Living in a North America, we have been very fortunate not to fight in a war on own soil, the situation is different in Europe where 2 world wars were fought. In each war, the place of battle and use of technology changed. Prior to the World Wars most wars were fought in the country, the change brought the war to the city. Within the cities, particularly wealthier ones is art. Some of the art was in private hands and others the art viewed by the public. If you grow up around it, you will begin to treasurer the art which is in your community either outside or in the galleries. The art in the public galleries is not for sale and is considered to be priceless by the community, what happens during war? In a book called The Rape of Europa by Lynn Nicholas published by Vintage Books, NY, 1995.

We each have a perspective of the Germany at the time of the Hitler and Nazi Party, but few books deal with their attitudes and actions towards art or at least expensive art. There were two aspects to their attitude – one Hitler wanted to established great buildings to showcase Germanic art and the development over the years; the second one concerned people they thought of less than them. They were opportunity seekers lead by Goering who first decorated his home in Carinhall and sold some to pay for the war efforts. The first group as shown by Mrs. Nicholas that researchers were sent to countries around Europe to identify which art was where and where it would go when it came back to Germany (after invasion).

The second group lead by Goering, as the Jewish population was put in ghettos, the homes which had art was taken, if it was valuable went through the process of Goering, second to German galleries and museums and then to storage areas. If the artist was Jewish it was labeled as decadent and generally went to storage. If it was expensive and owned by a Jewish family, then it was not decadent, but enriched the lives of Goering and museums.

The Germans used the same system in each country it invaded. First they sent in researchers to locate and catalogue the art, particularly if it was related to German roots. The country would invade and take the art (it was an interesting use of manpower or extreme confidence that people would not fight back or in the losses would not be great).

In each country which was invaded, people had to find ways to protect and hide the art till their country was free again.There are many wonderful stories of how people protected the art in the community.

After the war ended the operation to bring back the art to the owners has been a long one which was not the first priority of the victors. The victors first priority was to feed and cloth Europe. Art was a secondary concern, but to many countries represented different things to the people of the country and rallies for support could be done.

Linking to dividend paying stocks, the markets did not operate in wartime, which means it was very hard to sell, fortunately for many people in North America that is not our first concern. In time of war, having access to readily saleable items was important to flee and to start again. At the present time,  many stocks are listed on different exchanges and there is greater protection than in the past.

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

John Heinzl writing every Wednesday in the Globe and Mail about dividend stocks noted his investments did what they were expected to do and all is good. Mr. Heinzl predicted Johnson & Johnson or J&J and Proctor and Gamble (P&G) would raise their dividends in April. They both did. Reliable dividend growth is one very good reason to own these stocks and the premises profitable companies which increase their dividends is a very good way to increase your wealth with relatively low risk. Mr. Heinzl looks at what if you had bought $10,000 worth of shares in J&J 20 years ago?  Those shares would not pay you $1,875 a year in dividends; the value would have grown to $105,000 and you average return would be 12.5% a year.

J&J is in the health care field and with a rapidly aging baby boom, health care expenditures go up for we as humans need more health care at the beginning of our lives and the last 10 years of a mythical average person. In today’s low-interest environment averaging a 12.5% return on your investment with limited risk is a great return.

Linking to dividend paying stocks, there are multiple ways to invest, trying to lower the risk and maintain a healthy return is often a challenge which is made simpler investing in quality companies which are both profitable and have a history of raising their dividends over the years, J&J is a great example and there are other companies out there.

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

The NHL or the National Hockey League is in the playoff season which means exciting hockey for fans of the sport. In the Globe and Mail there was an article about the Winnipeg Jets titled Jets set the bar for small-market franchises. On the same day there was a picture of some of the fans who attended the game and it seemed everyone was wearing $ 100 Winnipeg Jets’ sweaters. In simpler terms the fans are very passionate about their team being in the playoffs. How well they will do is another issue, but how did they get there is today’s subject. The commissioner of the league Gary Bettman said there were 3 reasons why the Jets are very popular in the city.

1. Ownership – they have deep pockets as well as very committed and passionate about the game. The owners have done many things correct.

2. The arena is new with the bells and whistles in it as well as seemingly to be an intimate setting.

3. the NHL has a system of parity (revenue sharing) which allows all teams to be competitive and sustainable. Although big market teams can and often spend more money.

Linking to dividend paying stocks, the 3 above reasons can easily be translated to any sector of the economy. Ownership or management is a deciding factor in the success of an organization. The building or the equipment the people use or the technology the people use to deliver their goods and services has to be current. (there are very few organizations you deal with that do not have email). The third factor is the competitive environment, in the NHL they try to keep large areas as monopolies, although the competition is whatever else people do if they were not watching hockey. When you are evaluating your investments, if you are a sports fan bridge to investments.

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

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. While at Disney Mr. Eisner made great strides from bringing Disney back from the doldrums to creating wonderful animation to improving the theme parks to using video libraries to buying Cap Cities to gain ABC and ESPN and a multiple of things inbetween. The picture he paints is both Frank Wells and him were thinking about the long term of Disney and were very well rewarded with stock options that came in the money in the long term. On many different levels what happened at Disney was remarkable the pieces fell together and how much the goodwill the average person has to the Disney brand. Over the years, the management team tried to keep costs down and concentrate on the story for Disney is about storytelling. How well they do it over the multiple venues is a testament to the people who work there. The management team believed much of the work could be done in house as opposed to contract it out and the strong suit is the excellence of the brands and the exclusive content that Disney is in a position to provide.

Linking to dividend paying stocks, with a stock such as Disney the brand is great storytelling. If the storytelling quality goes down it is time to look at alternatives. The Disney company where there are multiple possible of cross selling and as long as it is done well, the experience will be terrific. One can imagine a cruise ship with a marvel comics theme or star wars or endless and execution within the creative design is easy to see if they are doing or it does not work. Disney has the potential to always be a work in progress linking the creative side to the financial side – as someone with goodwill to them, I want them to succeed, but every venture will not be storybook ending.

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

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