Sometimes you can read reports or books for seemingly different reasons and they have a part of a chapter as background and it means something more than what the author had likely desired. Recently read a book called In the Wake of the Plague (about the Black Death) and how the world was changed written by Norman F Cantor, published by Simon & Schuster, NY, 2015. In the book, the focus is on what happened in England, but the reality of Europe was similar to matter where a person was.

The nursery rhyme Ring Around the Rosies, a pocketful of posies, Ashes, ashes, We all fall down was about the black death, fortunately by the time people sang about it very few memories were around.

In terms of this blog, the aspect of the book that was interesting was about Europe’s wealth. It was in the hands of about 300 families and 4 dozen were in England. The wealth of the Dukes and Princes was very likely a billion dollars in today’s money. In England, the House of Lords, Parliament’s Upper Chamber was composed of the head of each billionaire high noble family, a heir, and 30 bishops from the Church.

The impact of the plague was individual rather than collective. Their cash flow was so high, their lifestyle so lavish, that they had a significant influence on the economy.

The pace of life these nobility set and the luxury goods they cultivated also had the effect of pressuring the less affluent nobility to imitate them as far as their more constrained resources allowed. Living on credit because as common among the landed class as it is in American society. The Florentine (Florence, Italy) and southern France bankers allowed huge debts to run up at very high interest rates. The banker’s loans were ultimately safe if given to the highest of aristocrats because of their immense wealth made repayment possible. However when King Edward III defaulted on his loans a number of Florentine banking houses went into bankruptcy.

The strange way the Black Death affect the awesome Plantagenet family. When Princess Joan died, she did not marry into the Spanish Castile Royal family. Although the political connections of marrying into the Royal family were never regained, it did allow John of Gaunt to inherit the vast dukedom of the Lancaster which shaped the events of English history. The folks were content was the Florentine moneylenders, John of Gaunt was to remain solvent and retain his leading billionaire lifestyle. In the next segment, interesting research on land will be presented.

Linking to dividend paying stocks, in every society there are wealthy people and they set the news and make the headlines for their concerns. Most of us roll along with the ebbs and flows of society, but the basics of money are the same, the wealthy often operate on credit, but they have income to pay it back. In your lifestyle, you can ensure that income comes in on a regular basis to help you pay back the bills of the banks if needed or buy more income producing investments.

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

Most people know that in 1492 Columbus said the oceans blue and discovered the Caribbean for Europe. The first few years were relatively peaceful until ships starting bringing back gold and silver and then Spain sent in the Conquistadors to takeover Mexico and Peru and transfer wealth to Spain. This made Spain the wealthiest country in the Europe and for a number of generations Spain was the most important country in Europe both economically and given Spain was Catholic, it had a big impact on the Catholic Church in Rome. What most people never ask is why did it take until 1492 before Columbus sailed the ocean blue?

In watching a video of Knights Hospitaller and Siege of Malta, there was a good explanation. For generations, the trade route for spices and other goods from India and Southeast Asia came up the Red Sea through the Nile and ending at Venice where it was distributed by merchant fleets. Venice was the distribution city. If you think about Shakespeare’s Othello, this is the setting in Venice. For generations, the trade routes worked for both Christians and Muslims. Then something changed.

The Ottoman Empire expanded through north of Turkey to the Balkans and controlled the trade routes in the Mediterranean control was both by land and sea and thus the cost of goods increased and when prices increase, merchants and citizens want an alternative.

The alternative was at the other side of the Mediterranean Sea between Spain and Morocco is the Straits of Gibraltar. It had not been profitable or desirable to look to the Atlantic Ocean because no one really knew what was there besides ocean. There were many theories including the world was flat and people would fall off the edge. Was it true? how many came back? Ships were built to travel along the coast and in the Mediterranean Sea not the Atlantic Ocean and everyone knew there was and can be storms. There can also be clear sailing.

At some point, there was a decision that the Mediterranean was too hostile to continue the same routes and alternatives needed to be found. The old route was not worth fighting over because the rate of return on capital was falling to negative.

