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

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.