There are many companies in business and you need to be very selective in trying to pick the right ones for you. Many financial newspapers including the Globe will offer advice on what the managers of actively traded mutual funds are picking for their portfolios. Mind you when they pick them, the stock may or may not be the biggest holding in their portfolio but their advice helps you to select. On January 20, the Globe had a special feature called the Top US dividend stocks for your portfolio.

The companies are the why:

Starbucks – 70% of sales in North America; where the economy is beginning to do well. The new menu should boost sales per store; the new app adds to loyalty program which helps increase revenues. The company can add $3-$5 billion in new debt before impacting their credit rating.

Apple – iPhone7 is coming in the fall which could be a reason for more sales. (iPhone is 65% of sales of Apple). Apple users tend to love the brand or be brand loyal which should be able to sell other products. The company has billions in dollars in offshore accounts which means they can be very aggressive on research and development costs which means somewhere they will be more innovative products.

CVS Health – two companies dominate US pharmacy sales CVS and Walgreen. CVS recently bought a company which provides drugs to nursing homes. Over the past decade we know seniors use more drugs (or buy more drugs). CVS is nice stable business with a clean balance sheet. The retail accounts for 46% of sales but 72% of earnings.

MetLife Inc – the largest life insurance company with more than 100 million customers in 50 countries. Its long term debt is manageable for it has $10 billion in cash. As the economy gets better, MetLife benefits.

Wal-Mart Stores – the shares have been hit by a strong dollar however on line sales have increased as well as same-store sales have increased. As the economy does better, Wal-Mart will continue to do good.

Quest Diagnostics Inc – the largest US provider of laboratory testing. It should do better on the better economy, the aging population and Obama care (expanding insurance coverage – the government pays the bills). While Quest does many routine tests they also do higher revenue, higher margin specialized testing which is growing rapidly.

Linking to dividend paying companies, notice the dominate market share these companies have, the economy will go up and down but these companies will tend to make profits which can pay dividends. The better the economy, the greater the capital gain for you. Be selective and you will do better with less market risk.

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

 

 

In North America and other countries around the world, if you examine the number of children families had over the years, it goes up and down. In the 1900’s people were above 7 per family, but some would die early from children diseases. In the 1930 was the depression and family size fell; in the 1940s was the war which meant many men were away. After the world the size of families increased and since the 1960s family size have slowly falling to around 2. The group after the world war is known as the Baby Boom generation and throughout its life – institutions had to change to meet its demands as they aged. When they were young, schools doubled, then universities and colleges grew and the workplace grew. The flip side is after they left the institutions, the School Boards have problems dealing with the infrastructure. Now the Baby Boom generation has begun to retire and will do so over the next decade. The good news is the generation behind will find jobs easier, the bad news is we will be talking about pensions and retirement funding for decades. There are many books about pension failures, but a good one is The Third Rail by Jim Leech and Jacquie McNish, published by Random House, Toronto, 2013.

The third rail is what our retirement is suppose to look like. The first rail is old age security at age 65, then one counts on their individual savings and the last rail is the pension plan from work. Few people pay attention to it until you are about to receive it but what if the pension plan is underfunded and seemingly what is to happen. If we use the example of the Baby Boom, when they were growing up they had 20 people contributing one collecting which makes the amount of contributions, the investments in the market and the low collectors of funds a viable funds. As we move to where the Baby Boom is collecting with the same 20 people know 10 are collecting, the markets still fluctuate and only a few are contributing. Common sense says something has to give. That is one scenario coming in the future. What are the assumptions in the on going plan? the investment income? the growth rates? Do you agree?

In the book, there are examples from New Brunswick and Rhode Island and they are very similar. The focus was on public sector pensions and the reality is many times the people in government want to give the employees a good pension. If they ask for cost of living, why is that not a good thing? In Rhode Island an example was given of a Fire Chief who from a base salary of $63,000 because of guaranteed cost of living of 6% annually his pension became $197,000 and if lived to 100 years of age the pension would be $700,000 (this individual was benefiting from compound interest). This would have been fine if investments were guaranteed to go up above 6% a year; the number of contributors to payees remain a constant but markets do not have guarantees and this fund was underfunded.

