In the 1936, General Francisco Franco lead the army and his forces against the government of Spain. In simple terms it became the Fascist vs the Republic. On the side of the Fascists was Franco, other generals, and support from Germany and Italy. On the other side was the Republic who was everyone else and the moral support of the western powers. During the Spanish Civil War people were encouraged unless they were from Germany and Italy (as they provided troops and arms) to help one side or the other. Most people from western countries and Russia supported the Republic. During the Spanish Civil War many journalists and artists offered their views.

The war starts similar to all other wars, while there is a dispute with the existing government, other factors in the background have been boiling towards the tipping point. With the support of Germany and Italy, those countries were looking for spoils from what they thought would be a short war. Germany wanted access to raw materials and minerals of Spain; Italy wanted to create a Fascist Europe. The importance of the Spanish Civil War was it was preview of World War II.

In all wars, people die; in all wars technology and systems improve dramatically. In the book Hell and Good Company – The Spanish Civil War and the World it Made by Richard Rhodes published by Simon and Schuster, New York, 2015, Mr. Rhodes an American focuses on the Republican side of the story. In war, people are shot and will be maimed by surrounding explosions which means medical facilities are very needed. On the Republican side, the Americans and British brought new standards to the operating theater which because medicine changes slowly, the Spanish were not doing. Remembering the time was the 1930’s and medicine is a craft learned profession which means not everyone was doing the best for the patient. The profession had recently learned about blood transfusions, sterile tools and not causing infections. The war helped bring the advances to the world and saved lives.

One of the conditions of World War 1 was Germany was not suppose to rearm the country, they did and Spain was testing site for the new breed of armaments as well as carpet bombing. The town of Gernika was the first town destroyed by carpet bombing. As long as the generals can live with destroying the town and the people, it continued into World War II as an effective strategy.

The book discusses journalists and artists and their work because the war affected them.

The war essentially was a stalemate until Germany and Italy continued to send in troops and arms while the western countries looked on. After the war, some of the people who fought on the Republic side were not embraced by their governments when they came home. For example some Doctors and Nurses from the United States who volunteered to help were considered communist sympathizers by the House Unamerican Committee. The end of the war left Franco in power till Spain turned towards its present monarchy system.

Linking to dividend paying stocks, in some areas wars because of their intensity will cause new technologies and strategies, many of us would prefer a more gradual pace because that means there is no war where people die. Depending on the investments you make, sometimes war makes them better.

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

 

 

The story of the development of the globe is part explorer and part trader. Exploring to see what there is and how wonderful the countries of the world are and that continues to be the best and romantic version of why people go travelling. The other reason is to be a trader and look for profit and that transforms countries. In the book the Opium War by Brian Inglis published by Hodder and Stoughton, London, England, 1976 he examines the United Kingdom relationship to India and China. Ever since the Portguese and Dutch traders went to the Indies and brought back spices at great profit, there was a motivation to see what else can be brought to markets to make profits. In England,companies were set up to do that and the most famous is the East India Company. The company had the rights to trade with India and fabrics, spices and tea came to England. Orginally tea was expensive, but duties were lowered and soon the masses were drinking tea which resulted in tea imports went from 1 million pounds to 20 million pounds. This was good for everyone, tea became a staple in England, the farmers were benefiting from increased usage and the Raj or Moguls enjoyed the tax on the tea to remain living well. In time, the East India Company was not making as much money as they thought they should or wanted, they were making money but not the 40% return on investment. People found about the poppy plants and opium and originally it was used on a small level or a small market for the effects are the same as they are now. It turns out there was a small market but it could grow bigger in China who had 300 million people in the 1830s.

The traders were interested in profit, they began slowly at first to bring in opium chests to China for silver, then the silver went back to England and it was not long the revenues for the country of England were dependant on the East India Company. In the book, the author reveals various senior members of government and what their reaction is and should be to the trade. Officially it was we know it is being harvested, but once it went on a ship away from India (by this time, England had taken over the administration of India) it was washed from their responsibilities. What of course is interesting is when the British traders included the famous firm Jardine Matheson (the biggest seller) irked the Chinese who wanted the trade stopped for the Chinese were running out of silver to pay for the opium, the British sent in their Navy which was the most powerful Navy in the world to protect British interests.

Linking to dividend paying stocks, all investors want to have a good return and it would be nice to have 40% returns all the time, however to achieve those high returns means people lives in general need to suffer. If you have a good conscious try to achieve lower returns in which more people benefit from the products and services or the relationship although not equal is more balanced. If you achieve returns above 40% on a consistent basis you may begin to rational similar to the British and the opium trade with China. The same arguments are being used where marijuana is becoming more legal.

