In a book called Necessary Endings by Dr. Henry Cloud published by HarperCollins, NY, 2010, the author discusses how we can change our perspective and go past the necessary endings.

Continuing with the theme, sometimes you will know when something should be fixed and when it should be ended. Other times you are more on the fence – you are hoping or wishing, what is the difference?

The past is the best predictor.

A wonderful story is Dr. Cloud writes a friend’s daughter’s boyfriend has asked to meet the friend, what should he ask him? The answer was to see his credit report and his last two years tax returns. The money was not what he was looking for – the credit report tells if he has fulfilled his promises. Can he be trusted? The tax returns show he takes responsibility for the daily things in his life. How much money was immaterial: the important aspect was his past behavior – promises, commitments and responsibility.

If you are evaluating personnel or projects

1. What has been the performance been so far?
2. Is it good enough?
3. Is there anything in place that would make a difference?
4. If not, am I willing to sign up for more of the same?

The answers will lead you to the correct actions.

If evaluating personal – an easy way is to put people in 3 categories

1. Wise people
2. Foolish people
3. Evil people

Wise people – when the truth presents itself, the wise person sees the light, takes it in, and makes adjustments

They like feedback; take it in and own it.

Foolish people – tries to adjust the truth so he does not have to adjust to it.

When given feedback they are defensive and come up with an excuse on why it is not their fault.

Evil people – protect yourself by documenting everything. Then use lawyers, guns and money to get their attention. Evil people want to bring you and your business down.

How to bring about change – make in urgent, have deadlines to ensure action is the new normal.

Linking to dividend paying stocks, similar to most things in life, people are the key to investing. Whether you like them or not is a good reason to invest. People are the people from the retail shop to the executive suite; they all have attachments, they all have reasons to invest their time and energy in the company. At the senior levels it is important to prune on a regular basis – as a shareholder do you see that reflected in the annual reports, if not why? Economies go through cycles and no one can predict all of them, however regular garden tools can help your investment thinking.

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

In a book called Necessary Endings by Dr. Henry Cloud published by HarperCollins, NY, 2010, the author discusses how we can change our perspective and go past the necessary endings.

In this column, the pruning will be discussed in greater detail. Too properly prune, you need to see what is the desired outcome? Why are you cutting the limbs of the tree? What are you hoping to see in a few months? Those questions can be asked of anything, including in your business. At times it is necessary and desirable to focus on the future and ask what do you expect to see? If you are managing people, what levels of productivity do you want them to accomplish? Sometimes the answer is in training; sometimes the answer is an ending because the person does not accomplish the goal you need them to.

Sometimes the desired outcome is to cut a business division; sometimes the division should be sold. Keeping a division which does not fit into your vision means you are putting people and resources to waste in hope of turning it around. At what stage should it be let go? There are few easy answers because someone has an attachment to it – both the people and who runs it and who has run it.

In the book there is a wonderful story about a health care provider company called Welch Allyn which is a family owned company. In the doctor’s office you may have used some of their products. The company has a variety of lines and most were profitable. The business was good – sustained growth and profits, strong and stable market share, brand recognition and industry standing, satisfied employees and loyal and well-cared customer base. It was a company that changed technology but was generally a steady as she goes business. The new CEO was driven by something else, what happens when companies do not see a necessary ending? The business is good, why change or innovate to something else? The new CEO wanted the company to change operating systems because all their products were running on different operating systems. What if customers could run their products on one operating system it would allow them to have better communications. For the company, the single operating system could mean the company was setting the industry standard which was one their strengths. The new CEO Julie Shimer needed to sell the strategy to the Board and sell the new vision of reality. In Ms. Shimer’s reality the medical care system was going to change. The future was doctors and nurses would have to do more with fewer resources, with sicker patients who needed recommendations faster. A better solution to the clients problems was to do use the Welch Allyn devices seamlessly or one operating system.

The 3 steps in the process are:

1. Does a gut check to see how you feel about pruning in general and identify any potential intellectual or emotional resistance?
2. Make the concept of endings a natural occurrence and a normal part of business and life, so you expect and look for them instead of seeing them as a problem.
3. Identify the internal maps that keep you from executing necessary endings.

