper demand drop by 6.4%, but in China demand increased by 4.8%.

In an normal year China consumes half the world’s supply of copper. If you are a bull on copper, you would expect demand to pick up in the rest of the world coupled with a recent estimate suggested 60% of current investment by major global copper producers is aimed at maintaining existing projects, rather than expanding production said David Burrow, president and chief investment strategist at Barometer Capital Management.

Linking to dividend paying stocks, if you own commodity stocks you need to pay attention to supply and demand because the price of commodities rises and follows with the simple supply and demand charts. If you own a company that has services, it can increase prices, for your investments are prices increasing or the same?

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

The information age has taken leaps during the pandemic which is a good thing for just about all tech companies, but similar to most things in life some companies benefit a little more than others. One of the big winners has been Apple. Last month Apple announced it was going to spend $430 billion in the next 5 years including opening a $1 billion dollar research centre in North Carolina.

In an article by Stephen Nellis of Reuters, in addition to the announced spending, Apple said it was generating enough cash to buy back $90 billion of stock, along with its other plans.

In computers, there are 2 large markets, US and China, in China Apple’s sales have doubled led by more than $6.5 billion in iphone sales and Mac computers were a 1/3 higher than analyst’s estimates.

At the present time, the global chip shortage has not been a problem for Apple and one of the strength’s of Apple is their supply chain expertise.

Apple is making more money from its App Store, music or itunes and services for fitness.

For the quarter ending March 27, Apple sales were $89.6 billion and profits at $1.40 a share. Analysts were expecting $77.4 billion and $0.99 a share.

Besides the buyback of shares, Apple raised its dividend 7% to 22 cents a share.

The iphone sales were $47.9 billion; sales of Mac and iPads were $9.1 billion.

Apple has 660 million paying subscribers on its platform up from 620 million (which is the reason why services fees have increased).

Linking to dividend paying stocks, Apple is the type of stock you want to own over the long term because it has products it can sell at high margins (iphones) and a guaranteed subscription base of fees. The ability to add extra fees is easily possible with over 600 million subscribers. Given the ability of Apple to research and development and big tech to track everything people do, advertising fees should increase. As an investor you like that, as an individual, sometimes you think it is too much, but there is a trade off.

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

In late April. Microsoft reported its quarterly earnings and similar to many large tech companies, they are making a lot of money. According to a report by Reuters, Microsoft met analyst’s expectations and beat profit estimates. Revenue and adjusted earnings for the company was $41.7 billion and $1.95 a share.

If you have a computer which is not an Apple you are using Microsoft’s system which means most of the world’s computing is done on Microsoft. This means there will always be a steady stream of income to Microsoft which is good for investors.

All companies including Microsoft wish to grow and some actually achieve growth. One of the methods Microsoft is growing is through the cloud. The cloud is where the real growth is occurring and to understand the Cloud, various research must be done. One example of research is a You Tube Video by the biz doc or Tom Ellsworth who is based in Dallas, Texas. Mr. Ellsworth does case studies and there are very easily to follow and in video he examined Amazon and AWS.

Amazon through AWS is the market leader in the cloud and it accounts for 65% of the profits of the company. The person who headed AWS is taking over as President of the company. AWS has kept 33% or a third of the market for the past 5 years and it is important to note the cloud has been grown rapidly and is still growing. Microsoft was late to the market and its market share grew from 10% to 20 to be number 2; Google has grown from 5% to 10% to be number 3; IBM is in fourth and has not grown market share with less than 5% and all other companies who had market share are losing market share to the big three.

If you think about cloud services, the key is volume and the ability to large capital upfront costs to have the servers and infrastructure and security. The costs of equipment and security tends to mean the largest companies will have the greatest advantage and they do. Similar to most industries there are always alternatives.

Linking to dividend paying stocks, when you buy the companies you want them to have a steady stream of income and growth potential. The steady stream of income draws you and the potential and actual execution to achieve growth allows you to hold onto the stock. In the case of Microsoft, as a market leader in operating systems, it will always have sales, but how many extra computers will you buy? or the market is relatively stable. However when you know that cloud services is 65% of the profit of Amazon and Microsoft is gaining share, there are more reasons for owning the shares.

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

Climate change is happening and most people in the world believe it is true. When that happens companies have to do something to ensure their products will be continually used with very little interruptions. That is good for the company and the consumer will continue to spend money. With climate change the biggest companies which people come to see as a problem or those that produce carbon or oil companies. What is a oil company to do? They can do nothing, fight the issue, or try to be part of the solution because the world is not going to go off oil in the next calendar year. It will take much longer than that.

In an article by Terje Solsvik and Nerijus Adomaitis of Reuters, Sweden’s Lundin sold what it said is the world’s first oil cargo certified as carbon-neutral at the point of production to Italian refiner Saras.

The crude from the Norwegian Edvard Grieg oil field was certified as carbon-neutral from exploration, development and so called Scope 1 and 2 emissions, the major emissions caused by the oil’s final use. Lundin Oil said the North Sea Grieg field causes only 3.8 kilos of CO2 emissions a barrel, 5 times less than the global average.

Emissions from producing the 600,000 barrel cargo amount to 2,302 tonnes of CO2 an equivalent of which will be captured by a tree-planting project in Mexico. Lundin said in would invest $39 million in a project to plant 8 million trees in northern Spain and Ghana as part of the company’s wider $750 million to decarbonize its output.

The other option is buy carbon credits.

Linking to dividend paying stocks, some of the best dividend stocks in the world are oil companies and if all they go into carbon neutral, there should be millions of trees being planted around the world. Whether that is the best solution to the problem, it is a good thing to plant trees. Consumers will decide, for your investments you may have to determine whether their efforts are sincere to combat global warming or not?

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