Linking to dividend paying stocks, the issue of underfunded pensions whether in the private or public sector makes a difference towards the ability to be above what the actuaries need to be in the fund. If there is less, then credit ratings will suffer and they will be at competitive disadvantages as the organization will have to pay higher interest rates. Instead of investing in the business, the institutions will have to raise capital to bring the pension plan to above what is needed in the future. While we all love pension plans, particularly those that have them, they need to be fully funded. One metric to look at is the company pension plan fully funded? If it not, look for alternatives. If it is a municipality, look to moving to ones which have and ensure they keep it that way or you will be paying more taxes and getting less.

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

 

For many years one of the best talk shows on TV was the Larry King Live on CNN. The Atlanta based superstation reached audiences around the world which made the talk show even more important for people to want to be on. The host is Larry King and part of the lure of the show was information, part was entertainment and a huge part of the appeal was the ability of the host to bring out the sincerity and honesty of the guest. Every group has a communication strategy – what message they want to get out and as members of the public we know this; the sincerity of the person is why we keep listening or watching. Larry King who has done it better than most – offer his secrets which are not really secrets just very hard to do every day. One of Larry King’s books is How to Talk to Anyone, Anytime, Anywhere – The Secrets of Good Communication, Crown Publishers, NY, 1994.

Business Talk

1. The same basic principles apply in business talk as in social conversation. Be direct and open, and be a good listener if your want to be a good talker.
2. If you are talking within your industry you can assume people know the terms, if not assume they do not know the terms and you need to speak in a lay language.
3. Time is money. Do not waste the time of the people you are talking to.

The Art of Selling

Everyone is selling something. Know what you are selling; and once you have closed the deal do not keep selling. Always sell the advantages of the product, not the features (soon all the competition will have the same features).

Interviews

Show prospective employers what you can do for them. How you can solve a problem.

Maintain an open attitude

Be prepared – what do you want to bring up or ensure your best is shown.

Ask questions. – if you can ask a positive question you have already gone a long way toward demonstrating that you are with the program. Listen to the answers and then you can move forward.

How to Negotiating – when you are in negotiations you will need to negotiating from an upper hand or from strength. This can be seen both in appearance, body language, and having other options (at least in your mind).

If you believe in sledgehammer approach do not expect a long term relationship. People have long memories and will be looking for alternatives. Try to keep fences mended so you can win again the next time.

What makes a Good and Bad Guests?

What I look for in a potential guest:

1. A passion for his or her work.
2. The ability to explain that work clearly and in a way that our viewers will find interesting
3. A chip of the shoulder
4. A sense of humor, preferably self deprecating.

A bad guest never starts as a bad guest because you believe they would be interesting.

A person who only hits the same note over and over again – the same point in different fashion – a talking head.

The Larry King show is a phone in and if the guest can not take a kidding or listen to a different view, they are a poor guest.

People who answer 90% of the questions with one or two words are poor quests.

Giving a Speech

The secret is really no secret, it is to think of it has do different from any other form of talk. It is a way of sharing thoughts with other people. Talk about something you know, people you met or talked to.

Be Prepared with the following structure

Tell them what you are going to tell them

Tell them

Tell them what you have told them

Look at your audience – if you read part look at different parts of the audience

Know the pacing and inflection you want to use

Stand up straight

Know thy audience

Brevity can be great, but people do what to hear.

KISS – keep it simple, stupid

Linking to dividend paying stocks, as a shareholder the first thing you want to hear is the company made a profit and can continue to pay its dividend. How much and how the execution was and continues to be is the next steps. If the company made a profit, then you can either continue to hold or at least be comfortable in your convictions. If not then move to alternatives on your lists. If the President tells you how hard the year has been, those are times to reduce your holdings.

