The Devil’s Broker is an interesting book about John Hawkwood who was the most wily, reliable and successful mercenary leader in 14th century Italy. The book was written by Frances S Saunders, Faber and Faber Ltd, London 2004 and tells the interesting story about Italy and Mr. Hawkwood. To start with Mr. Hawkwood, in centuries gone, kings lead their troops into another land and to the victor was the spoils. The King took leadership of the land, collected the future taxes and emptied the country’s treasury to pay for the war he just fought. The army that was with him would loot the country and take the valuables and occasionally other lords to ransom them off. Mr. Hawkwood fought with the King and saw the riches that were offered to the victors, what happens in peace? Fortunately, there is always a war somewhere so Mr. Hawkwood joined a group of mercenaries to plunder and take valuables and eventually became one of the leaders. After scoring big in France his travels took him to Italy.

Italy in the 14th century was not a unified country, it consisted on parts ruled by cities, part ruled by counties and the papal states. The papal states is what makes Italy different than other countries. In most countries, the church sets up a building or varying sizes and descriptions and then the leaders are interested in saving the souls of the population. In Italy, they were also interested in being a government which depending on the Pope at the time, would see an idealized government or an expansionist government. At the turn of the 14th century, the French King had essentially moved the centre of the Catholic Church from to Rome to Avignon, while Italy was in turmoil or not united. Eventually, the Pope decided to go back to Rome but to do so he would need to defeat the rulers of the city states for some had ambition to rule over the country. In steps a man such as Mr. Hawkwood who works both sides of the street because he is a mercenary, how he does it is part of the book. The thing to remember is mercenaries  work for the highest bidder and whoever pays them cash. The city states needed to be defended, rather than having a standing army the city states paid the mercenaries to defend them. In this strategy, most of the locals would not be killed when fighting happens or the locals would be defending the city behind the walls of the city.

In the stock market, there are mercenaries today which are the companies either trying to break successful companies up to realize higher shareholder values or tear companies down because the financial books are suspect. Many companies just need to continue to do what they do well and not worry because monopoly or oligopolies protect them. The monopolies can be barriers to entry, legislation, the accepted rule in the country, but something that protects them. To go after shareholder value means to break the monopoly which would destroy the company. Other companies are fair game in the name of shareholder value. Mercenaries have a role in the market and it is one more thing management has to have a position on. Generally as long as the company is making money and paying dividends, the shareholders are going to loyal. Change the formula and mercenaries are welcomed into the company.

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

Baseball recently had their all stars and you may have been reading about the US economic recovery, so how are the biggest dividend payers doing? If you had owned the 20 leading stocks over a 20 year period the average return would be 10.4%, for a low risk type of holding.

The stocks were put together by Craig McGee a senior institutional account manager at Morningside Research Inc. and his process was

to use Morningside US Equity data base for the 20 stocks with the highest value of expected total dividend to be paid in the next 4 quarters. Also included was

expected year-over-year dividend growth must be positive

each sector was limited to no more than two stocks (to have a very diversified portfolio)

Mr. McGee went back to 1993 and when a company did not meet the criteria it was changed to end up with a list of below

Rank   Company         Expected        Year-Over-Year Expected             Year-to-Date

–           –                 Yield %          Dividend Growth %        Total Return %

1.  Exxon Mobil            2.67                           9.52                                        3.62

2.  Apple Inc                  1.98                          5.79                                        19.31

3. AT&T Inc                   5.12                          1.66                                           6.14

4. Microsoft                    2.50                            4.67                                        21.33

5.. Verizon Comm            4.16                         0.71                                           6.98

6.. GE                              3.38                          3.53                                          -5.60

7.. Chevron                      3.23                         7.0                                             7.80

8.. Johnson & Johnson    2.73                         4.48                                         13.36

9.  Wells Fargo                 2.73                        12.00                                         14.54

10. P&G                            3.21                         6.98                                           0.71

The other companies included were Pfizer, Wal-Mart, JP Morgan Chase, McDonald’s, Home Depot, UPS, Duke Energy, The Southern, Dow Chemical and duPont

The important aspect is these companies have proven to be shown as long term holdings for any portfolio with limited risk and desire a good return. Owning them or a combination in the bulk of your stock holdings will increase your wealth over the long term.