At the time of Columbus, Spain was not a rich country, but there was stories and growing evidence there were riches out there somewhere. In our time, we would say Venture Capitalists took a risk on Columbus’s journeys and won big. On subsequent journeys, the Incas gave the Spanish gold to go away, but when it reached Spain, Spanish dollars danced in the Treasuries counting houses and Spanish troops were sent to bring back the gold. The stories of privateers and capturing one ship from the Spanish and bringing it to England or the Netherlands allowed the captain and financiers of the journeys to be millionaires and set up the advances in the arts and business in the countries.

Linking to dividend paying stocks, the Europeans call the time Europe went into the Atlantic Ocean the Age of Discovery and similar to many ages, the reason why it started was to find alternatives or to find more wealth elsewhere. In our society we continually do this – think about the alternatives when the pandemic hit stay at home stocks similar to Zoom and software companies to do the things companies used to do in office buildings. Finding alternatives or trying to maintain healthy margins is a normal thing in business and why there is constant change.

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

If you consider the baby boom generation, they are getting older and many are or will be in retirement years. The wave of people which is wonderful if they have a good retirement including dividend producing income, also comes with the reality that as a person ages, hopefully wonderfully, their body will break down. It may be physically, it may be mentally, but at some stage the body tends to break down.

In China, the country had a one child allowed for a number of years, the upside of the policy is that many Chinese are getting older quickly and what will they need as they age – retirement home living or home care. In an article by Alexandra Stevenson of the New York Times News Service, China’s looming elder-care crisis provided an opening for fraudsters and Ponzi-like investment schemes. By 2025, more than 300 million people in China will be 60 or older, according to the Chinese government. By 2050, that number is estimated to rise to half-billion.

Traditionally, Chinese families have take care of elderly parents (if you only watched the Disney movie Mulan – the ancestors song). However in the wake of the one-child policy and mass migration to the big cities, fewer people can care for the greying population. The most vulnerable are known as the “3 nos” – no family, no financial support and no ability to work.

What is the government to do? one would think as a Communist government the government would subsidize housing, but the government is not that communist. The government has turned to the private sector to build retirement housing, however the month bill averages $1,500 a month, but the average income to pay is $535 a month. There is a short fall.

The result of the shortages is numerous schemes to pay monthly to secure a spot in an retirement home. The problem has become so widespread, Chinese top judicial bodies have labelled the retirement industry one of the sectors hit hardest by what they call illegal fundraising. China Central TV, the state broadcaster, recently called retirement investment funds with high returns a “fairy tale”.

Linking to dividend paying stocks, the reason to invest in them is to increase wealth over time or when you are ready for retirement or in retirement, you have options. Hopefully you have other income – private pensions and combined with the government pensions you have an ability to afford private care if needed. With money there is always the opportunity to have fraud, your task as an investor is to be skeptical with high returns, but expect consistent returns over a long period of time. Have relatively easy methods to ensure you can leave your money, are the companies profitable? can they pay their dividend? then you can sleep well at night and have money when you need it.

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

One of the advantages of investing in a company is to vote for management compensation, the auditor and management concerns at the annual meeting. Every company spends a great deal of time and effort at the annual meeting and shareholders can ask questions. It is something you can do and something you should do.

In an article by Edward Waitzer and Toby Heaps, the make up of the biggest owners is changing. According to a Havard study, 3 companies hold 1/10 of the the world’s securities are have $19 billion under assets. The 3 companies are BlackRock, Vanguard and State Street. In 1998, they held 5.2%, in 2017 it was 20.5 % and if trends continue the number will be 40% by 2040.

The 3 companies are beginning to be more visible in attempting to influence corporate conduct. If you were on the Board of the companies, ensuring the management recommend votes is very important to the annual meeting. If the Board were to ensure the big 3 voted in their favor, along with other institutional investors doing the same, votes would very easily pass.

The authors explained passive investment is not neutral and what the companies say they are going to do, what timeline they give to the company and how they vote can be a mismatch. The issue is many people give the funds the vote by default, sometimes it should not be that way.

Linking to dividend paying companies, the large index companies hold all these companies in their indexes and likely will vote for the management 999 out of 1,000 times, and maybe more. As an investor you are concerned about continuing to be profitable and pay a dividend, but similar to people around the world, you might want to ensure the company has your values and is increasing them. You picked the company for a reason, besides it is profitable, maybe because you think it can be leader in making the world a better place. Ask at the annual meeting.

