If you are looking for negative news from an economic point of view it is not hard to find. The markets are down, it was revealed about 100,000 people are expected to die from the virus in the US (being optimistic is maybe a little less); most states have a statewide stay at home order; there was a “fight” between Russia and Saudi Arabia about the price of oil and it went down causing energy stocks to go down and Whiting Petroleum, one of the biggest drillers in Texas or the Bakken shale formation to seek Chapter 11 protection. The stay at home has caused auto sales to plunge 40% plus; mortgage applications are down 24% which means the spending on the appliances and home renovation is down.

In the second week of April is earning for the 1st quarter and it is expected to be a recessions type. The purchasing indicators measured by the new orders to factories and Purchasing Managers Index are expected to show recession type numbers. This is addition to the number of claims for unemployment insurance. If the money from the Treasury is delivered on time as suggested by Secretary Mnuchin that will be a welcome offset.

Chris Zaccarelli of Independent Advisor Alliance in Charlotte, NC said the comments made by President Trump and Governor Cuomo suggesting the virus effects will get worse than better, the virus is going to around longer than expected. If people have to stay at home for 2 or 3 months, then the economy will take longer to restart.

Linking to dividend paying stocks, during the stay at home many larger companies are making allowances for delayed payment of bills. That does mean the bills do not have to be paid, just delayed or the fees which we all hate to pay do not exist. Those fees should not have made for a profit or not a profit; The larger companies such as utilities residential numbers have gone up, but the large users in manufacturing and offices have gone down, still utilities are good stocks to hold. In viewing the crisis, remember health is most important, a close second is financial health.

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

The stock market was up on 3 days, but was down on 2 days, is that a good time to buy? The answer is no one knows, but it is a very good time to have a strategy in place and stick to it. It is important to have patience and do your homework. Part of that homework is work done by Gary Christie of Trading Central.

Mr. Christie used the software of his firm to search for:

companies that have positive cash flow growth to weather the storm.

companies that pay dividends, which allows you to be patient.

look for companies with a market cap of at least $5 billion and the stock market price decline has been at least 30% this year.

the S&P 500 price earnings ratio is 16.9, Mr. Christie is looking for a P/E ratio of less than 10

The companies Mr. Christie came up with are:

Company Mkt Cap CF Growth Div P/E YTD 1 YR Recent

$ bill % Yld % Perf % pref Price

Carlyle Group 7.9 29.7 5.3 6.8 -30.1 30.3 23.35

CIBC 26.0 15.8 7.7 7.4 -31.2 -27.3 58.72

Interpublic Group 6.0 76.6 6.8 8.8 -34.8 -23.3 15.78

Reliance Steel & Alum 5.9 36.0 3.0 8.6 -30.4 0.4 88.40

Everest Re Group 7.1 23.2 3.6 8.2 -36.8 -16.4 176.00

Goldman Sachs 57.2 2.3 3.2 6.8 -32.5 -25.0 160.54

American Financial 6.0 52.7 2.5 8.0 -35.2 -25.0 68.86

Omnicom Group 11.7 19.7 5.0 8.9 -35.6 -23.9 54.90

The other companies on the list were Ameriprise Financial, Aflac Inc, Snap-on Inc, State Street Corp

Linking to dividend paying stocks, when you bought the stocks you bought them for the dividend and as long as the dividend is being paid and hopefully increased, then you can continue to hold – for now the yield will be very good. With the dividends you can purchase stocks to diversify your portfolio but first you need to do your homework to determine which of the S&P 500 is worth buying. There are lots of good companies whose prices have gone down, many you might not know their names. Doing your homework allows you to buy for the correct reasons.

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

The cornavirus has through a monkey wrench into the economy because even though the US economy is 70% is a service economy, the virus has meant we had to learn and practice the term social distancing. The economy is based on people meeting people and if you belong to any groups you enjoy them. If you like sports – going to the stadium, cheering for the home team and celebrating afterwards is part of normal routine. The virus has meant all of those things people in general enjoy can not be done. If you consider how many people made a living from your enjoyment, you begin to understand how the jobless numbers skyrocketed.

In an article by Lucia Mutikani of Reuters she notes the Labour Department releases the weekly jobless claims report every Thursday. The numbers which will likely get larger is the reason the President signed the $2 trillion stimulus package. It is also the reason why the President can not seem to get over the economy was doing so well and now the economy is a recession.

The 3.28 million claims easily beat out the previous record of 695,000 set in 1982. In 2008 when the banks were on the verge of collapse, 665,000 claims were processed.

Layoffs were concentrated in food service, health care, social assistance, arts, entertainment and recreation, transportation and warehousing and manufacturing industries.

Linking to dividend paying stocks, companies that tend to do well in the downturns as well as upturns include: utilities, food distributors, information technology, telecoms, banks and pharmaceuticals. There is a reason to own the stocks because people need to pay bills and if they have to pay the bills on a regular basis, so much the better for the investor.

