This blog looks at books such as Switch – How to Change Things When Change is Hard by Chip Heath & Dan Heath, published by Random House Canada, Toronto, 2010 because as Dividend buyers part of what we want is not to change.

We all do something but it may not be directly classified as an activity. An example is the housekeepers in hotels, a study was made – all the ladies were weighed half the maids were told what they were really doing is exercise; the other half was not. A month later the researchers checked the maids weight and the ones that were told they were doing exercise lost weight, the others did not.

Another example is a car wash gave a loyalty card – one group was given a card that started blanked and needed 8 to have a free wash. The other group was given a card with two stamps and on the 10th they were given a free car wash or both needed 8 washes to get one free. The result 19% of the first had a free car wash, but with some already filled in 34% received a free car  wash. One way to motivate is to make people feel as they’re already closer to the finish line that they might have thought. This is shrinking the change or lowering the bar for person to stepped over.

On the personal debt level – the best way to pay off is to make the minimum payments and payoff the lowest debt first forgetting about the interest rates. If you can do one then you can do the rest.

Another example is the head of procurement for the US government, there are many who do it – buying things for the US government. There are many stories and some make the press. How do you influence it? One day a conversation with a person sparked an idea. The employee wanted to walk over to the closest computer store and buy some items however the paperwork made it virtually impossible. The idea was to double your agency’s use of the government credit cards over the next year. Credit cards are issued, they have accurate records and for the government can be paid off during the month and for small purchases they are wonderful.  A single person can make a difference.

Former UCLA Coach John Wooden – when you improve a little everyday, eventually big things occur.. Don’t look for the quick, big improvement. Seek the small improvements one day at a time. That’s the only way it happens and when it happens it lasts”    Shrink the change.

When people make choices they tend to rely on one of two basic models of decision-making – the consequences or the identity model.  The consequence is weighing the cost benefit and making a choice to maximize our satisfaction. The identity model is Who am I? What kind of situation is this? What would someone like me do in a situation like this?  (limited calculation of cost benefits) We are a number of identities and those become part of your self-image and triggers the decision-making.  This means any change effort that violates someone’s identity is likely doomed to failure. How do you change a matter of identity rather than a matter of consequences?

An example is Lovelace Hospital Systems in Albuquerque, New Mexico was concerned about the rapid turnover of nurses, Instead of focusing on why people were leaving, the more important question was why are they staying? One of the answers was the nurses were loyal to the profession of nursing. The hospital developed programs which recognized them and set up mentorship programs so new nurses would understand the profession.

Another success story is Brasilata a Brazilian company which manufacturers steel cans. One of the expectations of the firm is when people are employed they are called inventors and expected to bring ideas to make the cans and processes better. In 2008 the inventors submitted 134,866 ideas or 145.2 per inventor. Not all will be implemented but the wealth of knowledge and abilities continue to make the company and its people better. One small example is when Brazil had power outages, the people found ways to save enough energy to fall below its quota and resell the extra energy.

Linking to dividend paying stocks, the future is the important aspect when investing, the expectation the company will be profitable and continue to pay a dividend. That is a big expectation and with continued change in its people hard to realize. How the company embraces change will say a lot about whether it can continue to pay dividends.

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

It is always interesting to read reports about companies because perspective is different. As an individual you may have access to low-interest rates (hopefully you do) but one of your credit vehicles is a credit card and people use them with their rates in the 20% category. A few days ago in one of the newspapers a journalist wrote about a company in debt and used the term sky-high interest rates – the company’s debt was 8.5 to 12.5%. If this company could either pay down the debt or refinance it at lower rates, there could be smoother sailing for it. The company is in a field which is needed but how the product is needed is changing rapidly and no one really knows how it is going to end up which is the reason why interest rates are higher than average.