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

Whenever you invest, the choice is always what are the alternatives and how much risk there is. If the alternative is to by a Triple A bond yield 10% or invest in the stock market and hope, you might logically pick the bond. However in our reality, interest rates are close to 0 and one of the most important people who have a say on interest rates is Federal Reserve Chair Jerome Powell.

In an article by Howeard Schneider and Ann Saphir of Reuters, Mr. Powell said interest rates are not going up soon. Mr. Powell testified before the US Senate banking committee, the proceedings are televised and the words of Mr. Powell are analyzed in many reports afterwards. In the hearing, Mr. Powell said expect us to move carefully, patiently, and with a lot of warning. (if policies change to raise rates, it will not be a surprise).

The Fed has helped the economy through a $120 billion in monthly purchases of bonds both government and corporate. The policy is continuing for the forseeable future. Mr. Powell talked about the missing 10 million jobs, not pressure on the economy expanding. Mr. Powell recognized reality by saying the economic recovery remains uneven and far from complete. In the Washington Post, there is a running total of the number of people vaccinated. Mr. Powell said the economy or the return to normal depends on the number increasing to much higher numbers.

Linking to dividend paying stocks, with low interest rates investing in profitable companies which pay dividends is a very good alternative. If and when interest rates go above the average dividend yield, then money will flow to alternatives even though some do not debt. The world has $23 trillion in government spending and we still have low rates, perhaps dividend paying companies will never go out of style.

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

As long as the pandemic has happened, governments around the world have spent money to keep their economies keep going and this has produced a great deal of debt. At some point the debt will have to be paid down, but when countries begin to make progress in the countrywide vaccination program, traders have started to be concerned about inflation.

In an article by Lewis Krauskopf of Reuters, the yield on the benchmark 10-year Treasury note, climbed to a a one year high of 1.36%. That number is higher than 0%, but in relative terms it is still quite low and will remain low as determined by the Federal Reserve. There are whispers will rates go higher?

Eric Freedman, chief investment officer at US Bank Wealth Management, noted the theory is when government bond yields rise, all asset price should reprice lower, Mr. Freedman believes yields have not risen high enough to provide a competitive alternative to stocks.

BofA Global Research surveyed fund managers and they showed a record in the net percentage of investors taking higher than normal risk, cash allocations at the lowest levels since March 2013. Allocations to stocks and commissions at their highest level in about a decade.

Analysts at Citibank and Nomura believe if the 10 Year Treasury went higher than 1.5% stocks could drop 8 -10%.

At 22.2 times its forward price to earnings ratio, the S&P 500’s valuation is well above its long term average of 15.3% according to Refinitiv Datastream.

J Bryant Evans, a portfolio manager of Cozad Asset Management said if the 10 Year Treasury went above 3%, then bonds might start competing more aggressively with stocks.

Linking to dividend paying stocks, if you own dividend paying stocks, your dividend yield is compared to owning the 10 Year Treasury which should have least risk associated with it. There are multiple companies that have been profitable and able to increase their dividends every year. If you are worried, more towards these companies and until interest rates go above 5%, you need not worry. The new Chair of the Fed is not likely to increase rates until after 2022 or the midterms.

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

If you think about Tesla, you likely think about Elon Musk. Mr. Musk has many investments and one of the most public is Space X. Space X has ambition to go to Mars but it makes money from satellites. Starlink has plans to send up to 12,000 satellites and has sent up 1,000 already.

In an article by Alexandra Posadzki, Starlink Services would provide telephone services connecting consumers to its MSP’s platform to its MSP’s platform using its MSP’s platform using its network capacity. VOIP is a cheaper alternative to alternative to traditional telephone service, but relies on user’s internet connection.

The company says demand is strong for its service and more than 10,000 customers have already signed up to pay a monthly fee and the company says hundreds of thousands have expressed interest in the service. It is important to note Disney signed up 100 million people to its Disney plus channel and Verizon and Comcast has millions of monthly subscribers.

