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

For a long time, women’s official role is the homemaker and bearer of children. In times before pensions, if you had no children you wondered who was going to look after you in your old age. It was easier if you children. The women’s role was to help the man for the man was the “bread winner” and protector of the family. Anyone who has lived in the rural areas knows there is plenty of hard work to do and occasionally “wolves” at the gate or in the yard. With all people, some men were better at it then women; some were worse than women. However the law and traditions dictate where women’s roles fit it. In a book about Women in Medieval Life by Margaret Wade LaBarge published by Hamish Hamlton, London, UK, 1986, the lives of women were a little more complex than being fair maidens waiting for their men to come back from battle. In a Disney movie called The Rookie staring Dennis Quaid, the main character had a promising baseball career, was injured and taught high school. As the coach of the baseball team 10 years retired, he was throwing the ball and begin to throw 97 mile fastballs. If you can throw that fast, you qualify for the majors. It is not suppose to happen, the main character was debating whether to try out for the majors or not; his wife played by Rachel Griffiths said, “I am from Texas, Texas women know how to handle themselves and the kids. You go, otherwise you will regret not doing it forever and I do not want to live that way. ” It is suspected many women in medieval times said something like that to their husbands. You go to battle, the King has called and I will look after things on the home front. Women in Medieval Life similar to today’s life have always played a greater role than the history books give them credit for.

Linking to dividend paying stocks, men tend to written history and most men concentrate on what interests them. If they were the scribes to the King then the King’s conquests were what is important. Often times we read or focus on things that interest us, but there are whole new worlds out there. Start with what you know, move to the reasons why the company made your lists in the first place. Whether it be long time payment of dividends; high margins of goods of sales; limited competition to ensure high profitability; are some of the examples. Your list will soon include other companies that you do not know. Buy positions and you will be pleasantly surprised at other areas of the economy as well as the things you tend to follow and know.

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

As I was driving the car, on the radio station was CBC Ideas and the person giving the talk was Dr. Atul Gawande from Havard School of Medicine (and a whole host of other things) at the BBC Reith Lecture on the Future of Medicine.  It was a wonderful talk and could help make medicine better, but this post will concentrate on one part of the lecture. Dr. Gawande talked about the time in life when doctors are not really positive what to do or the next step. The example was a patient who had experience cancer treatments successfully and after a few years the cancer came back. What should the medical profession do? There are two choices try something new or do nothing, but lower the pain levels. Dr. Gawande pondered the choices, the patient was a friend which made it harder and still did not know what to do. As a writer he did research asking people in the end of life medical care and eventually came to the solution.

All people have priorities in the their lives beside to live longer. What does the patient want?

The most reliable way to learn what the patient wants is ASK.

As a general rule, doctors are lousy at asking.  Doctors are wonderful at giving you data and talking 90% of the time. If you are going to ask the patient, talk 50%.

Four questions to ask the patient to truly understand their priorities.

1. What is your understanding of where you are?

2. What are your fears or worries?

3. What goals do your have?

4. What outcomes are unacceptable?

With those 4 questions, very simple ones, the person knows what you want and equally what you do not want. As conditions change the answers can be updated. However with the patient’s priorities known both the medical profession, family and caregivers can be satisfied with the outcomes as well as the next steps.

In the above example, the patient wanted to finish off her time at home, in hospice care as well as be able to finish her piano teaching, which was her second love, her husband being the first. This was done and the storybook ending happened.

Linking to dividend paying stocks, at this time of the year all companies update their know the client are those 4 questions answered in your statement? If they are that is great, but the ones that the writer has seen many of them could be done better.

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

Hurricanes are very interesting and even more interesting if you do not live within the hurricane belt. One of the greatest storms was Hurricane Sandy and in a book called Super Storm – 9 Days Inside Hurricane Sandy by Kathryn Miles, Dutton, NY, 2014 the author goes to the people who try to understand hurricanes and predict their outcomes. Up above the clouds the winds of the world generally flow in the same direction and follow a predictable pattern. The general shape of the land and the circular flow of the ocean currents allows for weather to be predictable. In the case of the path of Hurricane Sandy, the Gulf Stream which starts in the Caribbean moves up the US Southeast around the Outer Islands or Hatteras, North Carolina the stream bends toward Europe. If you were sailing, you could put your boat on the gulf stream and in 3 months circle the Atlantic Ocean with little effort. There is a similar stream in the south Atlantic and Pacific Ocean. Hurricanes tend to follow this pattern to.

