If you similar to me, you will have biases. One of my bias being from the northeast is generally paying attention to the world around me and the history of the area. If you asked about the civil war my focus would be closer to the Atlantic Ocean. If you check the history, the Mississippi River played an important part of the war – who controlled it, controlled many elements of the war. Many people know the Mississippi River is big through the songs of Old Man River; stories about Tom Sawyer; looking on a map to see the river flowing from Minnesota to the Gulf of Mexico passing cities such as St. Louis, Memphis and New Orleans. But how many think about the naval battles during the civil war? A book which does is Thunder Along the Mississippi by Jack D Coombe published by Bantam Books, 1998. Mr. Coombe argues the navy has been shaped by the battles on the river as it moved from wooden ships to metal ships. And as the Union began to control the river it forced the Confederacy inwards and towards having fewer resources of manpower, food and material from the western states.

In terms of strategy, it would appear the Confederacy rallied to arms then thought about how the war was to be fought. The Union States had manufacturing facilities which could be converted to war time production. In terms of the metal ships, the Confederates had few manufacturing facilities to fight an internal US war. Controlling the river for the Union meant a classic squeeze and yhey could slowly push the opposition into a corner to where the end was see able. The first victory was at Cario, Illinois and then the line to Nashville, Tennessee was secured and blocked. There were many battles on the river to control it and some of the battles involved a future President Ulysses S Grant which are outlined in the book

Linking to dividend paying stocks, most of us have a bias towards where we live. We see the world surrounding us and as you look for investment opportunities sometimes you have to look beyond your biases. Wherever there are people, opportunities can be found.

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

 

In a couple of months the weather will warm up and people will go to the ice shops to buy a sundae – ice cream, whipped cream, and toppings. If you love ice cream, you are looking forwards to buying at least one sundae. What if instead of ice cream, the shop put in meatballs? not the results you were looking for – Seth Godin in his book Meatball Sundae published by Portfolio Books, NY, 2007 saw many companies and organizations were producing meatball sundaes in their marketing execution. The reason is all the wonderful attributes of the web are added, except the organization had not changed to use and embrace what the web brings and does not bring.

Marketing is we make what we sell. Markets spread ideas, tell stories people want to hear and believe. Translate emotion into action to close the sale and make things people want to buy. The best available medium to reach the right people at the right time is used.

Trend 9  Direct Communication and Commerce between Consumers and Consumers

eBay is the beginning of a significant consumer to consumer connection in the marketplace. Consumers will gravitate to each other informing each other and pressure organizations for more of what consumers want.

Trend 10  The Shifts in Scarcity and Abundance

Your organization is based on exploiting scarcity. Create and sell something scarce and you can earn a profit. But when scarce things become common, and common things become scarce you need to alter what you do all day.

What use to be Scarce – luxury items; hard-drive space; manual labor; overnight shipping; airtime; shelf space; long distance phone service; knowledge about people

What used to be Abundant – spare time; attention; ability to pollute without consequences; trust; sufficiently trained workers; open space, clean water.

Think about the companies that had to change and the ones that adjusted there are many.

Trend 11    The Triumph of Big Ideas

In the factory based organization little ideas are the key to success. New Marketing in the noisy marketplace demands something bigger. It demands ideas that force people to sit up and take notice, but it needs to be embedded into the experience of the product.

Trend 12   The Shift for How Many to Who

Marketers can focus on who is hearing (and talking about) their message and no longer have to use the mass audience.

Trend 13   The Wealthy are like Us

We either do not care about the best then we want the cheapest or we want the best, which means the companies in the middle are having a hard time.

Trend 14  New Gatekeepers, No Gatekeepers

It use to be in order to get bigger, you need to work with the big companies, and big companies like to work with other big companies. The path has changed.

Linking to dividend paying stocks, the internet and how we use the internet to buy has altered many companies. It will continue to do so, but that does not mean companies can not adapt to take advantage of the internet. Does your company make it easy to find your services and products and can easily meet customer demand wherever they are? In most businesses, who the customer is? allows you to narrowly define it. In politics, everyone has a somewhat equal say with one vote – are you doing politics or business? Business maybe harder, but it can be more exciting because the people who you serve really love what you do and that is a good thing. Making a profit and paying a dividend is also a good thing which is why it is hard to find companies doing it over and over again.

