VW announced it had been fudging tests with US Environmental Protection Agency (EPA) over its tests for toxic emissions, they were higher, perhaps owning a diesel car is not that more environmentally friendly that normal gas. In Germany, there is a desire to be greener than other companies and VW believed diesel is better. Toyota has hybrid technology on some of its cars and people in general are concerned. There is a growing market for these types of cars for we all know that automobiles  contribute to global warming, so we in the public would like to do our part in the solution. At times, we wonder if we are doing enough or we have to accept the consequences for things are changing in the environment. We do know that many changes in the environment can be adapted to, we just are not positive of how long it takes to adapt. Within this mix – VW as a company lied to the EPA and more importantly even though it does not sell a lot of cars – its reputation has taken a large hit as well as the price of its shares has gone down. The company is now is a crisis mode and this means it not only has to correct the lies; it has to come up with new technology that surpasses its lies and pay fines for its lies.

Linking to dividend paying stocks, every company has a reputation, breaking the trust of the customers and the public is the worst thing it can do and the prudent course is to find alternatives to the stock. The stock price will be down for the next quarter as the costs begin to be discounted into the operations of the company. In another quarter or 3 months the stock may be worth buying again for the company should have gone through the process of cleaning up the lies. People will lose their jobs and the company will have to do better than before, the stock price should eventually come back to where it is trading up and go even higher for VW still has a healthy market share for their non diesel cars. Honest is the best policy.

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

The easiest place to look for dividends are banks and utility companies which people use and pay fees to and fortunately for the companies there are few choices to avoid the fee. For the banks, people need loans to buy homes and cars; for utility it is either gas, oil or electricity to run the home, once they are in it is reasonably difficult to change. The harder aspect is to find the bargains and Craig McGee ran a chart looking at North American diversified banks.

Using the sources Morningstar CPMS and Bloomberg data bases Mr. McGee pick the following criteria:

price to book ratio (P/B)

forward PEG ratio (P/E divided by sustainable growth rate)

dividend yield

3 month consensus earnings estimate revision

Rank   Company                        Ticker           Mkt Cap       P/B      PEG    Dividend         3M EPS

($-Bil)                                    Yield %           Revision %

1. CIBC                                 CM-T          37.36            1.88    0.94      4.76                1.78
2. Citigroup                            C-N           151.37            0.74   1.03      0.40                 0.93
3. National Bk of Can            NA-T            14.17           1.56    0.88      4.84                -1.42
4. Bank of Montreal              BMO-T          45.10           1.27    1.44      4.67                 0.64
5. Bank of Nova Scotia         BNS-T           70.17           1.44    1.23      4.82                -0.49
6. Bank of America               BAC-N         162.42           0.71    1.59       1.29                0.95
7. TD Bank                            TD-T             95.77            1.55    1.31       3.95                0.42
8. Royal Bank of Can            RY-T            104.34            1.89   1.07       4.36                0.00
9. JP Morgan Chase             JPM-N           225.36          1.04    1.24       2.89                0.00
10. Wells Fargo & Co              WFC-N         262.01           1.56    1.29       2.94                0.11
11. US Bancorp                       USB-N           72.50            1.84    1.13       2.48                0.00
12. Comerica Inc                      CMA-N           7.20              0.96   2.28       2.08               -3.48

Linking to dividend paying stocks, the chart allows for a comparison but note the yields are very attractive for the risk of owning the shares. When share prices go down, for new money going in there is the ability to upgrade to the highest quality for the least risk and given the companies will continue to be profitable to pay their dividends, the share prices will rise accordingly.

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

There are more

Continuing with looking past your borders is a book called Abel’s Outback – Explorations and Misadventures on Six Continents 1990-2000 written by Allen Abel, published by McClelland & Steward Ltd, Toronto, 2001. Mr. Abel is a journalist and for a decade was able to travel the world to find stories. The interesting thing about the stories is the people who he meets while going to and fro. Although we are all different, it many instances we are the same – we adapt to wherever we are and find the good where we are to stay there. Even though on the outside looking in, there are some large obstacles. For example in one story dealing with the Australian outback – he is driving with a postman and seeing 2 cars on the road in a day is an exciting thing; however when they arrive at the destination it was worth the journey. There are many other stories along the same line, when you are travelling talking to people is a good thing and you can hear great stories and even make a few connections along the way.

Linking to dividend paying stocks, in line the journey is the important aspect, in investments the results are the important aspect. Along the journey, dividend paying stock owners want to collect money or dividends along the way to ensure that over the years the value of the shares rises and continues to rise and not fall too much. Investing in profitable companies allows the journey to be interesting and allows lingering to get to meet the people. For in the end, we are similar.