Linking to dividend paying stocks, it was not so long ago interest rates were closer to 5% and so were bond yields, with the great recession from 2008 people have accepted or become very use to low-interest rates or low federal reserve rates. This can be a great thing and hopefully it will allow the economy to move forwards and employment will continue to fall. In planning for the future, interest rates or yield rates are taken as a bench mark measure achieve. If you can receive 5% or more on a low risk investment it is highly worth doing. If it takes achieving a 10% return, then generally risk is going to pay a significant role – it is generally hard to achieve a 10% return year after year. On dividend paying stocks, that is why you hear total return – dividends plus capital gains. In a good year, both will add to a good low risk return and some years easily beat the averages while being a low risk.

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

One of the additions to many newspapers on Saturday is a comics in color, usually they are in black and white but on Saturday they come in color and they have their own section. Recently a comic strip was read of Beetle Bailey written and drawn by Mort Walker. Beetle is a private in the army – he goes to a store and buys a Power Bar in those days it was called a Buzz Bar. One of his buddies comes over and asks what he is eating? Beetle says the Buzz Bar – gives you energy and can cure a lot of stuff. His buddy says, You are too Gullible, those are ads are just after your money, the bar will not produce miracles it is a fake claim. Think it over! Beetle says, I think I would rather be gullible.

Linking to dividend paying stocks, sometimes we want to be gullible and pay attention to those never-ending growth rates and believe we will capture them in our investments. The past week demonstrated what goes up also comes down. All of us want to believe the hype both in products for a $1 or buying stock after all it is our hard-earned money and we are making rational decisions. In reality, there maybe some truth but not the whole truth in the advertising or the recommendations. The easiest method is to find stocks that have a definite sell point about them – if you stay with profitable companies – did they make a profit? If you buy dividend companies can they constantly pay their dividend? pick something that tells you very simply when it is time to exit and when you make it a longer term hold. If the condition no longer applies more to another alternative because the great thing about investments is there are always alternatives in the marketplace.

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

The title Criminal Enterprise refers to a book by the same name by Owen Laukkanen published by GP Putnam & Sons, NY,  2013. The book focuses on two investigator one from the FBI and the other from the State of Minnesota or the setting is in that state. The premise of the book is someone who had a great paying job in the section of downtown where the “Robber Barons” used to live or from the outside all the trappings of financial success, losses his job but keeps the house. The character turns from a likable person to a psycho who goes from small bank robberies to armed cars. The problem for him is he never seemed to think there were any consequences. If you try to rob a bank, one or two investigators will begin to determine who you are and what patterns you left behind. If the first went well and the robber tries a second, more people join in to find you. If you rob armed cars,every police service will try to catch you. As a psycho you can likely do the robbery but getting away is going to take some advance planning unless you know where and how to change your identity and slip away from the location where you are in. In the book’s case the winter in Minnesota which is worth considering slipping away from. however going to the rougher side of town is not slipping away.

Linking to dividend paying stocks, there are ways and methods to hide illegal money, maybe 5% of the money in circulation is from illegal activities, depending of the economy sometimes it goes higher. If you are not involved in the 5% then what you do not know is better for you and you can live a longer healthier life. In the book, the criminal did not think how to run and spiraled out of control or was a psycho. In all aspects of investing ,planning or doing your homework which includes thinking about the consequences of your actions is the key. In the book, the criminal robs another criminal of his money, the person had to answer to someone above him who said to the effect – give me the money or your life, generally I prefer the money, the result was eventually a house call to the first criminal looking for the money. If you invest in dividend paying companies, the only house call you will receive is the monthly statement from brokerage firm informing you of more money or shares were deposited to your account. Those are visitors that are well worth receiving.

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

Each of us search for something, sometimes the answer is nearby seemingly at the tip of your nose, sometimes the journey is longer. When we search we need to follow some basic skills whether it is investing your money or staying alive. One book that is more about staying alive is called Wilderness Secrets Revealed written by Andre-Franciois Bourbeau published by Dundurn Press , Toronto, 2013. The book is about Mr. Bourbeau going into the woods or the wilderness and surviving. There are many tips, one was he did not decide one day to go into the wilderness, he took his time and learned about the way. A great example is if you enjoy going into the wilderness, forgot or do not pack one thing which you typically would use. At some point in time you will need the object and you will need to find an alternative. It is recommended you not start with the biggest item but supporting items. For example bring the tent forget the pegs. What are the alternatives – tip the tent to trees. It is simple but solves the problem and allows you to begin to think about other alternatives. This is where you will have to do some research about how to make your alternatives – but they can be made. In one sense it is a lesson in creativity; patience and whether you really want to go into the wilderness or in my case well used semi wilderness.

