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

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 first group is the Huns led by Attila. The Huns and the fall of the Roman Empire are linked but so is Attila’s tactics as he is also called the Impaler. Attila instead of nailing people to the cross which the Romans did, he sharpen trees and the sharp end of the tree went through the person neck until either the birds had their share or they were taken down. The tactics lead to many stories and easier battles, give up or pay tribute (bribes) to stay alive. The Huns were originally from the Central Asia grasslands and were excellent horsemen. Observers noted they ate and slept on their horses. The advantage they had is endurance and the art of mounted archery. Another advantage over the Romans is the Huns horses feed themselves on the grasslands; when the Romans travelled they brought feed for their horses or needed larger supply lines. The Huns while generally living in smaller communities, all adult males bore arms, which made them a nation in arms. Attila worked with and against the Roman empire, as long as they paid their gold, he worked with them. When they could not the Huns attacked. Shortly after Attila died the Huns empire divided and moved in different directions.

Linking to dividend paying stocks, every organization has strengths and weaknesses and depending on circumstances can be good or bad. In the case of the Huns, they had strength in their agility but there was no staying power after Attila died. It is a credit to find a company which has continually made money and can pay dividends. There are many factors which compete against long standing companies, enjoy the benefits while they are still making profits.

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. The groups were the Nomads – who were mobile but equally important could retire or retreat to areas where others would not follow. The Huns and Mongols went to the grasslands of eastern Asia – lack of grain and very cold winters would stop people. The Arabs went into the desert (same problem) and the Vikings had superior ships.

Being a nomad was in fact being a warrior. To live on lands which do not produce an abundance of food and having to deal with the climate means the skills acquired just to live makes the person have the basis of being a warrior. Before the use of gun powder or guns, people depended on the bow and arrow and the sword. The nomads added the horse to the bow and arrow to make them a deadly combination. Another advantage was leadership in nomad society was based on skill and wisdom in warfare and hunting. It does not take long to determine if you have good knowledge – if you did you could rise up to leadership levels. The first order was to conquer your on lands before you conquer other parts of the world, which is the reason why until the Nomads left their lands, the writers in Europe did not pay a great deal of attention to them.

Linking to dividend paying stocks, we pay attention to those companies which are in our immediate horizon, if we recognize we are bias. Being bias can be a very good thing, you pay attention to those opportunities which are immediately around you and which are easy to follow. The easy to follow is the key, people are people and they all tend to do the same basic thing to earn an income. Some go into government and administration of the lands; some go into construction of buildings; some go into servicing of the others; and some go into the grey area of economy and will be known as the usual suspects to the law. Along the lines, we all want to live off more than we earn and have savings and thus investments. If you have investments as long as it is reasonably diversified and the country is stable, there are few reasons to look outwards. When you country is invaded, life changes and having ready cashable investments is a great thing. Investing is something in between and since we never know what is going to happen, being paid along the way – in dividends is always a good thing to have.

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

In the book Conspiracy of Fools written by Kurt Eichenwald published by Broadway Books, NY, 2005, the senior management of Enron changed the company from a gas distribution company to a trading company which tried to commoditize increasing parts of everyday life. Part of the reason was the senior management thought all business are similar. We have expertise in pipelines, what is the difference if we move into another commodity structure such as water. At Enron Water or Azurix they quickly found out – owning water infrastructure was not the same as owning pipelines. In England, what was thought as an easy return on investment, turned out to be less because the government changed the amount which rates could be raised. In Argentina where a system was bought, the former employees trashed the computer systems so no one would know who and what to bill. The former workers were government employees (will all the historical connections to that name) and it was very poorly told what would happen to their job and benefits.

In a Norm Brodsky article in the magazine Inc, he writes about looking at conditions and thinking they are similar conditions,but are they? They will be differences in economic and cultural conditions. What is the real competition? what price points do they offer compared to what you are thinking of? how does the local government embrace you or do they? are they willing to work with you or are you on your own? why can not someone else compete against you?

Linking to dividend paying stocks, while as consumers we want fair competition, as an investor you want the market tilted towards your investment. Why can the company continue to make money to be profitable and pay a dividend? It is not always an easy answer, but you need to know when the company thinks of horizontal expansion – what questions are they asking? is it really a similar business?

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

In the book Conspiracy of Fools written by Kurt Eichenwald published by Broadway Books, NY, 2005, the senior management of Enron changed the company from a gas distribution company to a trading company which tried to commoditize increasing parts of everyday life. In a trading company, people are paid to trade and used the firms capital and credit capacity. To gain an edge, an understanding of the regulations and where the regulations have a loop hole is important. Often times, regulators made the regulations but they left a tiny loophole which others see as being able to profit from. As private industry and the public complain about higher prices or no other option finding the loopholes is where the traders jump in. In Enron, they moved from gas distribution to many other industries – water distribution, electricity, broadband distribution, some had markets some did not. As a trader, you are looking for something to trade not to operate it. Enron people rarely said no to any ideas – it was to offer to the market to get the price of the stock higher so more credit could be used. In additionally, the CFO had an interest in using off balance sheet items which could take the bad stuff off the balance sheet for reporting time to be made good results and then put in back on to figure it out. The CFO and others would pay themselves large fees for their efforts – who were they working for themselves or the company? who knows? When was the CFO ever going to say no? If not him, who? When the CFO is more interested in the deal making than the nuts and bolts of operating a business, the wrong CFO is in the job. As Enron went down, the CFO was asked about outstanding debt – he said $34 billion, when asked about maturity scheduled, interest rate protection, daily cash flows, available cash – the answer was I have to get back to you or I do not know. The mundane things of keeping the business alive and knowing your cash flow is the job.

Linking to dividend paying stocks, the CFO is the one who pays the bills, they are where saying no to projects is important. At Enron, the wrong person was put in as CFO and predictable results happened. All companies have or should have more requests or ideas than money; similarly all companies should have more requests for donations than they have money. How does the company decided and when do they say no, is something the investor should get a feel for.

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

If you ask a small retailer what is the secret to their success invariably the answer is positive cash flow. The company earns enough to pay its bills and the expenses of running the company. No cash = no sale. It is relatively simple. In the Conspiracy of Fools written by Kurt Eichenwald published by Broadway Books, NY, 2005, the senior management of Enron forgot that simple lesson. Enron was a gas distribution company which became a trading vessel which tried to commoditize increasing parts of everyday life. The problem was the senior people focused on the trading, used of debt and the larger bonus – rather than the companies they bought operationally made money. When you focus on the trading, rather than the operations, the solution is to be creative to find a way to make it work. If you focus on operations you focus on simple stuff – who pays the bills? what is our cash flow? when do you say no to ideas. On reading the book, one is impressed with the creativity of the dealmakers – they were bright, eager, worked long hours but rarely were told no, only get it done and you will be rewarded come bonus time.. They were rewarded with the get in done theory, and as long as it did not break the law but was okay to be well into the grey area. Over the years the grey area of what is legal or proper and what is not, the grey area moved from white to black as enriching yourself before the company was foremost.

Linking to dividend paying stocks, Enron was a dividend payer through the years of pipelines, became a growth stock which exploded and the pipeline company was reborn and if you own stock in Kinder Morgan you have done well and continue to do so. With dividend stocks, boring, vanilla and making money are the keys. Creativity is wonderful but not too much which loses track of the reason for the company to stay profitable and turn out dividends.

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