Linking to dividend paying stocks, in the communication business monthly subscribers are the key and there is plenty of competition for each and every subscriber. Loyalty is less and less and cost per monthly is important. It might be Starlink continues to bring down the costs, but it will take a long time before it reaches the market reach of the biggest companies. Celebrate the innovations, and watch them but ensure the metrics needed to make a profit are there before you invest your money and check it every quarter. With Disney, Comcast and Verizon you can do that, with Starlink you are hoping.

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

If you know Tesla stock, then you likely know after Elon Musk, one of the biggest backers of Telsa has been Cathie Wood of ARK Investments and ETFs. The higher stock price of Tesla and other innovative companies gave the ETF about 144% return on investment. This growth brought in mega funds or over $14.84 billion to make the fund at $26.6 billion. That is the wonderful news.

In an article by David Randall and Lewis Krauskopf of Reuters, the growth of ARK ETF is double edged sword, the success brings in more money, particularly retail investors. The downside is the fund becomes increasingly large for it to have mega returns the companies have to do even better. Will Tesla’s price double? triple? stay roughly the same or go down? Will the momentum stocks in innovation the fund holds double and triple? The larger a fund becomes the more it behaves like the S&P 500 index fund.

Jimmy Lee of Wealth Consulting Group noted EFTs that can up more than 100% in a year can come down just as hard.

Cathie Wood before helping working for ARK worked with AllianceBernstein as chief investment officer of thematic portfiols and co-manager of global positions at Tupelo Capital Management. ARK was founded in 2014 to focus on innovative companies.

When ETFs move their positions around, particularly when they are large, use market makers to ensure transactions move smoothly. When they use market makers, information about what they are do makes the rounds of Wall Street. Sometimes it is a little harder to make as much money when the ETF is large.

Linking to dividend paying stocks, having innovative stocks rise in value is exciting because they offer a vision for the future and we all want to believe the future will better. In investing sometimes the tried and true is easier to live with because the money you invested you want to ensure it is available for you to live better. Companies that will do something in the future, hopefully, shares will go up and down, sometimes like a yo yo. Ideally profitable companies that can pay dividends will be more stable in terms of their share price and that can allow you to sleep well at night. Your money can grow over time and that can be just as exciting as the yo you stocks.

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

All systems work until they do not and then everyone looks for the enemy or villain. In late February the hydro grid in Texas failed. In was terrible and similar to most events there was a wide variety of reasons. Power plants than run on natural gas, oil and nuclear froze, windmills and solar panels did not generate electricity (although they make up 10% of the supply) and electricity did not come to many Texans. There are many consequences but blaming the victim is high on the list. As the snow and ice came with the freezing weather, people turned up their heat or caused a spike in demand. With limited supply, the regulator of the electricity system had to do revolving blackouts to keep the system running.

In an article by Matthew Daly of the Associated Press, the politicians jumped into the blame game. The Governor and Lt Governor blamed the Green New Deal or 10% of the system for failing the entire system. This was concerned suspect once people learned of solar and wind capacity, after the state they are in is Texas. Texas is the center of the oil and gas industry and leading producer of natural gas. If the the components in a natural gas generator froze, it might be more reasonable to blame the ability of the system to endure winter weather. It should be noted the average temperate in February tends to be in the 50’s not the 30’s. Over the next few months there will be a report on what happened and how to avoid it in the future.

For many years Texas has been the home of surplus natural gas and this means for the average consumer for their gas and electric bill, they do not have fix prices, after it is Texas. During the outage, natural gas prices went up and not just a bit but over a 100 times typical levels. Minnesota Senator Tina Smith among others said the producers had to pay spot prices and they pass the expenses to customers and it is too high. Senator Smith wrote to the Energy Department, Federal Energy Regulatory Commission and the Commodities Future Trading Commission.

An example of the spot pricing increasing was in Winfield, Kansas the price of natural gas was $3.00 per unit, it increased to $400 a unit. Normally, Winfield pays $1.5 million a year in gas costs, expects to be charged $10 million for the week.

Linking to dividend paying stocks, when GameStop shares soared, it was a news event and many try to speculate. When natural gas prices soared, fewer people could speculate although over the coming months you will hear some who did. Commodity prices can and do jump, it is part of the cycles and squeezes, to try to stay away from the the squeezes invest in profitable companies that can pay dividends. They can pay their bills, likely have policies and procedures to deal with the hopefully one time events and life can continue.

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