When you think about great publishers of newspapers, you often think of men, however there are a few women which rise to the occasion and dominate. One such lady was Cissy Patterson who life was written about by Amanda Smith in the book Newspaper Titan – The Infamous Life and Monumental Times of Cissy Patterson published by Alfred Knopf, NY, 2011. In the book half of Cissy’s life it read as one of the ladies who was born to marry and have sons to continue the family business. The family business was newspapers and her grandfather had founded the Chicago Tribune which was the most widely read newspaper in the Midwest. Her grandfather was Joseph Medill who linked the paper to the Republican Party and Abraham Lincoln. His daughter married Robert Patterson who became the editor and part owner of the newspaper group.

If you read the New York Daily News this is part of Tribune group because the son and brother of Cissy founded the paper in 1919 as a paper similar to the ones he saw in the London, UK when he was in WW 1. The paper repaid its debt in 1920 and circulation rose to over 2.2 million by 1946. In the print business, if someone sees somebody doing well they launch a competitor for example Liberty was the competitor to Colliers and the Saturday Evening Post although losing money will soon lead to closures.

In the book, Cissy became the editor of Washington papers –  and help propel them to the number one in paid circulation. This was at a time when Cissy was the only women publisher of a major newspaper in the US. Part of the role of the publisher is to balance the interests of those who are the largest advertisers which tend to mean the wealthier people in the area and the desire to print what people enjoy reading – something about their lives. In the case of Cissy her wealth put her in the 1% as such much of her life in Washington revolves around the White House and Congress.

Linking to dividend paying stocks, in the days before the wide spread of the internet, to own a newspaper was to influence public opinion and to gain access to those in power. It maybe the same today, but the easy relationships to large advertisers have changed, which is why the newspaper business is a tough business indeed, although there is healthy role for newspapers.

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

When you think about great publishers of newspapers, you often think of men, however there are a few women which rise to the occasion and dominate. One such lady was Cissy Patterson who life was written about by Amanda Smith in the book Newspaper Titan – The Infamous Life and Monumental Times of Cissy Patterson published by Alfred Knopf, NY, 2011. In the book half of Cissy’s life it read as one of the ladies who was born to marry and have sons to continue the family business. The family business was newspapers and her grandfather had founded the Chicago Tribune which was the most widely read newspaper in the Midwest. Her grandfather was Joseph Medill who linked the paper to the Republican Party and Abraham Lincoln. His daughter married Robert Patterson who became the editor and part owner of the newspaper group. As readers of newspaper we often forget our favorite newspapers have biases, but they do and the newspapers are in the business to make money and some do very well. The Chicago Tribute thrived in the market and the Patterson wealth became part of the 1% in the US which means they had mansions in Chicago, Washington and Newport. At the time of the “robber barons” the Patterson were well familiar with many of them. Cissy lived could have easily been one of the 400 special people in New York but she fell in love with a Count from what became the USSR and had an interesting time in Europe at the time of many Kings and Czars. Counts have the title to land or people in villages paying rents to the landlord, but in all countries not all the land is equally as productive and profitable as others. The Count had a relatively minor holding, but Cissy was in love.

Linking to dividend paying stocks, when Cissy married the Count he was living well beyond his means (had mortgaged the properties a number of times) and was fortunate that Cissy’s family was able to pay a generous allowance or dividends on the stock holdings. The Count was not the best of husbands for a number of reasons (gambling, mistresses were among other vices) and eventually Cissy left him as the family paid him to leave. While this is a person, we all fall in love with a stock or two because of the promise of the future. In many cases, even when we look back at the research which told us to look at other alternatives, we went ahead anyways. Understanding emotion plays a role in our decision-making is a good thing, learning to do it less can ensure we keep more of your money.