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

 

 

For many years one of the best talk shows on TV was the Larry King Live on CNN. The Atlanta based superstation reached audiences around the world which made the talk show even more important for people to want to be on. The host is Larry King and part of the lure of the show was information, part was entertainment and a huge part of the appeal was the ability of the host to bring out the sincerity and honesty of the guest. Every group has a communication strategy – what message they want to get out and as members of the public we know this; the sincerity of the person is why we keep listening or watching. Larry King who has done it better than most – offer his secrets which are not really secrets just very hard to do every day. One of Larry King’s books is How to Talk to Anyone, Anytime, Anywhere – The Secrets of Good Communication, Crown Publishers, NY, 1994.

The fundamentals of a successful conversation are honesty, the right attitude, interest in the other person and openness about yourself.

If you are honest – the public or the listeners will continue to listen for they understand if you have missteps.

The right attitude is you will keep on talking and you will strive to improve. If you go into a group the right attitude is to talk to 3 or more people; some will talk to everyone, most of us are naturally shy, if we meet 3 that is good.

Interest in the other person is a key and asking why is a great question. If you ask why the answer tends to open up the person to talk to about themselves and what they are thinking. The object is not to become your best friend, think acquaintance. If you ask why? Then your obligation is to listen to the answer including using body language to listen which means keeping eye contact and responding to their comments. Good follow-up questions are the mark of a good conversationalist. Larry King in his role as talk show host would have done research, but listening always opens up other questions.

The openness of yourself does not mean all the details of your life but something that defines you – Larry talks about being from Brooklyn and being Jewish. Those two elements give the listener knowledge of themes about Larry.

What does The Best Talkers Have in Common

They look at things from a new angle – taking unexpected points of view on familiar subjects

They have broad horizons – they think and talk about a wide range of issues beyond their daily lives

They are enthusiastic – displaying a passion for what they are doing

They do not talk about themselves all the time

They are curious – they ask why? They want to know more about what you are doing

They empathize – they try to put themselves in your place, to relate to what you are saying

They have a sense of humor – they do not mind using it on themselves or stories about themselves

They have their own style of talking.

Linking to dividend paying stocks, as investors you look to people talking about the companies you invest in, whether it is the President, the communications specialists, the analysts. Depending on whether you believe them, you will either confirm or play into doubt of your ideas and alternatives. We all are looking for that confirmation to buy, hold or sell and communication plays a role in that determination. The rules of communication do not change but when it does, something seems to be missing.

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

 

If you ever seen the movie Ben-Hur or movies about Mosses and the Red Sea one thing likely leaps to your mind – the chariot races in Ben- Hur and the Egyptians chasing the Israelites in their chariots before the Red Sea closed up to become a sea once again. Those are the imagines which came to me as the book Chariot – the astounding rise and fall of the World’s First War Machine by Arthur Cotterell published by Pimlico in 2005.

The chariot has gone through many changes in design since ancient times and its use has been for all matter of things. The invention of the war chariot relied on 3 things: the spooked wheel, the trained horse; and the composite bow. Wheels were traditionally heavy and thus drawn by oxen. For the chariot to be of use, it had to be fast and not until wheels were made which were light and sturdy could the function of the chariot begin to change.

The training of the horse is because most horses would rather run than fight or it times of battle they are temperamental and nervous. To be able to keep the horse from running away, new bridles had to be invented. Many years later the introduction of steel stirrups lead to control by the rider and less need for the chariot.

The other necessary aspect is the bow had to be changed for on the chariot – an archer released arrows. When the armies were densely packed together it did not matter on the accuracy. When the people separated, accuracy becomes important. Two horses running over a rough ground means the bow need to be secure.

With the new abilities the use of the chariot changes to become a war machine and various kings and pharaohs have used the machines to win wars. As soon as one country used it to win, other countries experimented for their uses and abilities to take out the front line troops. The chariot use went across the known empires into India and China.

