In the book Work in Progress written by Michael Eisner, published by Random House, NY, 1998, Mr. Eisner discusses his life and the people he has met in the entertainment world. Mr. Eisner is known for being CEO and President of Disney, but before that posting he worked at Paramount Pictures. The movie industry has always been a tricky industry to make money – everyone wants a star in their movie and with a star in the movie the costs to make the movie go up. We all have our favourite stars, not every movie they are involved with make money. Mr. Eisner tried to be more business-like, not every movie made money, but they would try to hit singles and doubles and occasionally homeruns would emerge. It was also possible to protect the studio financially with pre-selling the movie, use of tax shelter financing and focus on keeping production costs below the industry average. The company was not adverse to pay well, it just meant bonuses when the movies performed well.

Patience is almost always rewarded in the entertainment business. In the heat of excitement and competitive frenzy over a project, it is easy to overpay for a script, an actor or director. By simply waiting a little longer you usually end up with a better and more reasonable deal. In the movie industry, it is not the movie you did not make, but success and failure is based on the movies you did make. Remember to keep the basics correct – great story first.

Linking to dividend paying stocks, the lessons from Paramount can be translated to any industry. Every industry has its stars and those in the industry wish to have dealings with them. The issue is do you overpay? With Paramount one useful statistic is the cost of producing the average movie is it below the industry average? The statistic will not tell you if the movie made a profit but it does let you know about costs. Not spending high can mean higher savings.

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

In this instance, the Work in Progress is a book by Michael Eisner published by Random House, NY, 1998. Michael Eisner was the Chairman and CEO of Disney. In the book, Mr. Eisner discusses his early years – his grandfather eventually founded a clothing company which specialized in making uniforms for the US Army. He became very successful and also won the contract for the uniforms of the Boy Scouts. You would think with contracts such as the above – it was a licence to print money and the next generation did. The trouble was they never wanted to change anything; they eventually lost the contracts as well as when the zipper was introduced, the company did not embrace the technology of the day, but they believed people would always want to button up their pants. The company eventually went bankrupt, although it had enough assets for the previous owners to live a comfortable life.

Linking to dividend paying companies, looking at the company it had two great institutional buyers – US government and Boy Scouts, as long as the two were happy the company could have gone on to many things. The second generation of owners thinking it was a continual cash cow and not embracing technology quickly lead to its downfall. In today’s world, that downfall would have been very quick. The lesson to learn is to run a successful company the owners need to be passionate about it and rise to the challenges the markets put on it. The best thing the second generation could have done is sell, for if you are not passionate about your industry and be willing to embrace the tremendous challenges it faces, find another avenue for your investments.

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

If you watch TV or the internet ads, you may recall some wonderful ads by Facebook which feature children – what they did and what they could do if they were connected to the internet. The flip side of the internet is spam, and Brian Krebs wrote Spam Nation published by Sourcebooks, Naperville, Illinois, 2014. In the book Mr. Krebs writes about the leaders of the Spam groups – in this case they are Russian. The Internet of the Facebook ads is about learning, doing better, creating good things. The reality of the early internet was there needed to be a reason why people paid for subscriptions and there is a very healthy market for porn of all types, getting the best bargain and of course information. Porn is illegal, but it pays the bills. Countries like Russia which had limited resources to fight illegal severs, opportunities arose to make money. Then came the spams which also were designed and do make money – send out billions of spam, some will respond to it. Those that respond can be spammed on another idea; it in a global world where people look for the lowest cost, regulations can have alternatives. One of the big areas is cheap drugs or pharma – people pay less, they think the drugs are similar but one never knows. The size of the spams are the key – the good ones can send billions of messages per day. The owners of the severs benefit – usage is up and fees are good.

In the book, Mr. Krebs offers methods to try to keep your computer safe, which is always worth reading. You can find more information on KrebsOnSecurity.com

Linking to dividend paying stocks, the use of the internet is a powerful tool for the investor, the ability to search, read 10k reports and other sources makes investors decision an easier one. As one is researching there is wonderful information and lousy information, with time and ability you will be able to distinguish between the two. As investors we hope the wonderful ads of facebook and what can be done are the right way, but as investors bills must be paid.

