If you think about space flight one of the more interesting aspect is the liftoff. Gravity has to be overcome to overcome gravity there are large rockets that blast away and provide the thrust to go to space. In the US one of the leading rocketeers was Wernher von Braun and for many people he was one of many unsung heroes who tried to ensure people went to space and came home safely as President Kennedy wanted. The story of Mr. von Braun is one which the US military overlooked his background in order to achieve the Presidential order. Mr. von Braun’s story is told in the autobiography by Michael Neufeld titled Von Braun published by Vintage Books, New York, 2007.

Mr. von Braun was a leading rocket engineer in Nazi Germany and although his childhood dream was to work on rockets and he was a very good engineer, during the war he was leading the charge for Nazi Germany of rockets (with explosives) bombing England. After the war, the German engineers including Mr. Braun were brought to the US. First he was in El Paso, later moved to Huntsville, Alabama. The division is now called the US Space and Rocket Center. One of the passages in the book suggested the people of Huntsville were at first weary of the Germans. Later, resources continue to be committed to the town which meant more people employed, the people of Huntsville liked having the Germans in their community.

After the war, people who were Nazis were classified as important and less important. It was understood, when the Nazis were in power, if you did not go along with them they may kill you or make life very difficult. If you did not like it, move or keep quiet. The US military after the war used Nazis in what became NASA and in Europe to help the Marshall Plan rebuild Europe. This time the idea was to build economic livelihoods rather than military dictatorships.

Linking to dividend paying stocks, as long as you like the ends, the means can sometimes be overlooked. For example, the recent tax bill passed by President Trump will benefit corporations greatly, it will only marginally benefit the employees. If you can live with that, then it investing makes a great deal of sense. If you cannot try to find companies which tend to be more generous and still make money.

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

In some industries who seats in the executive chair seems less important for the decisions of the company seem to go on in an appropriate matter. In other industries, the CEO is more of a name brand and one example is the railroad industry. Most investors could not name the CEOs of the railroads but CSX’s Hunter Harrison is an exception. Mr. Hunter is considered to be the best railroad executive in North America. He recently joined CSX the stock is up 60% on the expectation profits will go up and service will be better. According to Nick Carey and Bhanu Pratap of Reuters, Mr. Hunter is in the hospital in Jacksonville, Florida where CSX has its headquarters. A few days later in was learned Mr. Harrison died.

Since joining the 3rd largest railroad, Mr. Hunter has closed several rail yards, laid off thousands of workers and instituted a new train schedule system. The new team of operating people have gone through his Hunter training sessions. Typically he favors maximizing asset usage by running fewer, longer trains running on schedule. Mr. Harrison arrival tends to mean more layoffs and higher stock prices.

Linking to dividend paying stocks, in most industries the CEO is important but does not imply the person will automatically push up the stock price. The person’s job is continue to earn revenues on good margins have debt under control to make money for the shareholders and to reinvest in the company to keep doing it. The execution is harder than it sounds for there are many complications, think simple home repairs which turn out bigger than expected. Most companies will not have a savior in the CEO but if something happens to the savior what does it do? how has the savior left the company to the next generation of leadership? If you see transitions are reasonable, then the company can be a hold. If the company depends on one person, it is good to have alternatives on your horizon.

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

 

In the world of global pharmaceutical companies there is the name brand which invent drugs and have a 21 years monopoly to sell drugs at higher prices and the generic drug makers who make those pills as soon as the monopoly comes off and this decreases drug prices. The largest generic pharmaceutical is call Teva Pharmaceutical Industries based in Israel. In mid December as reported by Tova Cohen and Ari Rabinovitch of Reuters, Teva reported it was cutting its workforce by 14,000 people and suspending its dividend. The problem is debt – the company bought Allergan’s Actavis generic drug division for $40.5 billion. The company has $35 billion in debt and needs to pay down the debt and now has to save money (not pay it or layoff employees) and worry about cash flow.

The biggest market for generics is the US and prices have gone down (amazing drug prices going down), it is expected some drug prices will continue to fall in 2018 making some generics unprofitable. As the world’s largest generic drug manufacturer it does have a wide portfolio of drugs and some of them might be able to raise prices.

Linking to dividend paying stocks, on the face of it, the cost to produce pills should be relatively small. The company does not pay for the research and development and once the patent comes off, the formula is available to be produced. It should be a relatively easy method to make money, until debt becomes too high. It is always important to watch your investments – can it pay its debts, what is the cash flow and is the dividend supportable? the questions tend not to change as the year changes.

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

If you fly Delta it will likely be on an Airbus which is partly manufactured in Mobile, Alabama. According to David Koeing of Reuters, Delta ordered $12.7 billion of planes from Airbus. Originally, Delta was going to buy jets from Bombardier but Boeing challenged the decision; Bombardier signed an agreement for Airbus to buy their division and now Delta continues to buy non Boeing. It could be Chief Executive Ed Bastian has a thing against Boeing although he told investors travel demand remained strong on both domestic and international routes. Mr. Bastian expects 4th quarter revenue for every seat flown one mile to rise about 4% from a year ago. This compared with the projection of 2 to 4% and operating margins will be in the range of 11%.