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

If you catch market call on CNBC or many other networks, invariably someone talks about the VIX and what is it doing in terms of volatility. The VIX is the seemingly go to guage.

In an article by Brenda Bouw, she explains the VIX helps capture investor emotion as measured by the CBOE (Chicago Board Options Exchange) Volatility Index. The VIX is a real time measure of expected market volatility in the S&P 500 index operations in the next 30 days.

In normal times, the VIX trades at between 15 to 20. On March 16 the VIX reached a record close of 82.69 and the Dow Jones Industrial Index fell 12.9%. The VIX in late April was around 63.

Kash Pashootan, Chief Executive of First Avenue Investment Counsel watches the VIX hourly as an indicator of short-term market behavior. He says when the VIX is trading outside of certain ranges, the market is trading on emotion and headlines. As a rule, he does not buy long term unless the VIX is less than 30. The higher the VIX the more the emphasis is on short term trading and an emphasis to build up the cash position.

Linking to dividend paying stocks, similar to all tools in the toolbox, you can have your favorites but no tool does everything. In the article, Brenda Bouw says tools are just that tools. The professionals use the VIX to help them, which means you should know about the VIX and what it says about the direction of the stock market. If you are not a professional, the VIX is important but do not spend a great deal a time on it. For us non professionals, one of the best tools is that the company announces and pays a dividend; when that happens you can understand the meaning of patience and long term holdings.

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

In the giant $2 trillion economic stimulus, you heard the President and others suggest that the money for corporations about $500 billion, should not go to stock buybacks. What you may or may not know is how much do US companies buy back their stock?

In an article by Sinead Carew of Reuters, using data from S&P Dow Jones Indices, Howard Silverblatt, a senior analyst noted we can expect fewer buybacks for the next 2 quarters. Companies will be concerned with their liquidity.

US companies spent $181.6 billion on buying back their shares in the 4th quarter of 2019. For the full year of 2019 the number was $728.7 billion down from the record $806.4 billion in 2018. 2018 was the year of the big tax cut.

In the 4th quarter the top 20 companies accounted for 55% of the total, the highest level of concentration since the 1st quarter of 2010 when the top 20 companies accounted for 59.8% of buybacks.

Almost 21% of the companies reduced the shares by at least 4% outstanding.

The top 5 companies buying shares were Apple with $22.1 billion; 3 banks – Bank of America, Wells Fargo, and JP Morgan. The 5 company was Bristol Meyers Squibb (likely because of the merger).

Linking to dividend paying stocks, companies buying back stock is a good thing for it lowers the number of shares outstanding which means earnings per share (EPS) rises which translates into higher multiples for share prices. Returning money to shareholders is a good thing because then the shareholder has options with the money – buy more shares; diversify the portfolio with other companies; have patience for other opportunities, the list is endless. The important thing is the company pay dividends.

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

The stock market has made wild swings in the past couple of weeks and one does not know if that is the new normal for the next couple of month but at some point the market should stabilize. What do you do? Being patient and waiting in cash is a good idea. Another idea is to ensure you do your homework and as prices fall and you can buy very good companies with high dividends and you are 99% positive the dividends are safe, you can buy those companies.

Companies such as Goldman Sachs send to their clients, but the lists become publicly available to everyone. In an article by David Berman of the Globe; he wrote David Kostin, a strategist identified 26 stocks to get you through the downturn. No one really knows how long the economy will be in a slowdown, but there continues to be economic activity. People will be receiving income from the government, however by all expectations there is a downturn in the economic growth of the country.

Mr, Kostin’s pick are the big, liquid market caps – they average $33 billion based on the stock market. The second characteristic is they have good balance sheets. With an economic downturn cash flow will be less, having reserves and access to lines of credit and the Treasury are very good things.

The stocks are Health Care – the virus is a health concern – Alexion Pharma; Align Technology; Gilead Sciences; Bristol-Meyers Squibb; Illumina Inc; Biogen Inc; Quest Diagnostics; McKesson Corp

Information Technology – Intel; Analog Devices; Texas Instuments; Qualcomm Inc; Maxim Integrated Products; Salesforce.com; Xilinx Inc; Cognizant Technology Solutions; Skyworks Solutions

Communication Services – Take-Two Interactive Software; Electronic Arts

Financials – T Rowe Price Group

Consumer discretionary – Lowe’s; Best Buy; Walgreens Boots Alliance; Booking Holdings

Consumer Staples – Altria

Industrials – UPS

Linking to dividend paying stocks, having cash is wonderful, you do not lose money. However companies that pay dividends means you will make more than doing nothing. The key is having a long term horizon and buying very good companies at lower than normal prices. You may or may not have heard all the companies on the list, that allows you to pick some and follow them which is doing your homework. When the markets go down, that is great opportunity to nibble, when the markets go up you wait. Capital gains come and dividends flow – that is a good thing for those with patience.

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

The coronavirus is going on and it looks like it will continue for April and May. Hopefully things will be better in the summer. In the meantime it is prudent to examine what companies provide work from home technology and are continuing to benefit from the changing work situation.