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

In many articles on the economy, eventually inflation is asked about – what happens if inflation and interest rates rise will the economy slow down and asset values fall? How can the middle income group (every year the number rises) continue to pay its debts or will they walk away from homes where the mortgages are greater than the value of the home (that happen in 2008). The are many methods to react to the problem or potential problem – one method is to study what do past economic cycles tell us? Norman Rothery writing in the Globe and Mail used author James O-Shaughnessy 4th edition of What Works on Wall Street and the Professor Kenneth French research. The results are high yielding stocks outperformed the markets in 1940’s, 50’s,60s, 70s, and 80s. The high yield stocks trailed in the 1930s and 1990s (internet bubble – however many high tech stocks went down on the other side of the curve – what was increased was decreased).

Linking to dividend paying stocks the lesson to learn is if you have a high yielding portfolio it will have to rebalanced because there are very few stocks of 1940s remained in the 1990s. You should not fear inflation over the long term, because large companies typically can adjust to the economic cycles if they have a monopoly or monopoly like competitive advantage over the competition. Think about utility companies and the ability for the government regulated body to raise rates to ensure profitability. As you review your portfolio ask how does the company retain its profitability and as a starting point you will be either reassured or start to look for alternatives.

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

If you search Google for Attila the Hun you will find great amount of information and if you search You Tube for movies and documentaries you will find different viewpoints of the leader. In History, the victor writes what happen and ensures that it is published and since it is a victory – there will likely be some embellishments on the part of the victors. It could be the losers made a mistake and it was taken advantage of, but that will likely be glossed over. In the written word and many documentaries, Attila was the leader of the Huns who were the nomadic tribes in the Eastern Asia (think European half of the USSR) which he ruled from 434 to 453 CE. Attila had a scorched earth policy – kill the men, burn the village and take the women and child as slaves, nomads were not farmers. Sometimes the Huns lined the men up and a knife reached their throats, sometimes he placed the men on stakes. Part of the strategy was to enforce no resistance and in the town or city, bribes or tribute not to do the same were the norm of the day. For those who live in many parts of the world, bribes are common to this day and will be far into the future. In the Hollywood idealized movie there is a movie called Attila staring Gerald Butler, the warfare is toned down with more emphasis on the person and their domestic life.

Linking to dividend paying stocks, for all companies there are the stories the company tells and the story in real life. Once in a while they meet, most of the time one is said to be better than the other. For the company, there are a multitude ways to describe how things are doing better, but in investing you often make more money if you have rather simple metrics. For example if the company is making a profit is the dividend sustainable? how often does the number increase. If the number has been increasing and the company is still making a profit, the other metrics while very important can be seen as secondary. For you investments, there was a reason why you bought, keep the reason simple and you will know to keep or look for other alternatives.

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

In the Globe and Mail, Chris Umiastowski writes about growth stocks and over the past 3 years his picks are up 275% which means we all would love to have those returns in our portfolio. In his case, as one would expect in the knowledge economy to be technology stocks including Netflix, Facebook and Tesla. The process Chris follows is a 3 step process:

Step one – pick stocks that genuinely excite you. The reason will be in steps two and three. In the past he has suggested trying finding the company which is radically changing what we consider to be the norm. The examples were Netflex is changing how we watch TV; Facebook changes how we interact with others and Tesla is changing how we build cars and a sustainable source of fuel for transportation. Now Chris says most of us have a limited knowledge of niche markets – find something that genuinely excites you. The test is within the industry does the potential company that you are considering investing in making a real difference in the industry? If the answer is not a resounding yes, then look for alternatives.

Step two – think about the long-term potential and what it means to valuation. Use all the regular considerations about what kind of revenue. gross margin, profit it has to make to be traded for 15 to 20 times earnings? If your homework tells you it has the potential put the stock on your short list of stocks to buy.

Step three – this is the reason why the stock should excite you. You need to continue to do homework till you are knowledgeable about the industry and many of the reasons why it might not work out and why the company should grow. If you find the strong company, have an understanding of the industry and being a bear does not crush your interest, begin to buy.

Linking to dividend paying stocks, in the above steps there is homework to be done, if something excites you then it does not feel like homework because you want to do it anyways. If you can understand the framework of the company and its financials begin to work the method you believe then the homework is fun and exciting. The other alternatives is to invest in an index fund of growth stocks or invest in dividend stocks because you need to be concerned with two aspects – is the company profitable and can it continue to pay its dividend. At the minimum with dividend stocks you have very defined exit points.