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

 

In late August many people will be watching a boxing match between boxer Floyd Mayweather and Ultimate Fighter Connor McGregor. The fighters are to receive close to $100 million each which stands to reason billions will or should be generated. Recently at lunch a conversation was overheard about the fight, the conversation centered around Mayweather is a pure boxer with a very strong right hand and McGregor comes from the world of Ultimate Fighting which other parts of the body are used. The discussion was animated because the speakers all seem to have relevant information concerning the fight. Through the channel of You Tube they were to offer suggestions why one is better than the other – the power of one, the speed of another. It was easily deduced the group had watched a number of the fights in the past or they were informed watchers. They had done their homework and could see advantages and disadvantages for both fighters. If the fight lasts longer than 5 rounds Mayweather will have the advantage was the consensus.

Linking to dividend paying stocks, if you do your homework with the passion the individuals put into the fight outcome, then picking a stock is relatively easy. Whether the statistic is throw ratio or number of win, it is easier to see if you use ratios. If you are relatively new to picking stocks, think about a subject you are interested in and relate it to stocks. Similar to sports a proven winner is a winner for a variety of reasons and if you cover your decision with dividend income – all your decisions will be winners.

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

 

If you own dividend paying companies, you will eventually look at some of the Big pharmaceutical giants because although it takes millions to develop a drug, if a drug is successful and can be prescribed by doctors to millions of patients the cost of the drug falls to pennies while the cost for the patients and the insurance companies keeps going up. The big pharma companies have convinced all of us, they need the 20 year protection in order to keep producing life saving drugs. As an investor you like the 20 year protection and one of your analysis of the companies is what is in the pipeline?

Ben Hirschler of Reuters reported the leading drug companies are embracing Artificial Intelligence to improve on the hit-and-miss business of finding new medicines. The aim is to use supercomputers and machine learning systems to predict how molecules will behave and how likely they are to make a useful (profitable) drug thus saving time and money on unnecessary tests. The goal is reduce the time from an average of 5 years to one year. Understanding the human body is complicated and what happens in the computer will not be the same as what happens in the body, it is worth doing the experiments. In the near future you should see more start ups of AI companies.

Linking to dividend paying stocks, when you read these types of reports as an investor you will be glad the company is investing in everything that needs to be done because most research is not finalized because of complications along the way – the tests go through multiple Phases and it is important to understand the Phase cycles of Big Pharma when you invest. If AI works as well as it is hoped and the average drug can be done in 2 years, then Insurance companies will push for cutting the 20 year protection length. With everything in life there is good and maybe changes in the future

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

On July 4^th it was reported by Reuters the French oil giant Total signed a deal with Iran to develop South Pars which is the world’s largest natural gas field. Iran had some economic sanctions lifted upon the country and the French through Total , the Chinese through China Petroleum and the Iran oil company Petropars will develop the gas field. The noting of July 4^th is the US government is still making comments about Iran while other companies jumped into the economic development. The US changed its sanctions list from everything to things involving ballistic-missiles which does not include natural gas. If the US wishes to invade, the world became more complicated and tied together.

Linking to dividend paying stocks, economics and generating revenues by its self does not have any morality but countries do. They try to get along, but if one country wishes to be outside of the market which is their right to do, about country and the companies headquartered in it will step up. In the case of South Pars natural gas, it is the largest in the world and for a major oil company it is very hard not to be involved. The world and electrical generation runs on natural gas for the foreseeable future which means the gas will be sold. The cost to develop will be in the billions but so will be the revenues and Total will be able to generate the kind of returns investors like.

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

 

General Electric is a large corporation and similar to other large corporations they look around from acquisitions and an opportunity to leave other divisions. The company moved away from financial services and decided to buy the oil services company Baker Hughes. There are good reasons to buy into the oil services field as the US continues to drill for oil and gas and more wells are successful. Thanks to technology, the success rate is up; in addition the cost to drill is up. Baker Hughes is headquarter in Texas and the image of Texas is they go by the gut. GE is headquartered in New York, they go by the numbers which means on the surface there is going to be a culture clash. The new President was quoted by David Wethe and Richard Clough of Bloomberg News that he is counting on more predictable income such as equipment maintenance contracts to help compensate for the up and downs of the US drilling outlook. It provides continuity and stability in the earnings and less volatility.