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

We are all from one place or another and being familiar with the place we are from gives us a bias. The bias is good, for example where my parents are from the memories of the roads, the hills (particularly in the fall), the farms and some of the people who lived there give a bias. Although there is an effort to understand parts of the world, my bias is generally within the area I grew up in, this is why books such as Black Sea written by Neal Ascherson published by Vantage Press, London UK, 2007 help fill in the large gaps. The Black Sea is the sea between south-eastern Area and western Asia. Countries of Russia, Ukraine, Turkey, Romania and Bulgaria and several smaller countries from the breakup of the USSR including Georgia border the sea. It terms of Russia from the ice-free Black Sea the navy can go to the Mediterranean Sea. The Black Sea is an very important connection from Asia to Europe which means for thousands of years people have been trading or exchanging goods. The Ukraine is known as the bread basket of Europe for the ability to grow wheat and for thousands of years Europe has eaten its grains. The Greeks were running out of food in their area and went north and discovered the steppes and grain growing areas. The Greeks originally followed the fish and there was plenty of fish to eat. The Romans had influence in the area as well as the Italians through the merchants of Venice. The Black Sea is the end of the great Silk Roads where goods moved from China to Europe,  at the Black Seas they were transported to Europe on ships. (when the Suez Canal opened the goods moved by ship). From the plains or steppes came the Mongols who controlled the region for a time. In addition to the mix is all the religions including Christian and Moslem which exist – people have conquered regions only to lose them back and regain them. There are a great many stories which can be found around the Black Sea.

Linking to dividend paying stocks, reading about the Black Sea and the history of the people who lived around this sea stories about changes to political structure happen usually caused by wars. The rulers change over time – some better, some worse which means towns and cities changed over time. For the worst ones, surviving was the biggest challenge; for the better ones – peace allows for opportunities. As a dividend investor, part of you outlook is for the long-term and when peace exists it is easier to invest and you can enjoy the prosperity.

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

The ability to generate financial data is easier everyday, more companies use the data and financial institutions tend to pay their bills on time which is why companies cater to them, This means as an investor you can pick and choose as never before and you can always find out what companies are the best of the breed (as Jim Cramer) calls the best stocks. Jean-Didier Lapointe is a financial analyst at Inovestor Inc and he looked at the companies in the S&P 500 that generate high economic profit for their shareholders, above-average dividend growth rates and are presently (Sept 15) trading at a seemingly discount.

To do the above he looked at 7 variables:

• return on capital (ROC) is above 10%
• an economic performance index or EPI (return on capital / cost of capital) above 1.5
• all companies must pay a dividend
• one year dividend growth is 10% or more
• 5 year average dividend growth is above 10%
• price to earnings is below 15
• current price to earnings is below its 5 year average

The result of 500 stocks only 10 fit the criteria or the field was continually narrowed to minimize the risk level.

Company                                Ticker            ROC    EPI      Div Yield   1-Yr Div   5 Yr Avg     P/E     5 Yr Avg

%                      %            Growth %  Div Grth %           P/E

American Express                AXP-N           24.80     2.4         1.55        11.54        12.67          13.2     15.4

Ameriprise Financial             AMP-N           21.0      1.6          2.44        15.52       34.7             12.4     13.5

IBM                                        IBM-N            16.90    2.4          3.53        18.18        14.26          9.8        12.6

Qualcomm                           QCOM-Q         17.30    1.7          3.51        14.29        22.04          14.8       18.2

Scripps Network Intact           SNI-N            18.20    2.1          1.73        15.0          27.14          12.3       17.6

T Rowe Price Group            TROW-Q          23.0      1.9          2.93        18.18        13.85          14.8      19.2

21 Century Fox Inc               FOXA-Q           14.4      1.6         1.13         10.0          18.10           6.7      20.7

Union Pacific                           UNP-N           16.10    1.8          2.55        10.0          28.52          14.7      17.1

Viacom Inc                              VIAB-Q           13.5     1.6           3.61        21.21       19.68           10.3      14.4

Western Union                            WU-N          19.4     2.0           3.39        23.08       19.52           11.3     11.6

Linking to dividend paying stocks, whether you pick the above stocks or others it is possible to continually reduce the risk and have a quality return on your investment. If your first rule is try not to lose money, then the use of financial data to limit your criteria is a wonderful way to start. The next step is to determine why the companies should be able to generate income particularly as the economy continues to improve. In this fashion your choice of which company or companies or index is a good one and your should be well rewarded.

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

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We all have opinions about the unions, some are good some are not, but given they are a fact of life it is good to know something about them. One of the biggest unions was the Teamsters and you might have heard Jimmy Hoffa and know something about the union. One of the books about The Teamsters was written by Steven Brill published by Simon & Schuster, NY, 1978. The book highlights the workings of the union and for all the good work it did, one connection was to organized crime. They shared the fight on the street, Teamsters was (or is) the union for truckers and for many truckers the work came with an increasing pay. There are multiple stories but two will be highlighted – one about real estate and the other about governance. It terms of real estate – the unions had their members enroll in a pension plan which is a good thing, the not so good thing was one part was invested through investment managers and insurance companies which kept the fund solvent. The other part – the Central States Pension Fund decided to invest in real estate. In 1974 the fund had over a billion dollars invested in real estate which was 20% less than Chase Manhattan Bank – the US second largest bank. That might have fine if most mortgages received the same attention as the Chase, but in reality many of the loans were twinned with mob money. It can easily be said, those two funds built Las Vegas and other leisure centers across the US.