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

 

 

 

 

In a couple of months the weather will warm up and people will go to the ice shops to buy a sundae – ice cream, whipped cream, and toppings. If you love ice cream, you are looking forwards to buying at least one sundae. What if instead of ice cream, the shop put in meatballs? not the results you were looking for – Seth Godin in his book Meatball Sundae published by Portfolio Books, NY, 2007 saw many companies and organizations were producing meatball sundaes in their marketing execution. The reason is all the wonderful attributes of the web are added, except the organization had not changed to use and embrace what the web brings and does not bring.

Marketing is we make what we sell. Markets spread ideas, tell stories people want to hear and believe. Translate emotion into action to close the sale and make things people want to buy. The best available medium to reach the right people at the right time is used.

Trend 5   The Long Tail

In almost every single market “other” is the leading brand. Consumers reward providers that offer the most choices. While there maybe a number brand, the market itself is a lot smaller. In any normal marketplace, if you give people more choices, revenue goes up.

Think about the Sears catalog – the catalog frees a retailer from physical constraint. By putting a retail store in millions of home you could profitably stock far more than you could in an average store. The internet takes that equation and amplifies it. It permits niche sellers to pursue the same strategy that Sears took but even deeper.

The secrets of the long tail are people who really care will find you and going to the trouble to make what someone wants is in itself a useful marketing exercise. It is not what you think the market wants or what you want to the market to want. It is about creating and assembling a collection of goods and services that captures the attention (and commerce) of the people who truly care.

Trend 6  Outsourcing

It is not just possible to find someone to make/code. do something for you quickly and cheaply; it is very easy. Just because you can outsource something does not mean always you should.

Two choices: either take every repetitive, by the book task in your organization and outsource it or give the people who do the task the freedom, the incentive and the imperative to something that cannot be outsourced.

Trend 7  Google and The Dicing of Everything

Google and other search engines have broken the world into little tiny bits. This means the end to end solution offered by most organizations is destroyed and replaced with a pick and choose component based solution.

The idea that one product line can subsidize another is built into the way many businesses work. The fact that middle men profit by bundling information or product lines or shelf space is at the heart of what makes so many businesses successful. Now bundling and middleman services are deliberately undervalued.

Trend 8  Infinite Channels of Communication

New forms of communication will continue to evolve.

In order for the consumer to make a decision, two things need to happen. The second is that he/she needs to determine that is it worth the time or money to take action. The first is they need to know about the opportunity.

In the old days you appealed to the masses in the hope to get the consumer. Now you trying to only appeal to those who are interested and with email you can do it more cheaply that ever before. You can advertise on those tiny slices of the market in which you have determined where you market is – those who are passionate about your products and services. From adwords, to blogs, to videos to searches it is about being selectively targeted.

Linking to dividend paying stocks, one of the methods to do your homework in deciding how to invest is the company doing the correct things to reach its customers? How well does the company know who is willing to spend money on their goods and services? Where is their profit margin? what companies are attacking their profit margin? Answering those questions will help in defining where you invest your money.

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

 

 

 

In a couple of months the weather will warm up and people will go to the ice shops to buy a sundae – ice cream, whipped cream, and toppings. If you love ice cream, you are looking forwards to buying at least one sundae. What if instead of ice cream, the shop put in meatballs? not the results you were looking for – Seth Godin in his book Meatball Sundae published by Portfolio Books, NY, 2007 saw many companies and organizations were producing meatball sundaes in their marketing execution. The reason is all the wonderful attributes of the web are added, except the organization had not changed to use and embrace what the web brings and does not bring to the marketing abilities.

Marketing is we make what we sell. Markets spread ideas, tell stories people want to hear and believe. Translate emotion into action to close the sale and make things people want to buy. The best available medium to reach the right people at the right time is used.

