In the last week of January and early part of February a company made most of the financial news because something was different. The company was Game-Stop which jumped from $20 to over $450 settling in somewhere between $200 and $300. It is a good story and involves short selling and panic buying to cover shorts and margin calls and generally most of the things dividend paying investors stay away from, however it is an interesting story.

With some of my dividends, Blackberry stock was bought – while 95% of the stocks in the portfolio pay a dividend, it is good as an individual to have some possible turnarounds giving the correct market conditions and management decisions. There is hope in buying a stock which is out of favor for very good reasons, but the company does have potential good assets to build. It was a very pleasant surprise one day the stock jumps into the $30 range and having the good graces to sell most of the holding.

We buy stock for dividends and some capital gain, when the capital gain comes, there is the possibility of selling some of the stock and lowering you cost to own it. If the stock doubles and you sell 50%, essentially the other 50% cost you nothing, because you took out your capital. You can hold the rest for as long or as short as you wish. If the stock falls it is okay. Having said all that, it is difficult to sell under an easy capital gain. Is there more to come? will you leave money on the table? those are all good decisions to have to make. The other side is if the stocks falls, do you hold? do you cut your losses? Experience helps makes the decisions, but easy gains feel wonderful, because the market has reaffirmed your homework and decision making abilities.

In the past month, the WallStreetBets on Reddit website and if you have not checked it out, you should look through it. There is a lot of banter, but there has always been a lot of banter in the watering holes or bars around Wall Street. What’s hot? What’s new? What is the investor who makes a lot of money doing with their money? what sector? can you ride along. The decisions around quick and fast money are not new and they will be around as long as you can make money in any market.

The huge focus on Game-Stop caused the rest of the market to focus on it and shares were sold to buy Game-Stop on the way up and down. Fortunately or unfortunately momentum traders are always trying to find the next thing. Maybe similar to me, one of the stocks you own that was out of favor will be in the next round of momentum traders sights. Remember many companies on the stock market are tied to commodity prices, when they rise those stocks connected to the commodity prices rise to, which ones you buy is the homework you need to do.

Linking to dividend paying stocks, in the long term investing in profitable companies which pay a dividend and can raise the dividend has proven to be a very successful way to increase your wealth over time. It allows you to sleep well at night and worry about people rather than stock market prices. Having said that, it is nice to make a quick dollar which allows you to buy more dividend paying stocks to reinvest, do nothing, spend or make larger donations to causes you support.

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

When you invest, you expect that the investments will be honest or above board and you will not lose money. You expect and understand why there is some greasing of the wheels, it is not over the top. And if someone does get caught, the person who goes to jail or loses assets is someone who lives the lifestyle of a very wealthy person or actually is a wealthy person.

The above does not happen often but there are exceptions. In an article by Stephanie Nebehay of Reuters, a mining tycoon was convicted in a Swiss court. The mining tycoon is Beny Steinmetz who runs the Ben Seinmetz Group Resources (BSGR) which employs over 100,000 people in the mining industry. Mr. Steinmetz is a citizen of Israel. He was found guilty of corruption and forgery and sentenced to jail and a fine of 50 million Swiss francs ($56.48 million).

In the country of Guinea, the BSGR was going to open an iron ore mine in the Simandou mountains of Guinea. The BSGR group offered a $10 million bride to gain the exploration permits and forged documents through a series of shell companies to try to cover it up.

In the court, Justice Banna said that Mr. Steinmetz had made an immediate profit from the mining rights and not a cent went to the government of Guinea.

Bernhard Maier a London attorney representing mining companies said, the case demonstrates a world of increasing transparency and scrutiny, as a result of technology and the internet, there is more accountability.

Mr. Steinmetz’s lawyer Marc Bonnant said he would launch an appeal.

Linking to dividend paying stocks, the tools that help companies determine customer preferences are also the tools that can be used to keep companies more accountable. It is best to buy into a company which has reasonably high ethics in the first place, because then you do not have to worry about it the first place. Being honest and ethical helps you sleep at night and in the long term makes you wealthier.

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

When you think about the big trading houses on Wall Street, the firm Goldman Sachs comes to the list because they do an excellent job of making money through all types of markets. When the markets were not doing well, everyone thinks Goldman Sachs is rigging the market for themselves, when the markets are rising they do even better. The company is not perfect, it was sued and lost a Malaysia’s law suit but the company continues to power on.

In an article by Anirban Sen and Matt Scuffman of Reuters, Goldman reported a 4th quarter profit powered by its trading desk and a surge in fees from underwriting a string of blockbuster IPOs.

Revenue from global markets which houses the bank’s flagship trading business had its best performance in a decade. Sales jumped 23% to $4.27 billion in the quarter or $21.2 billion for the year.

Total revenue climbed 18% to $11.74 billion. The bank’s net earnings applicable to common shareholders rose to $4.36 billion or $12.08 a share. Analysts were expecting $7.47 a share.

The bank’s trading desk generally works with governments and large institutions but the company is setting up a consumer loans and credit card business. The business rose 52% to $347 million or $1.21 billion a year. The bank generates most of its profits from the trading desk.