The above process is called SEAR for Help Search and rescue teams find you – in the movies it is the message on the beach; Conserve your precious vital Energy; Minimize Risks; and Pamper your Assets. In the outdoors it means prepare signals and stay in open spaces, doing things slowly; avoiding further perilous acts and do not lose or damage the gear you brought in. The idea is to prevent foolish actions into order to cut the stress level.

Linking to dividend paying stocks, similar to surviving in the wilderness takes good judgment knowing or having a good idea of alternatives to keep going. The wilderness offers many solutions and risks however people say that about a really large city and being in the town. There are parallels and both teach you the value of patience and lowering risk levels. With dividend paying stocks the patience is the price may not double in a month, but perhaps in 3 years and with the addition of the dividend you will have a good investment return with limited risk.

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

The Train is a movie starring Burt Lancaster at the end of WW II with the Germans retreating from France, the Colonel loves art much of it taken from Jewish homes or is “degenerate” art in the eyes of the Germans. In the eyes of the rest of the world, it was some of the best paintings in the world from French artists such as Degas, Picasso, Matisse and others. The art is worth millions of dollars if transported from France to Germany. The Colonel wants the train filled with art to have the highest priority, the French want the art to remain in France. There is a wonderful circle the French resistance plays with delaying and changing the trip and visuals from the train for the train to remain in France. At the end of the movie, the Colonel says to the Burt Lancaster character who never has gone to a museum or gallery to see the paintings, you have foiled me but this is art is for people like me, you will never be appreciate it. I have won, you have been lucky or something along those lines.

Linking to dividend paying stocks, these stocks can and are appreciated by everyone not only for their potential of capital gains but the income received while holding the shares. The prices go up and down with the market, but profitable companies over the long run will out perform the market because of the higher premiums given to profitable firms.

While at a beach on the lake occasionally looking at the small boats go by,  the book Smuggling – a history 1700-1970 by David Phillipson published David & Charles, London UK, 1973 was read. Smuggling has gone on for centuries and anyone who reads about drugs – they come from somewhere knows smuggling is not likely to stop anytime soon. The book focused on the UK, but one can go to any country in the world and have similar conditions. In the early days of the UK, if a ship was beached or ran aground during a storm, the contents were taken by those who wanted it. There was no agency or company to pick up the belongings for hopefully the vessel was insured properly. If prices or taxes were too high on a given item (the government needing money increases taxes on liquor) then there was an incentive of a alehouse or pub to pay taxes on the government side but to buy non government rum to pay no taxes and keep the profits. If you think about the US and Boston Tea Party – that started as people thought the taxes on tea were too high. Back in England – the coastlines were patrolled by the excise and revenue department. For many years they were chronically understated and few ships, but people joined the department for the other choice was the British Naval Service. Similar to the myth of civil servants – they captured a few ships or loads but the smugglers had the upper hand. For in many parts of the countryside, everyone knew the smugglers and the government was afar. As technology and attitudes change, the smugglers learn to be creative and so the story goes.

Linking to dividend paying stocks, we expect the companies to pay their fair share of taxes as well as to take advantage of loopholes in the system which legislators have passed. Smuggling is a problem for all companies and likely most people have bought something which they did not fully declare to the government. The question is to what degree it happens in the business and do the margins which are obtained offset the smuggling. There exists wide scale networks to move goods to places where there is demand which are beyond the government’s ability to stop and the key is demand. If taxes are too high, the average person hears or finds alternatives. If prices are considered too high, goods are copied and sold as orginals; the smuggling industry is worth billions and it is worthwhile to see how creative they are.