The new marketing or use of the internet means it favors some approaches over others. However, new marketing also demands better products, better services and better organizations. It also means in a world of choice, few will pick good enough. Avoid compromise.

Hopefully you will see companies capitalizing on the trends for the book is now almost 10 years old, but likely you will see companies still trying to figure it out.

Trend 1  Direct Communication and Commerce between Producers and Consumers

Organizations hear more directly from consumers. They gain a permission to market directly to them and they can create products for their customers. (the good part)

The need to change in organizations mean a retailer understands making a customer wait leads to lost opportunities. Inbound communications from consumers demand speed in answering and consumers have been trained to expect that they should be able to work directly with the person who can make something happen and that should happen almost immediately.

If someone sent an email to your president? what would happen to it?  Is it a missed opportunity to start the conversation?

A typical direct mail campaign earns 1% response rate. For every 100 letters one response.

A typical email campaign can get 20 or 30% the response rate.

Therefore the challenge is to see customer interaction as a profit center.

The marketing should start at the reachable then do your best to build the group ever larger by serving them and tell stories which appeal to them.

Trend 2  Amplification of the Voice of the Consumer and Independent Authorities

In a market where everyone is a critic, the need to create products that appeal and satisfy critics becomes urgent.

Consider the 1%. Not the richest 1% but 1% of the community are the givers. If you listen to talk radio only 1% are the callers, however you do not know who they are? You do not know who are the customers and who are the prospects, the ones who need to, love to and want to post their experiences. You have to assume every interaction is an interaction with a critic.

Every business has its 1%. Every business has a group so motivated, so satisfied, and so connected that they want to tell the rest of the world about you and what you do. As a marketer your challenge is to give these people a megaphone to spread the news.

Trend 3   Need for an Authentic Story as the Number of Sources Increases

Consumers hear about organizations from many sources. You have to get your story straight – say one thing, do another fails because you will be caught, someone will notice and bring it to the attention of the web.

Spread stories not facts – as long as the organization from top down lives and believes their story ( a unique story and a story that resonates with their customers) it is easy to spread the story.

Trend 4 Extremely Short Attention Spans due to Clutter

With the amount of choice we are offered, we tend not to spend too much time at one thing. This means the personality of your product on the shelf matters. It means every interaction with a consumer is a make or break proposition. You do not get the chance for a learning curve. You do not get the opportunity to have the user overcome initial discomfort.

Linking to dividend paying stocks, often times these companies were making money under the old marketing environment. The old method allowed them to do make good things including being profitable and paying dividends however the organization is likely the hardest to change, to see what is happening through the use of the internet. There are many examples of not doing in right or writing off campaigns that were not successful. If they are not doing it right, then looking for alternatives is your challenge.

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

 

 

 

 

 

 

The hardest thing to do is not spend money when the boom is on. We all know commodity prices go up and down, we all know cycles will go through the market, but we do not know when they will stop. One of the great examples is the mining industry, from 15 plus years the growth of China propelled up commodity prices which meant money was flowing into the big global mining companies. This meant they were buying up more resources, often not close to their core assets because they could. With the increasing commodity prices, deals were coming and closing and everyone in the system was happy. China has slowed down their growth, and the major mining companies are awash in debt. Anglo American company is in debt $ 5.6 billion and CEO Mark Cutifani said part of the problem was we spent money on stupid things. To get out of the mess, they do have some great assets ( relatively low cost mining and huge reserves) and will have to scale back the size and scope of the company. Assets that were bought near the height of the commodity boom will have to be sold.

Linking to dividend paying stocks, when the purchases were made and expenditures to bring the assets to market, there were many reports which showed the large number of pluses why the spending should be done. There were very few negatives, for the forecasts did not know when the cycle would change. When the cycle began to go down and prices fell, Anglo American kept spending for the clues were not obvious (although hearing about ghost cities in China seems to be a good clue). When the decline happened all the global mining giants felt the pinch of lower commodity prices, some a little better than others, but what do you do when the market collapses? The lesson might be when the boom is on be prepared to exit quickly for the downtime will be years to work through, maybe next year is a great time to buy the best assets at a healthy discount.

