Listening to a radio station, one of the historians made a general comment that most of history can be construed as accidents gone right. Her point was in every project or looking at how people governed themselves in the past, there was accidents that could have changed the dynamics or accidents gone right. The radio station was about the Italian province of Sicily, Italy during the reign of Frederick the 2nd. The northern people of the Europe, typically did not get along with the Mediterranean people for various reasons including food production. In the case of Frederick the 2nd, he managed a very multicultural state and many areas of arts and science proposed and grew. Laws were codified, many traditions we do today started in this era. Under a different ruler, who knows what would have happened.

Linking to dividend paying stocks, accidental history in this context means management matters. Who runs the company and how they run it, can be important as what it does. Few expect their companies to change the world, but the daily execution of business plans to consistently generating profits to pay dividends is something to pay attention to.

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

Most homes have some sort of carpet in them, and carpets run from dollar store items to those worth hundreds of thousands of dollars. If you are interested in the upper end, the book The Carpet Wars by Christopher Kremmer, published by Harper Canada, Toronto, 2002 is an interesting read. The famed Silk Road from China to Europe leads through the area of Afghanistan and for the past 2500 years, carpet making has been going on, it was the work of women. The skills being passed from mother to daughter and part of the reason for doing the trade was a good weaver is a good marriage prospect. The other part was for income and clothing for the family.

There are many stories in the book and an early one is Mr. Kremmer early days in Kabul – he ended up buying carpets and the dealer gave him two receipts – one for the government which lower the price of the carpet; the other for the next person who may buy or value the rug – the value was higher. Although the prices were within what could be determined as reasonable; one can easily imagine what would happen if the original agreed price was in the thousands.

Using the Silk Road as his guide and carpet making as his entrance point to conversations, Mr. Kremmer discusses the history of the region. To look at carpets is not to look at a floor covering it is a piece of art. The religion of the area does not welcome paintings, so the next best thing is the art and beauty of the carpet – brimming with human, animal and vegetable life forms. The ruling was because carpets and pillows are stepped on, sat on or leaned on these are deprecatory acts, the images of life forms is ok to be on a carpet. As such they can be priced for two things – as pieces of art and pieces for the home.

Linking to dividend paying stocks, for century’s people and been making and selling carpets, some have gone up in value, depending on the knots per sq in, the homemade dyes, the quality and picture. It takes a good eye and expertise to know what is good and what is not likely to go up in value. Similarly, with investing by keeping it simple – what is good – companies making profits to pay dividends. These companies will pay you two ways – the dividend and the capital gain as well as enabling you to look to the future with hope.

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

Yesterday’s column was about the cream of the crop of the movies – The Academy Awards. In a different category is the movies which did not quite make it or they were not well received by the movie going public. In a book by Roger Ebert titled Your Movie Sucks, published by Andrews McMeel Publishing LLC, Kansas City, 2007, famed movie reviewer Roger Ebert lists movie that were not good. In the movie business, there are some excellent movies but lots of them are not good. Many of the movies in Mr. Ebert’s book started with the right producers and directors, screen writers and noted actors and actresses to have success. Unfortunately somewhere along the line, the end result was not good. The plot seemed out of place, the characters were not believable and a host of other concerns. However the movies were released and lessons can be learned from them.

Linking to dividend paying stocks, companies that cater to the retail market have a wide range of success and failures in terms of product offering. In the movie industry it is easier to see and remember which movies did not quite make it because bad movies are not discounted, they just have short time in the theatres before the DVD is released. in the retail business the retailer changes location of products or discounts items to have a lower profit margin. It is harder to remember which items or products did not sell well because they are no longer on the shelf. Our perception is different, but talented people everywhere have successes and failures. Ideally, the company who shares you own has more successes or there main profit drivers are very profitable.

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

On Sunday evening, the Academy Awards was viewed by millions of people around the world. It is designed to enhanced the movie industry and for the average movie viewer the show remains the most important event of the awards presentation. There are many other awards, but none seems to have the glitz and glamour of the Academy Awards. When this perception happens, the movies that have winners of the Awards will receive greater paying movie customers. One may wonder, is the event fair? how much arm twisting is there in the background? who actually votes? It turns out there is lots of arm twisting; the movie companies have spent as much money to encourage members of the Academy to vote for their movie as it cost to make it. For once a movie receives an award, the Academy Award translates into higher sales.