Linking to dividend paying stocks, companies are run by people and we have attachments as well as we see or do not see reality. There are numerous examples of companies who were earning good profits however their world changed very rapidly as they tried to hold on to their market share. One of the most famous is Kodak pictures, but there are many many others. When you own a dividend paying stocks, one of the reasons you own it because it makes profits and has a large market share. The key then is to ask is it sustainable as the economy changes? What is their vision and does it match your reality?

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

If you talk to anyone who has bought stocks over the years, they will tell you of the ones that made money for them; eventually they will tell you the ones that lost money or they could have made more from. The stock was bought it went up, maybe it went up even more and then it came down; as it was coming down there was plenty of opportunity to sell and still have a profit but they rode the price down  until they were back to where they started from. There are many stories such as this and if the person does not have one – they are being less than truthful. The big question then is why is it so hard to sell? Part of the answer has to do with the reason to buy stocks is to make money, not necessary to sell right away. Part of the answer has to do with, it generally takes experience to set targets for your stock and be disciplined to sell part when the price has reached a certain price or you have made a percentage. If the stock goes up 15%, then sell a third of your holdings; you will still have 2/3s left and you have made money and there are always opportunities in the investment world. If you had owned oil stocks, they went up and you sold some, you had locked in profits and as oil companies share prices have declined you can buy the best quality for lower prices. The best quality stocks will rise faster and you would have made money even when oil prices fluctuate.  Another reason is because we are people we have attachments to the stock and we have to give something up to move forward. In a book called Necessary Endings by Dr. Henry Cloud published by HarperCollins, NY, 2010, the author discusses how we can change our perspective and go past the necessary endings.

Dr. Cloud believes how we see the normal and natural part of life and business endings do not have to be with hesitation, sadness, resignation or regret. They can be seen as positive parts of our lives. Knowing when to let go will help you in the rest of your life. For those people living in a home – clutter or pruning will be a known term. In a home we collect stuff, some we need, some we could throw out but have not (it might be important). In terms of pruning – if you have a home stuff grows in the yard and to make the plants better tree limbs or plants need to be pruned back. The issue is we have attachments to people and things, sometimes you have to “cut the losses” in order to move forward.

Linking to dividend paying stocks, in the above example where people ride a stock up and then down, the ride is easier if you are collecting a dividend along the way. In this fashion as the stock comes down the yield on the dividend goes up. This is good as long as the company can continue to pay its dividend which means it is earning profits. If you have no other reasons to sell, when the company no longer makes profits or can no longer pay dividends it should be long sold or you have moved to new opportunities.

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

We all look for something; hopefully it is something to improve. This is where books such as The No Complaining Rule by Jon Gordon, published by John Wiley & Sons, New Jersey, 2008. The theory of the No Complaining Rule is not that you do not complain, but when you do, you need to bring 2 solutions to the table. The reason for the solutions is if you complain to about something, the other side will want to do something to improve but they may not know what would improve the problem. Sometimes the problem is relatively simple, but the solutions are complex. For example when the author visited Washington DC, part of the downtown was managed by the US Forestry Division; part of it was managed by Secret Service; part of it was managed by federal agencies and part of it was managed by Washington City Hall. Depending on the problem could mean the solution is more complex than it really needs to be. It is the same aspect in many companies, the complexity is easier to see with bureaucrats but toes might be stepped on and people often react when their toes are stepped on.

This leads to the next part of the No Complaining Rule, people must be empowered to make a solution or a partial solution. If the policy of the retail store is no refunds, what else can be offered? perhaps a gift card – the person wished to spend money in the retail establishment? How much is always the question – $10 or less than $ 25 with a good reason. The only problem is if supervisors never approve a good reason, than the unwritten policy is $10. Will that keep a customer or will they leave? In a No Complaining Rule changing complaints into solutions means understanding the cost of the customer and keeping them or letting them go. Once that is thought, better decisions can be made. If you are curious then there is opportunity to do something.

Linking to dividend paying stocks, the No Complaining Rule tries to deal with positive ways to deal with negativity at work. It is understandable that negativity at work causes people to be unproductive and if they are unproductive they are a drain on resources and more important the people that work there. In theory there should be a relationship between good places to work which also have high morals and continuing profitability. Ideally that profitability translates into paying dividends and if you see your interactions with the company tend to highlight the positive they are worth putting on your radar of which dividend paying stocks to buy.