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

While watching an old version of the Count of Monte Cristo movie staring Richard Chamberlain (1974) there were a number of events where lessons are learned. The book written by Alexander Dumas in 1844 has numerous screen adaptions and is a great story. In the opening scene of the movie is a celebration for a ship has arrived in port. What it really represents is the merchant(s) invested into a ship which went to India from France ( about a 2 year journey) to buy spices. The ship has returned and the spices hopefully will be sold at a healthy profit and the owner will stay in business for another voyage. The celebration is both for the crew and the merchandise.

In another part of the movie, the central character Edmond Dantes is thrown into an off shore prison where the inmates are forgotten and eventually meets a fellow inmate who gives him a map of potential riches. The theory being finders keepers – if you can go to the island and find the treasurer it will be yours. This of course expects the finder would know how to convert the treasure to currency of the country he or she is going to live in.

The central character Dantes has paid for the Count of Monte Cristo title, this means the wealthier you are, the more titles that are available to you. Those of us who have no titles are suppose to be impressed with a title, but it could just mean you are a friend or have done something good for the King, in many countries around the world where a monarchy can be found, titles can be bought.

The downfall of one of the “enemies” of Dantes was insider trading. However for the plan to have worked, the Baron had to have used inside information to become rich and stay that way. In the book Dantes used inside information to trade against the Baron and the Baron proves he is not that good of a banker for he robs a Hospital fund and runs off to another country.

Linking to dividend stocks, even watching movies there are lessons to be learnt for example: slow and steady gains makes fewer enemies. In the movie, the Dantes character originally only wanted to be ship captain for his income would increase and he could buy a small house for his father and marry his girlfriend. In the end, he finds treasurer to buy estates but his father has died and his girlfriend has married and is no longer is for him. There are trade offs but one thing you do not have to trade off is income plus potential capital gains but sticking to profitable stocks and holding them for their dividends.

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

 

 

Have you ever been in a small town and wonder what do people do here, it must be boring. Those of us who live in the bigger cities believe there is excitement around us (although we may or may not be involved in it all the time) and the large cities are a host of opportunities. We often bring our this sense to our investment style, who does not want to own Facebook, Google, Microsoft, Apple and Telsa?  And there is nothing wrong with doing so, except when you look back at the shares which year over year have produced excellent returns, you come across a name such as Balchem Corp, Mueller Industries and Crane Co. It is rare these companies made the headlines but what they do is year over year produce excellent market returns. John Reese’s column on February 10 highlights the companies. A boring name plus a boring business is guaranteed to keep the professional investors away until the good news compels them to buy in and send the stock price higher. If a company with terrific earnings and strong balance sheet also dull things, it gives you the time to purchase at a discount and when it becomes overpriced you can sell at a healthy profit.
Balchem Corp is a company that makes flavorings, fumigating gases and nutritional additives for animal field. Since 1985 shares have returned more than 26% annually.

Crane trades for 12.6 times trailing 12 month earnings and has grown at 31% long term. Peter Lynch used the P/E divided by its growth ratio to find bargain priced growth stocks.

Mueller Industries makes plumbing, HVAC, and industrial products and is high on the charts if you price/sales ratio favoured by Kenneth Fisher.

Linking to dividend paying stocks, boring can be profitable. Start with a company making profits, if it can do make money through the economic cycles and your portfolio may not show the headline stocks but in terms of assets under administration, they keep rising and for you that is a good thing.

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

 

 

 

 

 

 

Anyone who has seen images of Venice or been there knows there is something special about the city in Italy. Whether it is the canals, the sea, the San Marco Plaza where people have come to for generations, you know there is something special. A wonderfully written book called Venice – Pure City authored by Peter Ackroyd published by Chatto & Windus. London 2009. Mr. Ackroyd captures the essence of the city starting from the sea and islands to the building materials to governance to merchants to consumerism to where the city is today. There are reasons why the city is special. Venice above all was a trading city it existed for and by merchants. In the market place everyone can to buy and sell and sought profit. The system of trade defined the social and cultural systems of the city; it subsumed them. Fashion and innovation became the key concepts.