Linking to dividend paying stocks, if you have chosen companies who have made profits over a number of years, as long as they are reasonably well run you do not have to worry about whether there will be profits or not. If the company is reasonably well run, it looks after its costs, maintains its profit margins and regularly pays its dividend. With many organizations there are awards; only the public will determine the extra value of the award. In all types of industry there are awards, for most people the bulk of the awards are for people in the industry which means they are important to insiders but not necessary to general public. It takes a great deal of effort to translate to the general public and the corresponding higher sales. As an owner of the shares, you want your company to win those industry awards.

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

One of the US well known personal finance advisor is Suze Orman and if you have not seen her on TV you can check out her website for the tools and resources and other material. One of  her book is called The Money Class – Learn to Create Your New American Dream published by Spiegel & Grau, New York, 2011. In it Suze asks people to live within your means not your credit. We all have hopes and dreams which is the reason why you want to wake up in the morning; being financially independent or not in debt makes life easier. Often Suze will talk about your grandparents, she means the people who lived through the depression when credit was very hard to get, cash was hard to come by and living was frugal. The ending of the war changed and houses were affordable, partly due to government assistance. It seemed money went further. Now days, houses and cars and everyday life seems more expensive; credit is relatively easy to have and use. Suze recommends live below your means but within your needs. Part of that is to understand the difference between a want and a need. On Valentine’s Day in the part of the northeast where this is written it is cold, a want is warmer weather, is it a need?

In the book Suze offers very good advice concerning your family, home, and moving towards retirement. It is the last section which this blog will focus on – what to do with the money you are putting away for retirement. There are a great number of choices in the marketplace – the easiest thing to do is stick to dividend paying ETFs. The fees are lower than a full service; many full-service funds perform very similar to an index fund, but you pay a higher fee. You earn money through the dividends and through long term capital appreciation (higher stock prices) the companies are easy to found through Standard & Poor Aristocrats index of firms – over companies have similar indexes. Some range from increasing dividends from 10 years to 25 years. This means one of the best methods to gain wealth is not to lose it.

Linking to dividend paying stocks, whether you choose the index or go with individuals stocks that make up the index, it is up to you. The important aspect with index funds is every year they or 6 months they rebalance the holdings which means the laggards are let go and winners are kept to continue winning.  One of the hardest things to do is sell when you believe there is more upside to come. Invest in the long term but make your money grow through dividends and capital appreciation.

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

In many museums there are beautiful carvings made from ivory. The craftsmanship is stunning and they are interesting to look at. In many very wealthy homes in countries around the world, there are ivory carvings. They are both artistically beautiful but in some countries – a sign of wealth

. In a book called Ivory, Horn and Blood by Ronald Orenstein published by Firefly Books, Buffalo, NY, 2013 the author examines the age old trade of ivory. The bulk of the ivory comes from elephants and no they do not naturally fall off the elephant. The elephant has to killed or subdued and the ivory is harvested. The elephant does not grow new tusks. If there was a large population of elephants and the majority came from aging elephants who were about to die, then there would be little problem with the trade. However the demand is up and continues to grow, the supply or number of elephants is down and the price of ivory increases. This implies much of the ivory on the market or being sold is likely came from illegal sources or poaching. The trade for ivory has been going on for centuries – the Emperors of Rome loved ivory.

Linking to dividend paying stocks, one of the reasons to own these companies is to gain wealth to buy luxury items for yourself and your family to enjoy. There is a cost to some luxury items and sometimes to items we need on a regular basis. This is the great democracy of money, if you have it, you can use it for both good and not so good. In an ideal world, it would be more good than not good. Owning dividend stocks will help you achieve greater wealth for you to have more choices in the economy. Use it wisely it will last a long time to come.

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

If you have money to be invested, there are many avenues but one place you should seriously consider is the stock market and ETFs. The reason for ETFs is fees tend to be very low and the product values similar to stocks. The price you see or are quoted is the price you will pay or receive. ETFs are index funds and there are hundreds of them and they can be sliced and diced anyways you want to, however similar to ice cream, sticking to vanilla is the easiest method to start with. This blog believes you should add the dividend portion to ensure you get paid from the dividends as well as capital appreciation of the ETF. Index funds will tend to go up in the long run because the stock exchange drops the losers and adds winners at least twice a year. We are all have sectors of the economy we favour either because you work in or near the sector, which is a good place to starts.

Recently a publication published the Annual Returns of the S&P 500 Sector Indexes is a nice neat chart – the results from 2008 which was a horrible year to 2014 which is more normal.