When the invaders came by sea, the chariot was not very useful as a prime attack vehicle as well the rise of the mounted soldier with the introduction of the bronze bit. The shift began after a few lost battles.

Linking to dividend paying stocks, the chariot is interesting to consider because as time changed, it allowed for the chariot to be a leading part of the armed forces. As time continues to change, the role changes. We all see change for we are all part of change and through our changes there was not a bad thing, it is just something came along which was more beneficial for our use. For chariot is was the role of the single horse – armies could more easily have a cavalry than chariots, but there is still a sight to behold.

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

 

 

 

 

Recently went to a presentation by Ron Tsang who is a Toastmaster at an Advance Club which means he makes a living doing presentations. He has written a book about storytelling and his studies are similar to yesterday’s post but slightly different.

A story is a narrative with a clear beginning, middle and end involving cause and effect. Stories stick to us because they can entertain, demonstrate, inform, persuade us or a combination of all the above. Mr. Tsang believes a story has 3 Acts or you can think of a 3 Act Play and he uses the 10 Cs.

Act 1

Context    –   what or why are you there?

Characters   – who?

Characteristics – what is unique about them?

Conversations  – what do they talk about?

Catalyst – what will change or lead to a change?

Conflict  – why are they at odds?

Act II

Complications   – why is the simple solution not easy?

Act III

Climax –  how does the solution work out?

Conclusion  – what do you want to reader or listen to do?

Connection  – why would the story resonate with the audience?

Linking to dividend paying stocks, there are different methods to tell a story, but one must be told to link to your audience to move them along the line to buy your good or service. How do you listen to stories? If you are dividend stock buyer, you want to hear the words profitability and dividend and long history of rising dividends very soon in the story or you will be thinking of alternatives.

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

 

There was a book a number of years ago called Everything I Need, I Learned in Kindergarten or something to that affect. One of the things you do in kindergarten is listening at story time and reading stories. Whether its children or adults, whether it is to inform or to sell, a story must be there or you will lose people. In this era when people are more cynical, a good story will always catch their attention. This leads to the problem where some of the best minds think about data and metrics, but storytelling is a different skill which is not always easy to do.

According to Harvey Schachter’s column in the Globe one writer has tried to make it simpler for managers to tell better stories. Richard Krevolin a screenwriter and professor at UCLA and USC film schools has written a book called The Hook published by Career Press,  Wayne, New Jersey, 2015 in which he outlines how to tell stories.

The basics is a 3 step approach – start by being able to articulate the premise of your story in a single sentence. The second step is answering 7 questions and final step is the outline.

The 7 questions are:

Who is your main character?   –  the hero should be the user

What does you main character need/want/desire? –  the dramatic problem

Who or what keeps him from achieving what he wants?  – who or what is the antagonist

How does he achieve what he wants?  –  how does the process work

What are you trying to say by ending the story in this way?  – what are your themes and motives

How do you want to tell your story?   what will be the narrative device  – this is a critical decision for how you tell will change everything.

How do your characters change? –  this is what makes the story credible

The 3rd step is the outline and it has 4 possibilities:

Origin stories – this is the simplest approach – the beginning of the product or service.

Mission/values stories –  from the mission/values of the company’s statement of values

Knowledge sharing – move from bullet points to a story that happens to share information

Brand/vision myth – told to inspire or create myths. Keep it believable.

Linking to dividend paying stocks, all companies try to sell their story to investors. How much you are accepting of them is the reason why you might buy their shares. There are many alternatives and if you hear and read a good story you will begin to put the company on your watch list. One method to do stories better is simply ask people to tell you a story when they ask you for advice.