In addition, up in the sky there are natural forces which tend to block the worst weather from the New York area, in the case of Hurricane Sandy the natural blockers moved which allowed Sandy to aim for New York. You can imagine, because of the size of Sandy and all the rules changing, everyone knew the affects were going to be bad, but no one expected it in their community. People relate to what they know or have been through, in the case of New York, their past experience was a smaller Hurricane which caused damage, the city was up and running within a week. On top of its winds, Sandy brought new concerns – storm surges – this type of Hurricane sucked the water up and  released it as the land became shallower, this cased the waves to that much larger. An interesting experiment is to hold up a glass of water; next hold up a pail of water; next a washing bin. Chances are lifting the washing bin was not done; it just shows the weight of water. Times that washing bin by what you can see when you are at the beach in the summer. Water in a storm surge causes a great deal of damage and very few things will stop the force of water coming from the sea.

Linking to dividend paying stocks, the above discussed exceptional circumstances, and when it happens there is not much to do but get out of the way. A whole bunch of things happened to create Hurricane Sandy and its path that do not normally happen; the risk managers will ask is this the new normal or once every 50 years? Unfortunately no one really knows because things happened that normally should not have. When investing, there will be exceptional events; however good companies’ prices rebound faster. While people talk about a flight to quality, the reality is most run to quality stocks when something goes bad. The time to run is when things are going okay or good. If you keep the bulk of your investments in quality stocks or profitable ones, over the long term you will have more money. If those profitable stocks pay a dividend, you have two simple methods for analysis – are they still profitable? can they still pay a dividend? If the answer is yes, then you can decided to do nothing or move to better quality stocks.

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

Many conversations for very good reasons involve the weather and no doubt one of the most used application on a smart phone is the weather and the long range forecast. Depending on where you live, a topic that draws attention is hurricanes. They are very interesting and even more interesting if you do not live within the hurricane belt. One of the greatest storms was Hurricane Sandy and in a book called Super Storm – 9 Days Inside Hurricane Sandy by Kathryn Miles, Dutton, NY, 2014 the author goes to the people who try to understand hurricanes and predict their outcomes. Hurricane Sandy broke all the rules and was the biggest Hurricane seen  it was so big anything in its path was going to be damaged. One of the reasons it became so big, weather patterns changed and the necessary warm and cold weather to feed the hurricane materialized allowing for the hurricane to get bigger. Being large it was slow moving which was great to be glued to the TV and watch it, but the damage it caused was considerable. The storm surges and the power of nature was something to behold; as you look to the sea be aware of the power of nature.

Linking to dividend paying stocks, to forecast hurricanes a great deal of information is gathered to be analyzed, it also take people to understand or have a gut feel for what is happening and if the hurricane is normal or a rule breaker. Similarly it choosing the best stock to pick, there is an increasing array of information to gather and analyze. This blog suggests the best method to make money is to try to make it simple and eliminate companies. For example, invest in profitable companies, which means you miss the unprofitable ones; invest in dividend paying stocks or you miss the non dividend paying stocks. By limiting yourself to profitable dividend paying stocks, you will have the greatest indicators of when to move your money – if they are not profitable or the dividend is being reduced. The overwhelming majority of companies will give plenty of hints along the way if operations are no longer profitable or if the dividend is to be cut. There is a great deal of information which can be analyzed, to make a decision try to keep the reasons as simple as possible.

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

If you watched the movie The Wolf of Wall Street with Leonardo DiCaprio  distributed by Paramount Studios in 2013, you will come away with a number of conclusions. One there is lots of money to be made on Wall Street and as long as you have few ethics, the more money can come into your pocket. In the movie, the greatest commissions were in the penny stocks or stocks trading for less than the price of hamburger. They are part of the system and it is entire possible for one or more to break out and make you money. The only thing you have to do is be able to sell. In the movie, the firm sold the penny stocks but clients rarely sold their positions for to sell the brokerage company has to buy back the shares. The brokerage company  really does not want to do that for the idea is to pick the trendy stocks; sell the position to clients with a heavy commission; and since the brokerage company makes the market as the price goes up and when there is sufficient demand, the brokerage company sells their shares. This results in the market for those particular share diminishing until it becomes trendy again.

The second aspect of the movie, is a great script will help the sell. Buying stocks has a trust implied with the company. You have ideas so you use the brokerage company to buy your ideas. For the company, they will suggest or offer opportunity to buy more from the company’s favoured stocks. The suggestions should be based on your client needs, but all clients want to get richer, some sooner than later. In reality, the ones who want to get richer later than sooner will do better, because they will buy better quality shares and wait. If you are waiting, it is great to have a dividend payment.

Linking to dividend paying stocks, most of us will need live the lifestyle of the Wolf of Wall Street, given the main characters were addicted to drugs, one might ask who wants that lifestyle? There are plenty of other methods to gain income which do not involve being drug addicted and have a longer lifespan with them. When you pick a portfolio of dividend paying stocks, you should have a longer term outlook and rely on history for Wall Street loves profitable stocks and clients love the dividends.

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