Utilities

Year       2008     2009        2010       2011      2012       2013       2014       Average 7 years

%            -29         11.9        5.9          20         1.3       13.2        29               7.47

Health Care

%           -22.8      19.7        2.9          12.8    17.9      41.5         25.3           14.3

Technology

%           -43         61           10.2          2.4     14.8      28.4         20.1            13.41

Consumer Discretionary

%         -33.5       41.3        27.9          6.2     24.1      43.1          9.7              16.97

Consumer Staples

%         -15.4       14.9        14.1         14.0     11.1      26.1        15.8             11.51

Financials

%          -55.2      17.2        12.2          -17.1    28.9      35.6       15.2               5.4

Industrials

%         -39.9      20.9         26.7          -0.6       15.4      40.7        9.8                10.4

Materials

%         -45.6     48.6          22.3           -9.7      15.2       25.6       6.9                 9.04

Energy

%       -34.9       13.9       20.5           4.7          4.6         25.1      -7.8               3.7

If you start from 2009, the numbers look better but investing with the bulk of your funds should be the long term and economic cycles happen. It would be very hard to have invested after 2008, if you had invested before 2008, although there were many bargains, people are people and the good news was hard to find. It does show if you have cash or continuing funds, there is money to be made after the downturn.

Linking to dividend paying stocks, ideally you start with an index and ensure even greater safety by sticking to dividend paying companies within the index. They would have done better on the total  return, because you would have received money for holding them. The broad indexes also tell you although you can have biases, the bloggers is financial and energy, but all sectors have good companies within them. If your investments have not done as well as the indexes, perhaps you should be in an index fund with lower fees.

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

Recently in the newspaper there was a story about how the oil price is affecting the Saudi budget. The reason for the story is only a very few individuals outside the Saudi treasury office know for certain  – Saudi does not release the figures to the public. In North America – governments are suppose to be more transparent and release figures on line. In Saudi, they can keep things quieter. However, it is possible to estimate how the impact of oil prices is having an affect. (With estimates, one has to be careful and verify how the estimates were done.) The article published by Eric Reguly of the Globe and Mail titled Even Saudi Arabia may be feeling the sting of lower oil prices says we do know some things. We know the official budget is $ 220 billion; we know Saudi produces 9.7 million barrels a day, consumes internally 2.6 for an export total of 7.1 million a day.  From these you can determine at $ 50 a barrel the country would generate $ 130 billion; at $60 it generates $ 155 billion and at $ 90 breakeven. This means either the country’s cash reserves are going to be used or cuts in spending need to happen.

Linking to dividend paying stocks, you will not know everything or have perfect information but there will always be things you know or can easily find out. Analysis can be done. If you look at 10k reports you will find additional information. Linking it all to make a decision is what powers you to do what you do. Once you have made your decision if you choose dividend paying stocks, two great pieces of information on whether to keep or look for alternatives are is the company profitable? and can it pay its dividend?. If it is less profitable the dividend is going to be examined. If it remains profitable the dividend can be enhanced.

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

Recently in the newspaper there was a story about how the oil price is affecting the Saudi budget. The reason for the story is only a very few individuals outside the Saudi treasury office know for certain  – Saudi does not release the figures to the public. In North America – governments are suppose to be more transparent and release figures on line. In Saudi, they can keep things quieter. However, it is possible to estimate how the impact of oil prices is having an affect. (With estimates, one has to be careful and verify how the estimates were done.) The article published by Eric Reguly of the Globe and Mail titled Even Saudi Arabia may be feeling the sting of lower oil prices says we do know some things. We know the official budget is $ 220 billion; we know Saudi produces 9.7 million barrels a day, consumes internally 2.6 for an export total of 7.1 million a day.  From these you can determine at $ 50 a barrel the country would generate $ 130 billion; at $60 it generates $ 155 billion and at $ 90 breakeven. This means either the country’s cash reserves are going to be used or cuts in spending need to happen.

Linking to dividend paying stocks, you will not know everything or have perfect information but there will always be things you know or can easily find out. Analysis can be done. If you look at 10k reports you will find additional information. Linking it all to make a decision is what powers you to do what you do. Once you have made your decision if you choose dividend paying stocks, two great pieces of information on whether to keep or look for alternatives are is the company profitable? and can it pay its dividend?. If it is less profitable the dividend is going to be examined. If it remains profitable the dividend can be enhanced.

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