The city started with the salt production and the controlling of the production and thus the price of salt. It evolved into trade over long distances; the more the possible risk, the more the possible benefit. In 1500’s there were more than 3,300 ships going around the known trading routes of the Mediterranean Sea bringing back spices to silks to anything else for the ships were owned by the City of Venice and rented out to the highest bidder. The important aspect was the east (where the goods went) did not know the price of the west and vice versa the only people who knew the margins where Venetian merchants. From the 14th to the 18th centuries Venice became the city of luxury goods. We all need some staple goods, but we desire more and the more is luxury goods. Venice possessed no natural resources and the only method of maintaining its supremacy was in the creation of more various and more rarefied items. The early trade fairs were in Venice and luxury items is the stepmother of fashion. (On You Tube saw a profile of Dubai and there was a connection to where Venice was in its heyday.) From the fortunes made in trading came money spent on art which lead to better luxury goods. Eventually Venice turned away from the international world of trade and became more provincial which lead to its decline of influence. Part of the reason was Venice refuse to compromise of the quality of its luxury goods, its competitors had no such scruples. Other countries and industries became more flexible or open and Venice influenced declined. Venice is still special it just trades on something else – itself.

Linking to dividend paying stocks, the growth and continuing to be in the forefront of customer preferences is hard. People change, industries change, countries change but as investor you want to know how the company is staying in front of its customers. In Venice’s time the merchants could exploit the spread because no one knew the spreads on prices, now days people have a reasonable idea and will seek alternatives. When you see company’s paying dividends for over 25 years and can continue as long as you see their ability to retain margins they are keepers for you can learn from them.

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

 

 

 

Many people have seen the CSI franchise TV series and sometimes we can be better for it. One book which adds to the segment is called Bodies We’ve Buried – inside the National Forensic Academy, the World’s Top CSI School by Jarrett Hallcox and Amy Welch published by Berkley Books, NY, 2006. In the book we readers go through the process where law enforcement personnel go to get training in CSI work. The first thing in school is going back to the fundamentals of what you should and should not do upon coming to a crime scene. The authors have 8 steps otherwise there are wonderful defence lawyers who will tear the work down. The steps are:

1. Approach the scene
2. Secure and protect the scene
3. Conduct a preliminary scene
4. Photograph the scene
5. Sketch a diagram of the scene
6. Perform a detailed search for evidence
7. Collect the evidence
8. Conduct the final survey.

 

1. Approach the scene – to look for other hazards, no days you may not know what you are getting into so go safe.
2. Secure and protect the scene – the golden rule is not to move anything, so ensure no one goes in and out without authorization.
3. Conduct a preliminary scene – basically observe the scene because potential evidence is destroyed within the first few minutes. Take your time, begin to see what has happened or likely happened. The more detail you note the better it is because by the time the trial happens many other files will have crossed your desk.
4. Photograph the scene – at the school you learn how to photograph. Taking more is much better than taking less.
5. Sketch a diagram of the scene – the sketch will help you show relationships of size and distance between different objects.
6. Perform a detailed search for evidence – this is a search from top to bottom and everything in between. There are 3 things that really make a case: evidence, evidence, and more evidence. The theory of transfer is no one can enter a location without bringing in or depositing some sort of evidence or no one can leave without taking some sort of evidence with them.
7. Collect the evidence – what is collected is physical evidence. This can take a lot of time, but if you do not do it can lead to not guilty.
8. Conduct the final survey – there are two rules to remember 1) physical evidence can never be over documented and 2) there is one chance to perform the job properly so work till it is completed.

The book goes into how to do all the above.

Linking to dividend paying stocks, similar to CSI investigators you should also invest through basic fundamentals and if that takes extra time so be it. Although everyone would love capital gains as soon as possible, when investing in dividend stocks you are looking for long term capital appreciation. If it takes extra time, it takes extra time. If you are being rushed why?

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