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

 

 

 

The start of the year for the stock markets has not been kind for most investors and what should you do? sell everything? The headline went around the world and there is truth in what it says. Ideally, if you sold everything you would be in cash and could capitalize on opportunities as they arose or at the very least your portfolio would not lose anymore money. According to Tom Bradley President of Steadyhand Investment Funds Inc. and others the toughest decision is Just when and how will you get back in if you sell everything?

Part of the problem is if you have a negative attitude, there is no perfect time to buy. The headlines in the newspaper will only report after it has already happened. If you are out, it is very hard to get back in because you see all the reasons not to be in; you will not see the opportunities to be found.

At the moment with interest rates being low, thinking long term it will take years before your money doubles based on the compound interest rates. When you are out of the market, you will begin to look for perfect answers and with the stock market the only perfect answer is what has happened. You need to begin to think about being approximately correct, not perfect.

The secret is to ensure your investments are in the best quality investments as possible. Start with companies that make profits and can pay dividends even as their share price falls – this is the buying opportunity. When the market goes back to what is considered normal, these are the shares that will rise first.

The method to go through the stock market ups and downs is to have a diversified portfolio that will allow you to keep your head above water and can see opportunity. This means money in the market, cash, bonds, and medium and large companies. Try to stick to profitable companies and remember most of the money is made when good assets return to their normal prices.

Linking to dividend paying stocks, if you have a reinvestment program this is when you can build wealth by buying more quality companies which are profitable and the price has fallen. When the market goes up for all the good things the economy is doing, the stocks which rise first is the quality ones. Try to stick to them and you will be more at ease when the markets go up and down.

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

One the books known to many people is Moby Dick the famous story about the hunt for a Great White Whale. There is a new Hollywood movie about the hunt called In the Heart of the Sea and it shows the sea is not always pleasant and calm. For many people we have memories and desires to be on the water when it is pleasant and calm and filled with adventure. The sea can be rough, but why did people go on a ship to try to catch whales?

The answer can be varied, but for the owners it is money, there is gold to be made in the whale oil. Prior to electric lights, whale oil was used to give light to homes, as well as the whales offered other products. This high demand according to the Economist on January 1 helped earned a company called Gideon Allen & Sons a whaling syndicate based in New Bedford, Massachusetts a return of 60% annually. Between 1817 and 1892 overall returns averaged 14% a year.

New Bedford was not the only whaling port in America; nor was American the only whaling nation. Yet according to a study published in 1859, of the 900 whaling ships or the seas, 70% were American and 70% of those came from New Bedford. What was so special about New Bedford? A place a hours drive to Boston. The merchants had developed a new business model that was extremely effective at marshalling capital and skilled workers despite the immense risks involved for both. The model is similar to the high tech model of today.

The model was the Managers held big stakes in the business, giving them every reason to attend to the interests of the handful of outside investors. Their stakes were held through carefully constructed syndicates and rarely traded; everyone was financially at least on the voyage. Payment for the crew came from a cut of the profits, thus decision making could be delegated to the point where it mattered – to the captain and crew.

At the top of the hierarchy was the agent or agent firms such as Gideon Allen who were responsible for the purchase and outfitting the ship, the hiring of the crew and the sale of the catch. Captains ran the show while the ship was at sea and often put in capital as well. Investors received 2/3’s of the profits, the rest was divided among the crew in what was known as the lay system. A capital may receive a 12th lay or one twelfth of the profit; a crew member would receive 1/300 or 1/777 whatever they could haggle .

For the agents, the firms invested in multiple expeditions. The reality is out of 787 boats launched from New Bedford 272 sank or were destroyed. However the ones that came back paid well and many agents were millionaires. You can still see the model being used today.

Linking to dividend paying stocks, when you invest you want to earn more than leaving your money in the bank and there is risk attached. The risk can lessened if you invest in profitable companies and let them do the heavy work. Investing in profitable companies allows diversification across the economy and as long as the companies remain profitable they can be held. As the companies go through their business cycles it is entirely possible to switch to alternative companies and use the dividends to buy the good companies at lower prices.

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