Scott Clayton works for a firm called TSI Network and used the following criteria:

US dividend payers offering well established software and services.

The TSI Dividend Sustainability Rating System:

one point for 5 years of continuous dividend payments

2 points for more than 5 years

2 points if the company raised the payment in the past 5 years

1 point for management’s commitment to dividend

1 point for operating in non-cyclical industries

1 point for limited exposure to foreign currency rates and freedom from political interference

2 points for a strong balance sheet, including manageable debt and adequate cash

2 points for a long term record of positive earnings and cash flow sufficient to cover dividend payments

1 point if the company is a leader in its industry

Company Div Sustain Points Div Share Price 1 year Mkt Cap

Rating Yield $ Tot Ret $ Bil

Microsoft Highest 10 1.4% 140.40 22.1 1,114.8

Cisco Above Average 9 3.9 37.35 -30.2 150.6

IBM Above Average 8 6.3 103.55 -26.2 94.7

Citrix Systems Above Average 7 1.1 130.5 29.2 15.6

LogMein Average 6 1.7 78.15 -5.6 3.9

Linking to dividend paying stocks, it is good to have some sort of rating system besides the company pays a dividend. There are always some companies that benefit from any crisis, the question is can they ramp up and then seemingly ramp down as the crisis ends. The key is taking your time and have reasons so if it does not work out, then you know when to exit.

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

As an investor you have watched the markets go up and down, but mainly down and all stocks have gone down something for selling affect all companies. It has been a month but it is time to see if there is anything that has gone up or stabilized. In an article by Noel Randewich of Reuters there are some stocks that have stabilized and may see gains.

While the service industry has been hit very hard, there are enough people still working or receiving an income that had their sales rise.

Meal-kit delivery company Blue Apron Holdings’s stock has risen but it should be noted prior to the surge, the stock fell due to growing competition and disappointing revenue. There is great competition in the space.

Zoom Video Communications has jumped as more employees working from home use the video conferencing app.

Domino’s Pizza is hiring more people to deliver pizza.

Walmart and Amazon announced they are hiring 250,000 temporary workers as demand has surged.

At home and when we go out we need to clean – Clorox and P&G make cleaning products.

Shoppers bought the inventory from grocery stores – Kroger and others have benefited and given they are deemed essential services, they should have a good quarter.

The companies trying to find a treatment such as Gilead Sciences and Regeneron Pharma have climbed and although the President likes to shorten the testing phase, it does take time. The time is usually measured in years, at the moment it is measured in months not weeks.

Linking to dividend paying stocks, similar to all stocks they have fallen in value. However parts of the economy continue and bills still need to be paid, for example your utility bill. Spending more time at home means continuing to use electricity and the government is sending money to everyone to pay their bills. It is hard to look at your portfolio when stocks in general decline, but consider why you bought the stock and is it doing what your bought it for – do they still pay the dividend? They you can see some bargains or stocks trading at large discounts, begin to buy them and wait for the long term and you will be wealthier.

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

The coronavirus effect on the stock market has been terrible, the gains of the past 3 years are gone and will take a few years to return. Unlike the President who believes the stock market will suddenly roared back to higher gains before November for him to be re-elected. One has to remember the President’s fortune is in real estate, not the stock market. Besides individuals who owned stocks, one of the greatest beneficiaries of the rise of the stock market was pension funds.

There are two types of pension funds — one could a defined benefit and the other a variable rate. The defined benefit is a pension which provides you a set amount every month for the rest of your life. Variable rates will move up and down as interest rates go up and down. Pension funds tend to have a broad mix of assets besides stocks, they own bonds, and some own real estate and infrastructure. At the end of their fiscal year, the pension plan’s liabilities are estimated by expressing those future benefits in present day dollars. The question then becomes does the pension plan on that day have enough assets to pay for the pensions in the future? With the rising stock market the answer was yes.

If you had a defined pension in one of the areas of hospitality and tourism, not only has the shares collapsed, you would be also worried about your pension. In the case of Carnival – the cruise line the decline in the stock likely is triggering the banks to look to the company to raise more money. It is possible the money is coming from the US government bailout.

In 2008, the collapse of the auto companies stocks resutled in many auto workers having reduced pensions. One other aspect for the pension plans is with almost 0 interest rates, they make little interest on their bond portfolio, fortunately most of it must be in government bonds or corporate bonds higher than BBB. This means as the economy falls, they had to sell some corporate, but they what is their return? Forced selling is painful but reduces losses and with a pension plan there will be more money to reinvest every two weeks or a month when payroll is done.

Linking to dividend paying stocks, similar to investor in dividend paying stocks pension plans are for the long term horizon. The stocks they buy are similar to dividend paying because they do the same thing – provide a steady stream of income whether the person is retired or not. As a dividend investor, you should mark on the calendar when you companies pay their dividends to ensure you can use the money or reinvest.

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