Boeing said Delta remains a valued customer but the order book is slim. Next year, Boeing will have to do something different to keep Delta as a customer.

Linking to dividend paying stocks, in most industries there are a few large suppliers and if the companies are not dealing with the large suppliers one has to wonder why? As an outsider you can gain some knowledge through the trade association or trade magazines to find out the real reason. As an investor, sometimes it is good the companies seem to be having a fight for it makes all the suppliers better and that can be a good thing for customers.

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

 

In mid December, Disney struck a deal to buy 21st Century Fox assets including film, tv and international businesses. The deal is worth $52.4 billion. According to Aishwarya Venugopal and Jessica Toonkel of Reuters the deal is expected to close in a year or a year and a half. In the meantime the Disney machine will begin to integrate the Fox assets into the Disney world of merchandising or the Disney store is going to expand. Both Michael Eisner and Bob Iger have done a masterful job of using Disney assets to expand the reach of the company. As part of the deal, Mr. Iger will be not be retiring but working for another two years.

The deal with Fox shareholders is they are to receive 0.2745 Disney shares for each share held and Fox shareholders should own 25% of Disney. Disney will buyback $20 billion of its shares to offset dilution. (this buyback will be helped by the new tax bill passed by the President as it reduces Disney corporate tax).

At present Disney breakdown of revenues is 44% from media networks (cable, tv and radio); 31% from the Disney parks (Florida and California); 14% from Studios; 9% from Consumer Products (if you bought toys for kids were they Disney brands?) and 2% interactive. The 21st Century Fox deal will drop the 44% down, increase the 14% and create a stronger reach in Europe.

Linking to dividend paying stocks, when many of the baby boom generation was growing up one of the shows on TV was the Wonderful World of Disney on Sunday evenings. Now days many families do not watch TV on Sunday evenings because there are more choices on the internet. In this case, Disney made the successful transformation from a small distributor to a global media giant. It has been relatively easy to participate in and something everyone could easily invest in. Investing does not have to be complicated, but it does require keeping up with the trends in the world.

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

In Europe between 1348 and 49 about one third of the population died from the Plague. There were all kinds of stories of why it was happening although the true story was disease from black rats which jumped into humans. It is now thought there were over diseases due to logistical reasons of rats tended to be in urban port areas, while people died all in both rural and urban areas. Losing a third of the population changes the countries and in a book called In the Wake of The Plague by Norman Cantor published by Simon & Schuster, New York, 2001, the author outlines some of the changes.

In 1340 90% of the wealth of England was in land. Of this land 40% was owned by the King and the high aristocracy that carried the title lord. Another 30% was held by ecclesiastical officers and corporations. This left 30% to be owned by the rural upper middle class who are called gentry. 2% was in the hands of free peasants or yeoman.

In England before the Black Death there were likely half a million people in the gentry class. By 1400 the gentry was half the size. There were two kinds of people who benefited from the squabbles concerning property – the lawyers and women. The common lawyers made their money protecting, expanding, and defending the gentry estates. The other beneficiary was women. The common law had a procedure for protecting widows, partly because the gentry landlords engaged in serial marriages with wives who often died in childbirth and often gone by 30. The task was to have a son to inherit the land. The law declared the widow had a right to “dower” rights or 1/3 of the income from her husband’s estate until she died. Much of the life of gentry is focused on property and inheritance of property – who is line to inherit what?

Linking to dividend paying stocks, in the plaque or black death is was very important to have a will to provide for the seamless passing of property from one generation to the next. You invest for many reasons – to ensure your wealth is working, to provide an income for you, to give to charities of your choice and to pass on wealth to your beneficiaries. The investment in the middle ages was land, now it is a combination the issues have not changed. Investing in income producing will benefit you for a long time.

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

In Europe between 1348 and 49 about one third of the population died from the Plague. There were all kinds of stories of why it was happening although the true story was disease from black rats which jumped into humans. It is now thought there were over diseases due to logistical reasons of rats tended to be in urban port areas, while people died all in both rural and urban areas. Losing a third of the population changes the countries and in a book called In the Wake of The Plague by Norman Cantor published by Simon & Schuster, New York, 2001, the author outlines some of the changes.

