There are many methods to accumulate wealth – you can marry into it (there are many stories about people overlooking the negative aspects of their spouse for the money they bring into the marriage). You can win a lottery (the writer plays a lottery but rarely wins over $15). You can be a robber baron – steal it from people. You can invest in the perfect stock and it goes up and you win, although you should be reminded that there are many stocks in the market and only a few that are very big winners. The other way is over time – if you live in the correct neighborhood over time your home will go up in value. You can live on less than you make and save the rest to make investments or you can live on a little less than you make and make investments. For the average person, the last example is the best one.

Andrew Hallam wrote an article in the Globe and Mail and he wrote he was a teacher. He used the examples:

Jill begins at 16 and invests $240 a month every month till she is 65. How much would Jill save? The answer is $240 a month x 12 months x 49 years is $141, 120.

Lisa starts investing $1500 a month at the age of 40. How much does she save at 65? The same process $1500 x 12 months x 25 years is $450,000.

Who would have more if they averaged 8% a year. Why 8%?

Short term returns are often horrible, but investing is not a sprint, it is a marathon. Using information from DQYDJ.com and the Stingy Investor Asset Mixed calculator, the results were:

for the 25 years ending in 2008, the average was 10.2%

if you started in January 1929, 25 years late the average was 8.14%

Using compound interest and 8% to be conservative the answer is Lisa would have $1,421,179 but Jill would have $1,718,310.

There are a wide variety of funds to put your money into such as ETFs or mutual funds but the key is to start early, keep fees reasonably low and let compound interest help you.

Linking to dividend paying stocks, ideally some of your investments include a dividend stock ETF or fund because the dividends which can be rolled over means the companies inside the fund are making money and they will tend to trade at higher multiples for stock growth. You benefit it two ways even though you are trying to ensure capital preservation is the key.

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

In the world, of multi billion dollar markets, there is two ways to examine the markets. The markets are an example of supply and demand and the best information tends to rise to the top and eventually everyone has similar information or people will try to cheat. In the world of the large banks, they occassionally get caught cheating, but no one ever goes to jail. The bank agrees to pay money and admits some wrong doing but nothing illegal to send people to jail.

In these equations, the issue is did the bank make sufficient money to increase profits and pay bonuses and have enough to pay the fine in reserve? If they did, seemingly procedures are changed and life goes on.

In an article by Abhishek Manikandan and Michelle Price of Reuters, JPMorgan Chase & Co agreed to pay $920 million and admitted to doing wrong. The money was broken up to $436.4 million in fines, $311.7 million in restitution, and $172 million in disgorgement the Commodity Futures Trading Commission (CFTC) said. The fine was the biggest ever settlement imposed by the derivatives regulator.

What JPMorgan did between 2008 and 2016, was engaged in a pattern of manipulation in the precious futures and US Treasuries futures market. Traders would place orders on one side of the market they never intended to execute, to create a false impression of buy or sell interest that would raise or lower prices. The practice is known as spoofing.

Some of the trades were made on JPMorgan’s own account and some were made on behalf of hedge fund clients. The bank was warned about it in 2014 and instituted a new surveillance system but kept doing it anyways. Daniel Pinto, co-president of JPMorgan and chief executive of the Corporate and Investment Bank said the individuals who did the trades are no longer with the bank. (although it safe to say they left with bonuses in trac).

Mr. Pinto says the bank has invested considerable resources into boosting its internal compliance policies, surveillance systems and training programs.

The CFTC has been using more data analysis to spot potential wrongdoing and some of the ideas came from the health care fraud schemes. The CFTC and Justice Department mined the data to see how the worst actors were and surprising or not surprisingly came up with a big bank.

Linking to dividend paying stocks, any market where there is money to be lost or made, there will be some form of fraud. The wonderful analysis for a company actually doing things and making money can be use and are used for companies that have the potential to make money. To try to be as legal as possible, error on the side of investing in profitable companies which can sustain their dividends. No company is perfect, but one can determine the values of it when problems come up. How does the company deal with them under the pressures of consistently making money.