Linking to dividend paying stocks, those words are pleasing to the ear of a dividend stock buyer for as much as you want the ups and successes; you have to live with a cycle in every industry. Continuity and stability of earnings allows for scaling upwards and the discipline to cut back when the cycle goes down.

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

 

In our economy we have more and more small businesses which is great thing, however most small companies would love to have relationships and orders from big companies because they pay their bills on time. When they pay their bills, the revenues increase and more profits can be made. However Larry Ginsberg wrote a column called How small fry can attract elusive big fish and he notes to reap those rewards, entrepreneurs have to understand a few things about big companies and how they make their buying decisions.

Understand the organization – companies continuously change people and processes. If an entrepreneur does not understand how actually makes a decision, it will be a long process. Know it is a long term, multiple relationship that requires patience.

Understand goals and objectives – companies have a window of opportunity to buy something new and then it essentially closes. Most companies have spending restraints around the end of the third quarter to make the next quarter even better. Trying to sell at that time is wasted effort. Budgets tend to be approved after the second or third month of the fiscal year. Without an approved budget, managers cannot approve your purchase.

Understanding the individual – employees are often overworked, constantly stressed and they often do not know have the experience to solve the problems, thus they are looking for solutions.

Play by their rules – Companies evaluate suppliers on multiple aspects such as on-time delivery, no short ships, quality of product, invoices match purchase orders and communication. This evaluation gives a point total and it is important to ensure your total is meeting the expectations.

Linking to dividend paying stocks, much of the above is the expected and the overall goals and objectives are given to shareholders how well it does on the rest of the scale is for investors to determine. The budgets have the effect companies tend to move in cycles, as much as you would love to see your company breaking records every month, it likely will not happen, it could, but there should be a reasonable cycle of prediction. If that does not happen, then it is time to investigate alternatives

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

in the Wall Street Journal in October 1998 Emily Nelson wrote about Bananas unlock key to Wal-Mart strategy. One of the great assets of Wal-Mart is its database which in 1998 was second in size to the US government or it has big data. What to do with the data is the key and 1998 the most common item US consumers bought was bananas. This is why bananas are in the produce department, the cereal aisle and by the cash registers. The idea is to make it easier for consumers to purchase products as well as complementary ones. Wal-Mart collects raw sales, profit margin, inventory numbers and market-basket data or what products are likely to be purchased together.

Since 1998, Wal-Mart has been sharing some of its information with buyers and suppliers for each of them to achieve what they believe is the best position for their product. Which aisle? what should it be near? how far done the shelf? This information or tailoring to the customer helps drive sales. The downside is if the supermarket fiddles too much and consumers can not find the products they typically buy 15% of the customers would rather leave than look.

Linking to dividend paying stocks, we all hear about big data and Wal-Mart has been collecting information for years – it is still very competitive in their environment as consumers change. People want convenience, the want something that might have never existed, but it is very easy to go beyond what customers want in the desire to help them buy your products and services. As you examine your investments what do they do with the data they collect? how are they evaluating you. what judgement do you see?

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

 

During the holiday, one of the tasks was to clean up and a old article from April 1998 was found titled Knowing rivals’ costs clears profit picture by George Salk who was at the time a Senior Vice President of Boston Consulting Group. If you start with the basic formula profit is the higher revenues than costs, how are costs set? All companies and many individuals spend many hours on tracking costs, which is a good thing to know. However, it is crucial to also invest in understanding what is driving their competitor’s costs.

If your rivals have a lower costs than you, they control how much money a company is going to make. The only escape is to know their costs and to act on that knowledge. The cost advantage can be based on economies of scale, depth of experience, overhead differences, supplier practices and local factors such as energy costs.

The process for determining competitor’s costs is called competitive cost benchmaking. If you are just starting it will involve work and tearing down customer products, reconstructing manufacturing and service processes down to the last machine. The information can come through public documents, surfing the internet, interviews with suppliers. The idea is to break down products and services to understand your relative cost position overall and for each section.

The result is decisions are made on Prices differently, Redesign of products, Redesign processes, Change a company’s positioning, Make different investment decisions, Involve customers, Restructure supplier arrangements.

Linking to dividend paying companies some of these companies are where they are because they have cost advantages over the competition. The key is to understand what cost advantages they have and knowing the competition changes so does basic costs – think the difference between Uber and Taxi companies, the Uber model is less. However if the industry is still relatively stable or systematic cost differences are not removed easily, why does your company continue to make money is still the issue.

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