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

When many of us hear about Biotechnology we have an image related to food as all the foods we typically eat are modified to fit the method we eat. If tomatoes are grown in California and we live in the north east, the crop must be picked to ripen when we go to the supermarket. The skin has to be able to withstand however tomatoes are harvested and hopefully all the nutrients and tastes that we know as a tomatoe remain the same or gets better. That is one part of biotechnology but there are others and in a book called Biotechnology Unzipped by Eric Grace, published by Fitzhenry & Whiteside, Markham, Ontario 2005, Dr. Grace helps the average person understand biotechnology. From an investor point of view, biotechnology can be defined as the commercialization of cell biology.

The book discusses what DNA is and the process to break it down; biotechnology and the body – this is where the big excitement to make money is – new or better drugs or treatments. To focus on the concern in the body, some of it will make a lot of money for companies and improve lives along the way.

Biotechnology and the environment is trying to understand how nature works – both on land and in the sea. How do the fish in the ocean adapt to their circumstances – what can we learn from them? Part of our lifestyle depends on taking commodities out of the ground. What if there were microbes and plants that would thrive on the waste products of the mines? If they were widely used the lands could become liveable again. The process involves proteins known as metallothioneins. This means after the mines close or when they are running out, instead of being abandoned and specific plants and processes can be applied which will help make the land better. Whether the government or an industry fund pays for it – better there is hope for areas where mines are located or were located.

Linking to dividend paying stocks, biotechnology is one of those areas where there will always be a new invention. There will always be a better way, but the process from new to being commercial to generating revenues is a long one. The process is one of hope along the way. As an investor you will want to follow, but it is easier to keep your money if it is a division of a large company which already earns profits. There will be large companies looking at the science and determining how to profit from the discoveries. Some of them are in the pharmaceutical companies for there is a wealth of knowledge to learn and in the past they have chosen the most promising methods, will they keep picking the best. We do know there will be lots of hype, hope, promise of wealth, but you will need to be very selective.

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

Communication is a wonderful thing, we all like it to be in a clear concise language. However, what we like and we receive can be two different things. In today’s political language the important aspect is to stay on message as if the message has been delivered from a high and needs to filter down to the masses. For generations, there has been codes between people so others do not know what is going on. There has been secret messages which lead to actions – sometimes offensive, sometimes defensive. For as long as there has been rulers and would be rulers, there has been plots to transfer power from one to another. If you are not in the position of advising leaders, perhaps you have seen coded messages where treasure is buried or could be buried. In order for the plots to work, secret messages have to be sent back and forth. How these secret messages are written is the book The Code Book by Simon Singh, Random House, NY, 1999.

Behind the all Presidents are people very interested in codes, both making them and breaking codes from the other side, in order to know what the other side is thinking. There have been interesting movies about Code Breakers for they generally operate out of the spotlight in the Second War, the British working on breaking the German code and getting a machine so they would have know what the Germans were planning. In the South Pacific the Navajo language was used as a code and Nicolas Cage played in a movie called Windtalkers – his character was assigned to protect the Navajo speaker. If you go further back in history, the great cryptanalysis were Islamic. The master was al-Kindi who wrote in 815, one way to solve an encrypted message, if we know its language, is to find a different plaintext of the same language long enough to fill one or so, and then we count the occurrences of each letter. This is known as frequency analysis. Using the English text, the most common letter is e, t, a and so forth. Thus to make and break codes codes an  understanding of math, statistics, linguistics is required. The reason for these requirements is is all codes are based on some sort of pattern which allows for the code to be formed as well as to break. The more the code is used, the greater the chance to break the code.

Privacy for your emails is the basis of encryption and companies employ those skilled in math, statistics, and linguistics help keep the important elements of your business for those in the business. In every takeover, the company who wants to win calls the project something secret or in a code to try to ensure laws are not broken and secrets not stolen.

Linking to dividend paying stocks, while at times it may seem you need to break the code of Wall Street, the language to success is easier than it seems. If you tend to stay away from the company with the breakthrough new method or device and stick to proven winners or companies already making profits, it becomes easier. If you invest in profitable companies which pay a dividend, the choices become easier and more profitable for you.