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

Many young people own bikes and at one point they race them and usually that is it, for professional bike racing in North America is not something many think about. The situation is different in Europe where bike racing is a very popular sport and summer excitement. In North America you might have heard about the name of Lance Armstrong – he won 6 Tour de France victories and for the longest time said he was not using doping techniques. It is safe to say, that the overwhelming majority of elite professional athletes in bike racing used drugs to both keep them in the game and try to gain an extra 4% advantage. In the world of elite athletes where each of them have great natural talents, vigorous training, and great desire to win and many of them are near equal or on any given day one of them should challenge to win, all the athletes are looking for a slight edge. The slight edge is the understanding of enhancing oxygen cells and preserving muscle strength till the end of the race where a sprint is needed to win the challenge. In one sense, the advances the elite athletes and their doctors learn should benefit people around the world on the other sense, it is an advantage that others do not have.

In the book The Secret Race – Inside the Hidden World of the Tour de France; Doping, Cover-ups and Winning at All Costs by Tyler Hamilton and Daniel Coyle published by Bantam Books, NY, 2012, Tyler Hamilton a very good rider and friend of Lance Armstrong tells his story and how the doping is done and why it is done. One has to remember the doping techniques are enhancers a late addition to the training and desire to win. The training and desire to win come first and foremost, the winning  brings a contracts, sponsorship, and the ability to continue to be a bike racer. It is easy to understand why the athletes take the drugs, after they have done everything possible not to take drugs but are just a little bit away from victory or the podium. Training day in and day out takes a toll on your body; injuries take a toll on the body; keeping the right weight takes a toll on your body; maintaining championship form takes a toll on the body; as in every job – the job takes a toll on your body.

Linking to dividend paying stocks, these will typically be the sponsors of the teams. The reason why the companies will be sponsors is in the above example – the bike race brings out many people to watch both in person and on TV. Sports can be one of the few areas where the general population turns to watch because while many can predict the winner, there are many variables to go into winning and given increasingly equal performers the tide can turn quickly. In the bike racing – one rider maybe a generalist; one is better climbing hills (mountains); one is better coached in terms of strategy of the race; and a multitude of other factors. Look at the sponsors of the race, the market share of the ratings on TV, and determine if the companies are effectively reaching to their target market.

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

On the Bloomberg News last week it was reported Billionaire hedge fund manager Dan Loeb said he is building bets against stocks that have surged because companies are relying on dubious financial metrics. Mr. Loeb felt there is sloppiness in accounting and the use of adjusted EBITDA and adjusted earnings has produced companies trading at valuations which are not supported by real numbers. What he is suggesting is companies are saying if you factor out this exception then we are really doing well. The question is the exception really an exception? Every year, people knowing that the standard Price Earnings Ratio (PE) is something investors want to hear, there is a twist on accounting procedures. If the company has not produced what it thinks is enough it needs a good reason, and it order to get the stock trading at a higher PE studies come out to suggest the company should be trading at a higher multiple or its stock price should be higher. Mr. Loeb believes many of the stories are unbelievable and thus is shorting companies.

In another news article by Scott Barlow, he says the good news is that a focus on low stock valuation is a profitable way to invest over the long term. The bad news is any time period less than 10 years they are not much use at all.  Mr. Barlow quotes value investor Charles Brandes saying what growth investors pay in valuations, we pay in time. This means growth investors usually pay high PE Ratios to capture immediate earnings, while value investors who can buy stocks cheaper often have to wait a long time before the stocks appreciated.

Warren Buffet describes this style as simple, but not easy. It is simple to see, but it hard to hold a stock through 5 years of volatility and potential poor performance and trust it will generate high returns in the long term.

Linking to dividend paying stocks, if you pay attention to these stocks then while you wait you can be rewarded with a dividend along the way. Profitable companies will trade at higher multiples than non profitable ones because there will be in business for longer periods of time. If bad news happens to a profitable company, it should be able to continue operating; if bad news happens to a non profitable company – many things spiral downwards including loss of credit. In investing try to keep it as simple as possible and you will be rewarded.