Linking to dividend paying stocks, traders like active markets and if there are rising active markets they like it better because there are even more profits to be made. IPOs from companies help generate fees, the company invests more in AI and finds areas to make money. Goldman has been a leader on Wall Street and continues there, while they are the leader it is safe investment to make in their stock. If your companies you invest in are leaders in their fields, the important question is are they still the leader, if they are you can hold, if the leadership is falling it is time to look for alternatives.

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

The economy runs on credit and most of the credit comes from banks in the form of loans and lines of credit. In mid January, Bank of America is the second largest bank in the US which has a relationship with every 2 average citizen. For this reason, we look to how the banks are doing and is credit still in the economy?

In an article by Noor Zainab Hussain and Imani Moise of Reuters wrote about Bank of America which reported on their 4th quarter. Total loans and leases at the bank were down 6% in 2020. The demand for loans were down, customers saved more and large companies relied on capital markets for funds rather than their bank (one area was the SPACs).

Chief Financial Officer Paul Donofrio believes Bank of America should be able to grow Net Interest Income (NII) able to grow because deposits and loans are growing. the NII is expected to increase in 2021 with the biggest gains in the last half of the year.

Consumer and small business transaction volume across the 2nd largest business rose 7% but its fixed income trading desk missed estimates. Net income applicable to common shareholders fell to $5.21 billion or 59 cents a share for the quarter. Last year the company made $6.75 billion or 74 cents a share. Analysts on average had expected a profit of 55 cents a share.

Linking to dividend paying stocks, unless the economy collapses and then the government would step in to bail out the too big to fail banks, the banks are seen as the bell weather for the economies and generally because the big banks have many areas for profit are profitable companies which pay dividends. It is hard not to own the banks directly or indirectly (ie. index fund of the market) and it is hoped that both individually and as a country this will be a good year.

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

If you were to think back on 2020 and ask yourself do you think China would show economic growth, given former President Trump has imposed tariffs and was recommending US companies doing business in China do it the US first? Likely you would tend to think China would have limited growth because some of the world’s largest multinational companies are based in the US and China plays a large role in their strategic plans.

In an article by Gabriel Crossley and Kevin Yao of Reuters, China is the world’s second largest economy after the US, released official data which should growth beating expectations. The Gross Domestic Product (GDP) grew at 2.3%, even accounting for the response to the global pandemic. China is expected to have the highest growth in 2021 at 8.4% according to a Reuters poll of leading economists.

Beijing’s or the ability of the government to apply strict virus curbs allowed China to contain the outbreak better than most countries around the world, while the government led stimulus plus encouraging manufacturers to step up production to supply goods which could not do so while they other countries shut down their economies.

GDP expanded 6.5% in the 4th quarter according to data from the National Bureau of Statistics. The statistics indicate China’s consumption lagged expectations, but exports grew more than expected.

Retail sales fell by 3.9%, but industrial output grew by 7.3%.

China is on its 14th 5 year plan, but it does have concerns. In all likelihood tensions between Washington and Beijing will ease, there are rising labor costs, an aging population, and much debt.

The Chinese central bank is expected to keep interest rates low for the coming months.

Linking to dividend paying stocks, most companies with overseas operations depend on China for revenues and logistics or the supply system. China may be a country some Americans do not like but it is an economic powerhouse not to be taken lightly. As China continues to grow commodity prices will hold up in value and there will be many stable prices on the stock market. China is not the most important aspect of a companies business, but it is one to pay attention to.

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

It used to be when you looked at your vehicle you would think about the parts – it needs steel, rubber, or relatively basic commodities to operate. Now when you access the newer vehicles on the road they increasing dependent on electronics to operate. The auto mobile companies in their planning of logistics never thought their biggest problem would be demand for PlayStations.

In an article by Jack Ewing and Don Clark of the New York Times News Service, strong demand for gaming stations, personal computers and other electronics has caused a shortage of semi-conductor chips for car makers. All the large car companies – Toyota, Fiat Chrysler, VW, Ford and GM have announced plant closures because of the shortage of semi-conductor chips.

When COVID-19 hit, auto companies slashed orders for chips expecting demand to down and this was good for the semi-conductor companies – demand for laptop computers, webcams, tablets and 5G smartphones went up. When people started working from home, companies had to upgrade their systems fueling more demand for semi-conductor chips.

The good news for the auto companies is sales came back faster than expected, the bad news is it takes semi-conductor chip companies 6 to 9 months to realign production. New cars have about 100 chips per car.

Companies which supply chips include: Infineon Technologies, NXP Semi-conductors NV, Renesas Electronics. The simpler 8 inch chip has been replaced by the 12 inch chip in the most modern plants. It is easier to ramp up production in the 12 inch chip than the 8 inch according to Syed Alam, global leader for Accenture’s global semi-conductor consulting practice. It takes 20 to 25 weeks from the time new orders are placed for chips to be produced and work through the supple chain to reach cars.

Linking to dividend paying stocks, we are all depended on one another in ways which many of us never realized. If something happens to the supply chain, then it has a ripple affect which even under the best expectations and planning does not work out. In your investments, do you have a understanding of the supply system for your companies?