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

As a dividend investor, you are used to voting. Every company where you have an investment has an annual meeting and you should vote. Most of us, as long as the company is making profits and can pay a dividend vote for management.

There is a vote for President and other offices and you should vote. The writer has been involved in the political process over the years from knocking on doors, to giving literature, to fundraising, to recruiting candidates, to helping run campaigns. Some candidates have been wonderful, some not so, but the process is important. I hope you vote or have voted.

For an investor, governments play a role, not the majority, but governments can pass laws which make the day to day business of running a company easier or harder. As an investor, you like when governments make life easier, but there is a balance, similar to everything else in life.

Linking to dividend paying stocks, one of the reasons why you invest in these shares as the companies have gone through economic cycles and political cycles and still make profits to pay dividends. Who ever wins will not likely change what good companies are doing already. As an investor you have many different viewpoints, which is good, but casting your vote is important. VOTE

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

COVID has changed retail shopping in the US, but in some countries shopping on line was pushed ahead a number of years, but people were already shopping on line. All retail companies over the past few years have invested in shopping online, COVID pushed the line ahead the equivalent of 10 years into 1 year. Then there are countries where companies similar to Amazon were available but were being subsidized by countries such as the US, Germany and Britain. An example is Italy.

In an article by Adam Satariano and Emma Bubola of the New York Times News Service, Italy is a country that has preferred to shop in stores, pay cash to buying online in record numbers. If you think about Italy, the numerous coffee shops for people to go outside brings an image that seems natural. Go shopping and stop at small restaurant before going home.

North America is Amazon’s largest market accounting for 2/3s of its $245.5 billion global consumer business. But the Seattle based company has been targeting Europe and other markets to grow.

Amazon entered Italy 10 years ago or in 2010, and prior to COVID 40% of Italians shopped on line compared to 87% in Britain and 79% in Germany according to Eurostat, an European Union government statistics group. Although people shopped on line, e commerce accounts for 8% of retail spending in the country.

In 2020, the total online sales are estimated to grow 26% to a record E22.7 billion ($35.4 billion) according to researchers from Polytechnic University of Milan.

One reason for fewer online shopping in Italy is small and medium sized businesses make up roughly 67% of the economy and 78% of employment. Many companies saw online as a life line or opportunity to stay in business.

Amazon has added 2 new fulfilment centers and 7 delivery stations pushing its workforce up to 8,500 well up from the 200 in 2011.

Linking to dividend paying stocks, to build up and take advantage of opportunities companies need the infrastructure in place. When demand builds the process is repeated over and over to satisfy the customer and keep them coming back. In Italy there were challenges with internet infrastructure but all companies had the same concerns, who takes advantages of it?

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

COVID has affected the world and one of the ways it has affected is income earned has fallen. According to an article by Stephanie Nebehay of Reuters, income earned from work worldwide dropped by an estimated 10.7% or $4.7 trillion in the first 9 months of 2020. The figure was noted by a report by International Labour Organization (ILO).

Governments around the world have including income supports (you remember in the first tranch the US government gave an extra $600 a week), which is equal to 5.5% of global gross domestic product fro the 9 months of 2019.

The United National agency said a decline in employment numbers had generally been greater for women than men. In the 2nd quarter alone, global working time lost was 17.3%, equivalent to 495 million full-time jobs. It was estimated that 14% or 400 million jobs would be lost.

In the 3rd quarter, losses of 12.1% or 345 jobs are estimated to be lost.

Linking to dividend paying stocks, there is an old saying if there is a downturn if affects someone else, it is a recession if it affects you. The lost of so many jobs means the old saying is somewhat ineffective because the slowdown has affected almost everyone. If you have investments in dividend paying stocks, at least the dividends continue to be paid which helps you through the economic changes.

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

One of the advantages dividend buying investors have is they are bias toward utilities or companies that perform like utilities. This means the investor looks for companies with a reasonable diversified customer base, but can act similar to a monopoly because prices can be increases every year. In the case of utilities the price increase comes from the Utility Board or Commission which sets the hydro rates every year, then tend to go up.