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

On March 25, 1911 a fire occurred in the garment district of New York City in the production of Shirts or Waists for women. The name of the company was Triangle Waist Company and 146 mostly young women died during the fire. There had been other fires in the garment district, but this one changed the landscape and the book Triangle – The Fire that changed America by David Von Drehle published by Grove Press, NY, 2003 tells the reason why at this particular time, change happens in New York. In many cities around the world there is a garment district which is where clothes are made for it was a job which many people have training when they are young and can relatively easy to move to wage work. In New York City by 1909 more women worked in the factories in Manhatten than all the mills and plants of Massachusetts and by far the majority them were sewing or cutting to make clothes. The mills north of Boston took the cotton from the south and made cloth, while the factories in the high rise buildings added value by making clothes which were sold across the US.

Part of the reason for the change was politics – politics is about getting votes and appealing to the mass people to vote people. In terms of immigration which countries welcome, at some point there becomes a critical mass of the immigrants where the face of the party needs to reflect their concerns, For many years, New York had an Irish appeal (look at the size of the St. Patrick’s Parade), it changed to Eastern Europe influence (many Jewish voters) and for political machines how to get them to vote either Democratic or Republican. The reason why politicians are successful besides having committed people to support them is to their ability to read the will of the people about when to change regulations and when not to change. If a change happens besides being a good thing, the forces for and against the change have to be weighed and balanced. It is more of an art than science. After the Triangle fire, the mood of the people of New York after trying to find villains was to support some sort of change so no more fires would not happen. To put in the sprinkler systems and other features would cost money (everyone wants but no one wants to pay, particularly developers after the building has been built) so there is a natural reluctance to do. The skill of the politicians is to weigh what people can and should pay for at the same time to gain votes in the next election. In the book, there is an excellent description of the political process (Chapter 8).

Linking to dividend stocks, for every industry stability can be a good thing and can be profitable, Then it seems something changes and the rules change which puts the profitability at risk. The reality is the things or issues were bubbling for a while and as investors you need to pay attention to them or they will overtake your investment. Remember the overwhelming number of politicians react to problems that have been created with little or no regulations for a period of time.

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

On March 25, 1911 a fire occurred in the garment district of New York City in the production of Shirts or Waists for women. The name of the company was Triangle Waist Company and 146 mostly young women died during the fire. There had been other fires in the garment district, but this one changed the landscape and the book Triangle – The Fire that changed America by David Von Drehle published by Grove Press, NY, 2003 tells the reason why at this particular time, change happens in New York. In many cities around the world there is a garment district which is where clothes are made for it was a job which many people have training when they are young and can relatively easy find wage work. In New York City by 1909 more women worked in the factories in Manhatten than all the mills and plants of Massachusetts and by far the majority them were sewing or cutting to make clothes. The mills north of Boston took the cotton from the south and made cloth, while the factories in the high rise buildings added value by making clothes which were sold across the US.

Part of the reason for the change was fire regulations, in the 1900’s fire regulations were not the highest priority in high rise building. The Triangle Waist Company operated in the top 3 floors of the 10 story high rise building and if you think about the operations of a garment company, there was a high risk for fire – cotton is flammable. The new regulations meant that buildings needed to be refitted and built with sprinkler systems; the fire exits needed to open outwards; and fire escape on the outside of the building has to be built so people can escape a fire without it collapsing. In the fire, the fire escape was mangled and fell which in turn people fell and could not use the fire escape. Another issue was fire drills, at the company there was no fire drills, however the first 5 minutes are critical in a fire, after that it is more luck than anything else. The new regulation was all high rise buildings must have fire drills at least once a year. All very good things which most of us would accept as normal and the minimum one would do.

Linking to dividend paying stocks, with these stocks they tend to like regulations because it is a barrier to entry. If someone is not following the regulations the lawyers talents at suing can be used. Regulations can be beneficial for investors.

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