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

There are many different methods to try to make money on the stock markets, this blog believes investing in the best companies that are profitable and pay a dividend particularly when they are lower in value and holding them as their rise back to normal and beyond EPS multiple is one of the easiest and best methods. However, the most profitable stocks means a concentration on a narrow minority of the stocks traded on the exchange. There are a wide range of ideas and theories how to capture those capital gains which are offered. One example is book written by Edgar Perez called The Speed Traders published by McGraw Hill, NY, 2011. The Speed Traders help add volume to the total number of shares traded and if they computer programs are near correct – they will have bought and sold the shares on the same day and tried to make a penny or two or three on each trade. The idea is to start each day fresh or with a clean slate – if they make a little money and have very low commission rates then doing thousands of trades on a daily basis adds up to profitable days. The High Speed Traders constantly influence the market but are no means the biggest players or the most influential, however the operators of the exchanges which make money based on the number of shares traded, need to constantly upgrade for the needs of high speed traders. The belief is the faster the trade reaches the market, there is a slightly pause where money can be made and is made, which is why their operations tend to be near the data centers of the exchanges. If you are an average person, you do not compete with the high speed traders because your connection to the market is slightly slower and for only a few cents on low volume it does not make any material difference. If you have thousands of trades the connection does make a difference. All of the players of the firms interviewed noted whatever advantage you think you have, you better believe the competition has the same advantage. This means while it is possible to build programs which are successful, there are more variables in the market to take into consideration which means the program needs to be constantly tweaked to stay  successful. That said, there is money to be made but it is not as simple as noting the statistical inefficiencies in the market, it is finding methods to make money from them.

Linking to dividend paying stocks, when you look at the owners of the stock many have different reasons for owning it which is why there is a the market. Someone will buy and hold; someone is looking for a quick buck; someone will buy because they like the name; or it is recommended; or it is part of the hot part of the market; or it is not part of the hot part of the market; it is being hedged; it is not being hedged. The only common thread is the idea the stock may or should go higher. The multiple reasons for holding means it is possible for statistical inefficiencies to result. If you pick a profitable company which is trading less than its peers, the stock should trade similar to its peers, of course there are likely reasons why it is not. One method to get around it is see if there is a dividend being paid, at least you will receive income as the stock slowly or quickly moves to where it should or is expected to be trading at.

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

One of the largest companies which is privately held is Koch Industries and the book Sons of Wichita written by Daniel Shculman published by Grand Central Publishing, Hachette Book Group, NY, 2014. The Koch Industries was founded by Fred Koch who was a petroleum engineer. His company helped build refineries which were slightly different than the major oil companies to give independents greater control of their companies. Eventually Koch owned the refineries and went into pipelines. In the west, if you look around you desire land and ranches for cattle grazing. Some of the land would have oil on it to supply the refineries. Fred made a great start and son Charles made the families multi billionaires. The company believes its expertise is in the gathering, transportation, processing and trading of goods. Whether the good be oil, timber or something related. On the business side, there is an introduction of Charles management system called Market Based Management which besides offers the expectation of doing good, it offers a decentralized management system which expects everyone to continuing find better ways to do their job and then share the information to the company.

One of the reasons the company is known is two or three of the brothers are involved with organizations that leave individuals with the greatest control and the government doing less, the philosophy is called libertarian. The brothers back organizations which help fund the Tea Party and with super PACs dominating the political fundraising environment, the Koch have been and continue to be major contributors. The book goes into some of the reasons why the Koch’s offer large dollars. Outside of the less government issue they are major contributors to hospitals, universities, art institutions in New York and Wichita. In addition, for a company which does not the government, its method of earning money is government regulated – pipelines and it is not surprising that lawsuits have been filed and fines paid (the law firms are always on retainer).

Linking to dividend paying stocks, early on the company bought a refinery in Minnesota which turned out to be a cash cow or because of its monopoly position – the biggest refineries are in Texas, which allowed the company to expand and grow. It took good management to do this, which is a credit to Charles Koch and the people who work(ed) for him.