Utilities love hydro power, because after the capital cost of constructing the dam, the cost of generating electricity is very low. The maintenance of the wires and distribution is an on going cost, but the power costs are limited. Hydro is defined as green or renewable energy.

The other major elements of renewable energy are solar and wind and we are seeing more wind farms, more homes and farms with solar panels on them and battery storage facilities to ensure hydro flows through the day and evening. What companies do you buy?

The S&P Global Clean Energy Index is a good place to start and includes a 45% increase in prices over the past 12 months. That is the best reason to buy but there are others and David Berman outlined them in the Globe and Mail.

Wind and Solar are Economical

Years ago, renewable energy needed government support (when the writer put solar panels on my house, higher prices from the government were received for the length of the contract ). Technological advances have driven efficiency and reliability along with declining cost of wind and storage components. According to investment banker Lazard, the unsubsidized cost of wind energy has declined 70% over the past decade, while solar is down 89%. The decline makes them less expensive then coal and oil and closer to natural gas.

Growth in Renewables is an Unstoppable Force

Despite the President’s love for coal, US electricity generation from coal fell 22% from 2016 to 2019. Renewables are up 34%. Utility companies compare prices and are no longer building coal plants to generate electricity which is the reason why many coal companies went into Chapter 11.

Big, Savvy Investors are Embracing Renewable Energy

Most Fortune 500 companies have clean energy policies and all the big tech companies are trying to be carbon neutral by 2030. In addition, many large pension fund plans have a Power and Renewables Group to invest in renewable energy.

Even Big Oil Companies want some of the Action

The largest oil and gas companies have signed onto the Paris Accord and trying to determine how best to get into the renewable segment. BP and Total have spent billions and BP expects to increase renewable energy capacity to 50 gigawatts by 2030 and Total expects to generate 40% of its sales from low carbon electricity by 2050.

Linking to dividend paying stocks, oil and gas production is not going to stop, but companies will continue to spend billions on solar and wind and hydro, which means more and more homes will come with solar panels connected to the grid. For an investor, if the cash flows are similar to the good effects of an utility they are worth investing in. Whether you buy the utility or the Index fund, one or more should be in your portfolio.

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

One of the reasons why you invest in dividend producing stocks is they have a cash flow which allows them to invest in the company and give money back to the shareholders. There is always a balance, but in a crisis what a company does with its cash flow can tell you if you want to be a long time shareholder. When the pandemic started all companies were unsure or had low levels of certainty of what to do, then time went on and they adjusted. Office workers worked from home, meetings on Zoom or Webex or one of the platforms and there was a level of adjustment.

Adjustment is always two phases, the first phase just the understanding of what needs to be done and the second stage how long will it go on. Was the pandemic a summer thing and all back to normal in September or will it go longer? In an article by Andrew Willis of the Globe some companies bought back their stock and expected things to be relatively normal. There were a number of companies who batten down the hatches, tap government programs for support and hope the vaccine would come soon.

Others like CN, saw the pandemic last longer and there were things it could do and did. CN is one of the largest railroaders with lines running from Chicago to New Orleans and from coast to coast in Canada. The company has 25,000 employees moving about 110,000 rail cars each week across 60,000 miles of track. All companies have investor conferences to tell their story and CN has been telling a good one.

At the start of the pandemic, the company shut down as the economy shut down, but then it realized and did figured out which customers ran essential services that would be needed – food distributors and farmers. Rail cars were moved to 23 terminals which featured refrigerated facilities. This helped keep grocery stores shelves remaining stocked. The company invested in new ship-to-shore transport system. The company did other investments to ensure the company could meet the demands of its customers.

Linking to dividend paying stocks, every company faces similar problems, the difference is some companies have more money to throw at the problem or do nothing. How does a company’s culture and work force adapt to the new realities? When you examine your investments in companies, how well did they adapt both short term and longer term? Did they pretend the COVID is over? what did they do and not do? If you believe they did the right thing, great if you believe they could have done something else then it is time to look for alternatives.

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