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

In the global world, there are countries that are better than others for sales of products which you as an investor own. In recent memory, the market in South Africa was one of those countries – there are many people, including a relatively wealthy white population. The black population was titled towards less than middle class. Within the country, opportunities were to be found, but as a government run apartheid run system, does the profits justify being there? Over the last number of years South Africa has transformed to be a country where competitive markets have developed and all people have a chance to make a decent living in it. The apartheid system developed over the years and people like Steven Biko helped change it. In the 1987 movie Cry Freedom starring Denzel Washington and Kevin Kline, the beginning of the end of apartheid was happening. The character played by Kevin Kline – a publisher of a newspaper could not longer support the brutal aspects of apartheid and helped bring a end to it. Thankfully a leader such as Nelson Mandela came to power and the transition while not perfect was better than most countries.

Linking to dividend paying stocks, in the global economy what happens around the world is important. For many it will be similar to South Africa, for years western countries had dealings with the country and then leadership changes and the end is seen, but for years it was okay. Having a diversified portfolio around the world makes perfect sense and good strategy; but it comes with the provision of a global citizen and one day – it will be in the newspapers, something will have changed. If the company tries to be a good global citizen with a long record of doing good, then having operations around the world can be a wonderful strategy.

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

The Harvard Business Review publishes books about Management  and one that is always worth reading is on Brand Management. This particular book was first published in 1994 and the 1999 edition has further updates in it, the publisher is Harvard Business Review, Boston, Mass. A company sells something and it becomes successful, what is the next step? How do you protect the brand – do you use private labels to fight on the cost aspect? do you add a premium brand? do you add extensions to the line? or do you try to sell the company to someone else so they ask similar questions? The results in the marketplace will show which action is the best one, but understanding the tradeoffs or ensuring to extend profits, not just product lines is a key. There are many examples in the book which are great and many possible solutions exist.

One of the keys is understanding why people buy the brand. In one example, people bought the brand because their parents bought the brand knowing it was good, when someone began to change it, the consumer began to think why this one, why not another? Doing nothing was the best solution. In another case, the company went  downscale, but then the upscale customers asked why is this a premium brand? am I getting the value I thought I was? In another case, a extension of the line was introduced but demand for the product did not increase. If you were competing in the toothpaste category – can you get people to brush their teeth 3 times or more? but the two biggest brands can introduce brands to ensure your space is constantly squeezed – there is only so much room on the grocery shelf.

Linking to dividend paying stocks, some of the best dividend companies have great brands and if you own their shares you will pay attention to what they are trying to do. One of the keys is what competitive advantage does your brand have over the others to generate profits. What is the brand’s return on sales or profitability? how is the market share – knowing that large market share does not always mean profitability. Understanding the answer allows you as an investor to see if the company has the best strategy and execution of the strategy. If you think it is going well and margins are holding up, you can continue to hold the stock; if not, look for alternatives for companies that you believe and can see are doing better.

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

There are many Secret States but the title refers to a political thriller set in the UK in a four part series staring Gabriel Bryne as the Prime Minister and was produced in 2012. The show is based on a novel, but it starts with an industrial accident which the then Deputy Prime Minister investigates and the accident builds to something more highlighting various connections, trade offs, pressures, other people’s agenda, desire for power and what should be done and what is the right thing to do. It makes for a good viewing and you can take it for what it is.

One of the premises of the show is the link between big business and their agenda and the government – often the agenda are the same thing; sometimes they are different. In the 4 part show – there is a different outcome desired by the government but does the PM have the support of his party? In reality, the outcomes the PM was going after might have been a better solution, but were they implemented?

Linking to dividend paying stocks, a company that is profitable often supports the government in power because they have similar agendas and as long as the company continues to make a healthy profit it seemingly supports the existing government. Governments tend to think the company will support them in good and bad times, but companies have their own agenda. They want to make healthy profits in good times and have the governments support them – morally and financially in bad times. As a shareholder, your concern is policies which continue to allow the company to make money so it can share with you in the form of dividends.