Another story revealed around governance – when Jimmy Hoffa went to jail, he pick a successor – Frank Fitzsimmons. At first the reason was considered Mr. Fitzsimmons was supposed to offer a caretaker government for the return of Mr. Hoffa. However 3 months into the job, Frank liked it and started to make changes He started to feel comfortable with the power, to look as if he knew how to handle it and like it enough to want to keep it. When positions have respect – the people in them tend to rise to the demands of the position, although everyone will do it a little differently – be it more delegation or less.

Linking to dividend paying stocks, with the union one of its strengths was the size of the pension plan. However, the union really did not use the pension plans resources to further their fights. When a group owns a pot of money and every month more is coming in, there are responsibilities and abilities to effect whatever their cause is. In the Teamsters case they spent the money on themselves and organized crime figures, things could have been different if different management and skills were managing the money. Pools of money represent choices

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

It is good to occasionally read books that do not fit your way of thinking about the world. One such book is called The Myth of the Market – Promises and Illusions by Jeremy Seabrook published by Black Rose Books, Montreal. 1991. Mr. Seabrook believes the root problem of our society is that it is consumer based and somehow we need to changed it. In a consumer society there is need for growth – the need for a vast expenditure of human energy in the effort to sell more and more than things to people, the need for which had not previously occurred to them? Mr. Seabrook goes on to describe all the ways the market does not work for people and there are lots of examples.

Linking to dividend paying stocks, if the company has a reasonable monopoly then it does not have to matter about how the economy is set up or whether the market works or does not. Although for the for see able future, the market is going to be the system of the economy. In reality, one of the few methods to get the economy moving again is to encourage individual spending on goods and services. From a macro point of view it is great policy, on an individual basis – it may or not be – it depends on debt payments.

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

The Shadow Market conjures on privacy but what it really means is around the world there are billion dollar funds looking to invest in something which makes money and there is little regulation on the money. In the book The Shadow Market by Eric Weiner published by Scribner, NY, 2010, Mr. Weiner shows how the financial markets of the world are changing. If you read the financial press, the news will reflect that corporations who are buying greater assets tend to be less US-based. For the last century or so, the US corporations lead the world in expanding their operations around the world. As the world changes, although it has a long way to go, the non US corporations have tended to be more aggressive in their expansion and the dollar figure seems to be in the billions. Every once in a while, the company funds will influence their clout for example, in 2008 China was consuming 60% of the iron ore supply (iron ore is used to make steel), when the price was rising the companies which supplied the iron ore were raking in the billions. The negotiation for price is the Chinese steel makers estimate how much steel they are going to make and negotiate with the big producers about price. The Chinese wanted the price to go down after a couple of years of increases; the chief iron ore negotiator was arrested until the price was negotiated down. This may not happen in all cases, but it does happen. The problem with billions at stake, politicians who do not directly own companies will try to influence companies to settle based on the revenues the resources bring into government coffers and the jobs they offer.

Linking to dividend paying companies, the world is changing but that does not mean the consistently profitable North American companies have to be switched to non North American companies. It is important to be aware of the pools of capital around the world because for investors – who has the gold (or pots of money) has say. When countries run large deficits, they may want to grow their economy to pay the debts, but in the short-term they have to pay attention to those that have the pots of money to buy bonds. From a small investor point of view, as long as you stick to profitable companies which earn enough to pay a dividend, you may have new owners or get bought out but in the end your investment has gone up and that is a good thing.

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

The Shadow Market conjures on privacy but what it really means is around the world there are billion dollar funds looking to invest in something which makes money and there is little regulation on the money. In the book The Shadow Market by Eric Weiner published by Scribner, NY, 2010, Mr. Weiner shows how the financial markets of the world are changing. It used to be the largest capital pools were a combination of money centered banks in New York, London and Frankfurt. The world has changed because of sovereign wealth – money controlled by individual countries (primarily enhanced by oil revenues); hedge funds; global market funds; state funds (China) and most of this money is not controlled by the US or western world. This mean these funds can have a say in how the world reacts to various crisis and proposed solutions. For example, China and India because their economies are becoming the biggest in the world and owning billions of dollars in US reserves can tell the US to pay down its debt. (that must have been an interesting conversation for the US President generally said to be the most powerful office in the world).The funds can invest around the world and as long as they receive resources from a country which allows them to tell others to tone down their ability to influence the government. All of this means the financial world is changing and other considerations need to be applied to solutions offered by the G7 and its institutions.

Linking to dividend paying stocks, while it is entirely possible to invest in North America or Europe, the reality is greater wealth is coming from other countries. The Shadow Market has the goal of buying into corporations and ensuring they continue to grow or be sold off so their funds grow. The Shadow Market is generally not interested in control the corporations, just trying not to lose money and make money. The Shadow Market because it tends to be risk adverse, has help create a great deal of financial vehicles which individuals can invest in to try to capture wealth creation around the world (this is a good thing). The Shadow Market funds are not homogenous, they are like all investors – everyone is looking for perfect information (which is only available in hindsight) which means many different theories are being used and tested. Some are good, some are not so good, but investing in profitable companies with a reasonably stable income stream never is a bad idea. Some years the growth is great, some years it is only good. As individuals we can live with good.

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