In England and other countries, a third of the arable land in 1346 was owned by church officials – bishops, abbots, ecclesiastical corporations, the chapters of cathedral priests or monastic communities. Much of the land came with by gift, however the priests were to perpetually pray for the designated family members. The Bishops for thousands of years was trained in church doctrine as well as managing income and ideally increasing it. When an abbot died, the monks gathered and picked an experience administrator in property management, accounting and law. The name was submitted to the King who generally approved the person because he was a person the Crown could do business with – a person of conservative temperament and a realistic attitude. The tenure of abbot was life. In modern day life, the abbot was similar to a University President with all the concerns going on.
The main consequence of the Black Death was not the advancement of workers’ movement but along the road to class polarization in an early capitalist economy. The gap between the rich and poor in each village widened. The wealthier peasants took advantage of the social dislocations caused by the plaque and the poor peasants sank further into dependency and misery. The church culture moved from a mature Jesus to Mother Mary and infant as well as a younger man on the Cross.

Linking to dividend paying stocks, in every downturn there is opportunity only if you take it. You can take it if you have done your homework to see is good to buy in the long run and what price. If you can buy quality at low prices (and hopefully you did that for the holiday season) you can buy quality investments.

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

 

 

In Europe between 1348 and 49 about one third of the population died from the Plague. There were all kinds of stories of why it was happening although the true story was disease from black rats which jumped into humans. It is now thought there were other diseases due to logistical reasons of rats tended to be in urban port areas, while people died all in both rural and urban areas. Losing a third of the population changes the countries and in a book called In the Wake of The Plague by Norman Cantor published by Simon & Schuster, New York, 2001, the author outlines some of the changes.

Whenever a disease is in the headlines, people consult the medical profession in order to figure out what to do to try to minimize the effects. The doctors did not know about the rats and believed the disease was transmitted by airborne. This was part of the solution because some of the disease is transmitted by saliva. One of the effects of believing the disease was airborne was doctors suggested windows to be closed. The closing of windows led to tapestries being made. Similar to all things some tapestries were more elaborate than others. The weaver guilds increased their production.

For most people today, a bath or shower is part of their daily routine. In the time of the black plaque and years afterwards, baths were not prescribed because it opens the pores in the skin and the theory was bathing made you more likely you would get the disease. This no bath idea lasted for 400 years. In countries in Asia where bathing is expected, the disease was not an aspect of daily life.

In terms of labor, with a third of the population dying, a labor shortage emerged in the 1370s. The peasants demanded higher wages and the aristocracy and gentry used Parliament to hold down workers’ wages against the inflationary wage market.

In 1340, 60% of Western Europe’s wealth and nearly all its political power were in the hands of some 300 families of higher nobility, of which 4 dozen lived in England. Their wealth is estimated to be a billion dollars in today’s money. The head of the families plus some 30 bishops sat in Parliament’s House of Lords upper chamber

The pace of life the nobility set and the luxury goods they cultivated kept many trades working and pressured the less noble to imitate them. Living on credit is not new.

Serfdom had originally meant to ensure a steady supply of labor by tying generations of men to the land (if your father was a serf, you were one too). Serfdom exists where land is cheap and easily available but peasant labor to work the land is in short supply. English serfs were not slaves, they had legal rights – they could work a piece of land as their own for their own gardens; the lord had to provide a mill to grind the peasant’s grain; and they needed a local church. When the number of serfs increased so there was a excess supply of labor; the lords figured out it was less expensive to hire labor than to have labor live on their lands. The serfs were turned to free men to make their ways the best way they know how.

Linking to dividend paying stocks, we often believe or think this time it is different, we live in a different time. It turns out many of the rules were set long time ago and often still work. One tried and true method to become wealthy is to collect rents or collect dividends.

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

One of the most influential global mining companies is called Glencore PLC with headquarters in Switzerland. The company owns the base metals that China needs to move its country forward. Glencore has decided the world’s automobile companies will actually be producing and selling electric vehicles to the masses of consumers. Some of that will be mandated in Europe, but as prices of electric vehicles come down to what the masses of consumers in the United States can afford, electric vehicles will be more prevalent on the streeets. Glencore according to an article written by Barbara Lewis and Maiya Keidan of the Globe and Mail will be in the thick of things.  The Anglo-Swiss company production of cobalt and copper has doubled in 5 years to 2016, while production of nickel is up 4 times the research compiled by Reuters by S&P Global Market Intelligence.  Global companies such as Glencore need to look a decade in advance and Glencore believes the cobalt, copper and nickel are the key metals for electric cars.

Glencore has been struggling to pay off debts, which were north of $40 billion, and now are less than $30 billion. The company has benefited from raising commodity prices and selling off assets deemed as non core. It does have more debt than competitors BHP has $16 billion; Rio Tinto has $8 billion and Anglo American $5.5 billion. CEO Ivan Glasenberg believes Glencore has manageable debt but is still trying to lower the debt levels.

Linking to dividend paying stocks, trends themselves do not produce income needed by global companies. When you decide if you needed a new vehicle, will that one be electric or gas? If you decide the choice is electric, then you can look around are you the exception or the rule? If you are the rule, then companies which have the metals to make the batteries to go into electric vehicle will have a long and fruit full run as prices will continue to increase because of increased demand for the materials. As an investor you are looking for those situations.

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