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

Former President Trump had said he did not lose and went on a spree for months saying I did not lose I won. Since the vote was not in my favor it must have been rigged. The former President kept up with his public statements for months and it was repeated by those who were influenced by him. President Trump had the ability through social media to convince his supporters to support his preferred candidate in the primary or to determine who the Republican nominee would be. Without his social media platform it was going to be a debatable subject. All those Republicans who believed they need former President Trump’s help went along with his conspiracy theory ideas. The result was a high profile event more symbolical than anything else, the President led a charge to the Capital Building and people rioted. The politicians got out before they could be caught and protesters did damage to the building and some lives were lost. The symbolic event at the Capital Building has consequences.

Former President Trump was touted as a great marketer or branding particular his name, after the Capital Building his brand has been diminished. Companies paid for golf memberships and hotel runs and gave money to the Republican Party candidates have stopped or said they will not renew.

In an article by Tom Sims of Reuters, senior management of German Bank Deutsche Bank said they will no longer do business in the future with former President Trump or his companies. Deutsche Bank has $340 million in loans outstanding with the Trump Organization and some of these loans are personally guarantee by Mr. Trump.

The President set a record golfing for 315 days, primarily at Trump Golf Courses and the PGA which held tournaments at 2 of his courses are changing the venues of the event.

Linking to dividend paying stocks, for everyone and every organization there are consequences to actions, although no one knows where the line will be drawn. People feel they know where the line should be drawn, but where and when the public will let you know. It is fitting for President Trump whose line was kept being changed, it was just before his Presidency ended. In your investments, do you know where you would draw the line if the company did something you disagreed with?

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

2021 if the vaccination is successful, which would be a very good thing, the next step will be to raise interest rates and begin to pay down debt. During the pandemic, governments close down many venues where people meet and gather which caused massive disruptions to employment. To counterbalance the effects was to send people and businesses money, as the vaccinations reach a level where there can be concerts and people in stadiums safely, the big concern among policy makers will be inflation.

In an article by Saikat Chatterjee of Reuters, President Biden proposed an increase spending to people, businesses and states as a hopefully final bridge. This spending means more government spending and eventually inflation will rear its head, although do not expect high rates in 2021, but rates for the US Treasury yields are above 1.1%, a 9 month high.

The fed may or may not start tapering a $120 billion a month asset purchase program paving the way for more than a 1/4 interest rate in 2023. Although Janet Yellen has signaled she does also wants to do something about income disparities.

Eurodollars futures maturing in 2023, now expect as much as 40 basis points in cumulative rate increases. The futures are a bet on the direction of the short term London interbank offered rate (Libor), one of the most widely used interest rate benchmarks in global financial markets. Investors hedge interest rate risk in the Eurodollar market.

Morgan Stanley expect tapering by the fed to begin in January 2022 with the fed buying government debt by $10 billion less and buying $5 billion less mortgaged back debt a month with an aim to stop in 2023.

Linking to dividend paying stocks, inflation may be of concern, but in a K shaped economy many people have not seen a rebound in their jobs or income, President Biden is concentrating on them. When we see a more fully shaped rebound, then we can worry about inflation and whether it is best to be in dividend yields or interest rate yields. For the next year, the concern will primarily be analysts and academics.

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

Within every market is the biggest customer and when they buy, volumes go up. When volumes go up everyone on the outside looking in seems to think things are going well. For the insiders in that industry, they worry the biggest buyer may or may not continue to be the biggest buyer. In the case of commodities, the biggest buyer in the marketplace is China.

In an article by Clyde Russell of Reuters, in 2020, China bought record volumes of crude oil, copper, iron ore, and coal or the biggest mining companies depend on China.

In the oil market, crude imports rose 7.3% in 2020 to 10.85 million barrels a day about 12% of global demand. In December, crude imports decreased to 9.06 million barrels a day which is 17.9% decrease or a decrease of 15% from 2019. Did China need the oil or were they stock piling or putting the oil in storage? China does have refining capacity and will refine some oil to ship elsewhere in the Asia.

Copper imports in December were 512,332 tons down 8.7% in November and it was the 3rd consecutive monthly decline. Last January prices reached a high of $8,234 a ton and have decreased to $8,009 a ton. China accounts for half of global copper demand.

Iron ore is another major commodity where China dominates, accounting for 2/3’s of the seaborne market. In 2020 imports rose 9.5% to 1.17 billion tons. Iron ore is used in the manufacture of steel and steed demand was strong as China spent money on infrastructure and construction projects to renew growth (expect the US to do something similar under the new President). In December imports were 96.75 million tons down 1.4% from November.

Coal imports leaped 235% to 39.08 million tons from November’s 11.67 million tons. The total coal imports for the year was 303.99 million tons up 1.5% from 2019.

Linking to dividend paying stocks, in our economy most of us have little to do with basic commodities because we work with information, but the economy runs on commodities. In countries around the world the demand for commodities by China means the mining, railroads and ports were active which means jobs. Politicians like that which means they will have a love hate relationship with China. In your investments, there is company or country which dominates, as long as you are good with it, then there is no reason to seek alternatives, just be aware of it.

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