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

In the area in which you live, you will see many people with fences. When the majority lived on a farm or rural areas, fences were designed to keep the cattle or livestock inside the fences. In urban areas, the fences are designed to keep young children in or maintain a level of privacy for the adults. In a book called Walls – Travels Along the Barricades by Marcello Di Cintio published by Goose Lane Editions, Fredericton, New Brunswick, 2012, the author goes to places in the world where walls separate countries. Depending on where you are from, you likely can name some countries with a wall, in the US it is the wall along the Mexican border. There are many other walls in the world. The walls on the Western Sahara; between Ceuta and Melilla; the Indo-Bangladesh Fence; The West Bank Wall in Israel; Nicosia/Lefkosa; Belfast, and The Great Wall in China. All of the walls try to keep people from moving from one side to the other. Sometimes it is for what is supposed to be peace; sometimes it is suppose to stop immigration; sometimes it is supposed to be better for the country which put it up. What develops overtime is people must enforce it; deal with the barriers – before they existed relationships between the border existed; people must deal with those who wish to come across for what are very compelling reasons or they would have used other methods. If a country is stable and relatively secure, then walls are not needed. If it is not, people move with their feet from conflicts – what should the world do? The answer is always easier if it is not in your backyard.

Linking to dividend paying stocks, on the economic side as investors you want your company to have walls against the competition to keep them out and allow your company to prosper with the ability to raise prices or gross margins. In terms of accumulating money, walls are a great strategic advantage to the organization.

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

We all have preconceived impressions about warfare, and generally it is correct – if a state or government is very well funded it could afford to spend the most money on advanced weapons and pay for a standing regular military. Along with reasonable administration it should have staying power and then comes the exception. In a book called Mongols, Huns and Vikings by Hugh Kennedy published by Cassell & Co, London, UK, 2002, Mr. Kennedy says the Nomads were the exception and to answer the question why were they the exception, he reviews the groups.

The technological advantage the Vikings had over their competition was their ship. The ship were clinker-built, with overlapping planks nailed on to a wooden framework. This produced a ship which was strong, light and flexible to ride the waves in the seas. The power was either by oars and/or by sail and were faster than other ships on the ocean. The next big advantage is very shallow draught or amount of ship below the water. It could be less than 18 inches which means rivers and streams could be sailed on.  The Vikings would try to raid or sack or rob or take tribute from coastal cities in Europe.

The end of the nomads advantage was technology or gun powder. Not the actual stuff but the mechanics of making it. In order to make gun powder permanent settlements and factories are needed. The lifestyle of the nomad is to move from one place to another which makes the requirement difficult.

Linking to dividend paying stocks, at the present time we are undergoing a change in technology to mobile. It is not here yet, but it is coming and it is a challenge to take advantage of and use the new technology until one or two become the standard. There are always challenges in the economic world and to continue to make profits is one of them. For the stocks you own, what is their economic advantage? people wish to have some notion of being able to use an alternative – how close are they to the companies which you own?

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

We all have preconceived impressions about warfare, and generally it is correct – if a state or government is very well funded it could afford to spend the most money on advanced weapons and pay for a standing regular military. Along with reasonable administration it should have staying power and then comes the exception. In a book called Mongols, Huns and Vikings by Hugh Kennedy published by Cassell & Co, London, UK, 2002, Mr. Kennedy says the Nomads were the exception and to answer the question why were they the exception, he reviews the groups.

Genghis Khan and the Mongols is a terrific story which has been retold many times from the barren steppe lands north of China arose Genghis Khan who united his people and spread his empire across the Asia and Europe. Similar to the Huns hundreds of years before, the Mongols used horses – the horses were used to travelling long distances or had the great advantage of mobility. The Mongols also had something known as the nerge.  A huge ring of hunters gradually close in on the game, driving it closer together. Anyone who allowed an animal to escape was punished. As the ring contracted so the press of the animals would become more intense. Finally the khan gave the order and the killing would start. The nerge gave skills of teamwork, communication, co-ordination and obedience which are very useful skills in war.

In the order of military service, all adult males were in the service. The basic unit was a thousand people and Genghis Khan’s people were given leadership if they showed they were competent. If not, others in the group who showed promise would be given leadership. In many other countries, leadership was given based on your family name. In this set up, the group gave their best and were committed to the army and its conquests.

In theory, the Great Wall of China was designed to keep the Mongols out as well as a infrastructure program for the ruling Emperor. The Mongols took a couple of tries but they did conquer China.

Linking to dividend paying stocks, teamwork and communication are hallmarks of very good companies. Teamwork means people are working for the right cause and not stabbing each other in the back for their own rewards or chance at the big prize; Communication means people know what others will likely do or what they will not do. In the nerge, these elements could easily be identified, it takes a keener eye in the world of press releases all saying what they should say.

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