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

Browsing through the library this book caught my attention with its character on the front of an “mad scientist look”. The book reviews advertisements which appeared in the United States in the 1880’s. As one can imagine the consumer protection laws were very thin and promising the moon and delivering the pebble at your foot was common practice. The book was put together by Dick Sutphen and is called The Mad Old Ads published by McGraw Hill Book Company, NY, 1966. One of the lessons that can be gained is quacks and imposters were hard to tell from the real thing. One has to remember the population was more rural than urban; the medical profession was still giving out opium and everyone was looking for a cure for their illness. There were no perfect answers and all kinds of devices were offered which could help. Some seem to do more harm than good, but they might help in individual circumstances.

This was also the time of the transition to electricity for everyone, which meant people were selling devices which ran on electricity as a great thing. One would think some people were shocked when they used the devices.

Similar to today’s world, getting wealthy was important and there were many swindles and hoaxes advertised to help you depart from your cash.

Linking to dividend paying stocks, reading through the advertisements in some ways we have changed and in many ways we have new and improved advertisements to take your money from you. When you buy your investment, ideally the price goes up but no one really knows, what we do know is over time a profitable company will trade at a higher multiple of earnings and the price will go higher. Along the way it is very good to collect a toll for use of your money or a dividend.

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

You have lived another year and a very growing trend is many baby boomers or those that were born between 1948 and 1964 also lived another year. The reason to highlight this group is they are larger than previous generations and after the 1960s size of families began to fall. The baby boomers typically have 5 plus children in their family, while the generations afterwards had smaller families between 1 and 3. This generation caused increased number of schools, post secondary education, housing and list goes on. As the generation increases in age, with the leading edge beginning to retire, as time goes on they will age similar to everyone else. The demands on the health care system will be the greatest as the baby boomers live into their 80’s and 90’s. One stock that has been a great performer over the years and should benefit from this trend is Johnson and Johnson or J & J. In a recent article from John Heinzl, jheinzl@globeandmail.com titled J & J: A prescription for growing dividends, Mr. Heinzl explains why owning the stock is a wonderful thing.

It is a dividend machine – for 52 years it has increased its dividend, usually in April. Given a 47% payout of earnings, growing free cash, a triple A credit rating, the company is expected to continue with the increases.

Its total returns are impressive – the stock price has been climbing, if you owned the company and reinvested the dividends you would have earned 8.3% over the past 10 years. Low risk for you, relatively high returns.

It is diversified – there are 3 companies – pharmaceuticals (43% of sales in 2014); medical devices (37%) and consumer health products (20%). In addition more than half of its sales come from outside the US.

It has demographics on its side – see piece about the baby boomers aging.

It is growing – J & J constantly develops new products, since 2009 it launched 14 drugs that sold over $ 27 billion in sales. They have more drugs in the pipeline.

Its valuation is reasonable – the stock is trading at 16.4 times estimated earnings. The analysts on Wall Street are positive for 2015. The shares trade around $100 a share.

Linking to dividend paying stocks, J & J is one of those stocks many institutions own because it trades at $100 and it consistently provides a good return. For the past number of years with a low interest rate, getting a 8% return with limited risk has been a very good thing to earn. J & J is the type of company to own to hold for a long time, to take advantage of its financial results and to earn money with a lower risk return.

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

The economy has a segment in every newscast but the reality is many listeners do not know what the person has said. John Lanchester in the book How to Speak Money offers descriptions of many of the phrases you hear on the news. In theory with the internet, people can look the descriptions up; however most of us do not. We hear, we read and eventually get it; but if you do not read as much as you should. what to do? The book How to Speak Money is a dictionary of financial terms and if you regularly read or hear financial news you will catch on soon.

Linking to dividend paying stocks, since the 2008 bank crashes lead by mortgage back securities, there have been multiple terms to describe something regulators are trying to get the economy back to what was normal. It has been the financial markets even more interesting and ideally the world goes back to normal and the financial markets are boring once more. Boring or concentrating on profitable companies never needs to be boring, just profitable. Depending on what is hot or not, makes the selling of securities more interesting, but as a buyer you are more interested in making money yourself. Still to the profitable companies as they manage their way through the different aspects of the economy and let them do the heavy work. Your task is to celebrate their continuing market share and high margins through higher share prices and collecting dividends along the way.

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