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

For most criminal cases, they only effect the criminal and those affected by the crime. The crime is localized but every once in a while a trial and conviction become a symbol of something greater purpose. When it becomes a symbol, those on both sides with little direct involvement make the case much more complex than it normally would be. It is possible to site various cases some even affect politics at the Presidential level. In The Case of Valentine Shortis  by Martin Friedland, University of Toronto Press, 1986 – he shot three people – two died and one was badly injured. His claim was he was insane for a normally sane person does not shoot and kill people. In the jurisdiction that the event took place, the normal result of a person shooting another and found guilty was to be hung till the death. In this case, that is what the public was expecting, but other factors began to play a role. The case happened in Montreal and the representatives of the Crown had a more than active interest;Mr. Shortis was catholic in a province with a divide between protestant and catholic; Mr. Shortis family was wealthy to ensure a much more spirited defence including the leading doctors for treating insane people testified in the case. If you add all the above plus the institutions of church, newspapers and recent past history of hangings the story becomes national in scope. For the topping on the cake add in a the unpredictable layer of government leaders looking for votes or trying to take votes away from the other side and a straight forward issue is anything but a straight forward case.

Linking to dividend paying stocks, most of the time companies play by the rules and their lawsuits, which all companies are involved with, stay local. But every once in a while companies are faced with a bigger story, it becomes a national story. A national story means all sorts of interests line up for and against the company, most having no direct connection to the case. Often times companies become inward and try to ride out the story. As most companies will attest to later, the story really never goes away, but being prepared and trying to anticipate events is something all companies need to do. Not being prepared means the damage to the stock will be lengthy. This is why some will tell you when there is a national story, try to sell some of your holdings and buy back later – it tends to be a more profitable action.

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

The book Pride Before the Fall written by John Heilemann, HarperCollins Publishers, NY, 2001 is about the Microsoft trial. A company the size and profitability of Microsoft has lots of lawsuits, but invariably as Microsoft dominated the software industry there would be those that wanted Microsoft to have less power. Microsoft lead by Bill Gates figured out the software was the place a company wanted to be and with the leading company of the day – IBM agreed to allow Microsoft to supply the software for their machines. As IBM was the leading company of the day, corporate America embraced IBM and with them, Microsoft and they were on their way to influence. As time shifted from large machines to desktop then to laptops now Smartphones and all sorts of combinations Microsoft has been a market leader. They rarely start a market, but quickly lead how to monetize and become a leader in the field. As Microsoft grew, when the next big thing was access to the internet and which browser would you want? Netscape was the first company to have a browser, and by all accounts Microsoft threw its weight around and eventually was told about it in court. The book is about the trial, the attitude Microsoft took into the trail is very common. The company has been very successful, they employed many smart people and the culture of the company showed that, in the case of the trial, their attitude toward the government was they were not as smart as us, otherwise they would be in private industry. People forgot the government employs good people who have long timelines, in private industry the timelines are get in done and move on to the next task. The government can look, listen, and wait until all the stars align for the people not working for Microsoft will release information which leads to Microsoft bending the law. Most large companies stay large because they go after the smaller companies to maintain and slightly grow their market share. To maintain and grow, because large companies have resources to allocate to projects, they can and do outspend the competition – 98% of the time it works.

Linking to dividend paying stocks, the book while about Microsoft goes on about the length of time and energy the senior people in the company devote to the trial. When the government comes knocking, priorities change. Within the trial and lead up to it, most of the time, the government wants a politically correct solution. The government does not want the company to be out of business, unless they are rotten to the core, but it does want something. The trick is to find what is acceptable and give it to them early without admitting error. Whether that something is money, some scapegoats or people (that usually leave with their pockets lined) or a form of reorganization it is important to find out what that is and do it sooner than later. Trials take a great deal of effort and resources and often times it is better to exit the stock during the trial, wait till the trial is over and buyback the stock. Attitude plays a great deal, in the book Microsoft’s pride was the reason they lost, although for many months they could not see the other side point of view, they felt they were correct and everyone else was wrong, it had worked before.

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

The travels in the past week took me to a lake which had cool breezes to offset the hot sunshine and some young people in canoes were seen. Paddling a canoe is not a hard thing, but it does take practice and people of all ages can easily paddle a canoe. In the example at the lake, the course was to go to the buoys, go out into the bay, and come back for their first trip paddling a canoe. As everyone knows the easiest method to get to the buoy is a straight line, the young people being overly ambition must have seen something very important on the other side of the inlet for most of their canoes went in that direction even though their instructor was encouraging them to aim for the buoy. It took time, some frustration (some people rather than turn just sat and look at whatever was most interesting on the side of the inlet), some education about paddling a canoe and eventually the two people in the canoe worked together to get to the buoy and on to the lake.

Linking to dividend paying stocks, the ability to canoe is available to almost ages, but the ability to travel in a canoe takes some discipline. The bay on that warm day was smooth, which should have made in even easier for the young people. It is was okay they made mistakes, their travel distance was short, perhaps later this summer they will be doing an overnight canoe trip. Similarly investing is open to all ages, it does take some discipline to do. To minimize the mistakes, start with stocks that make money and pay a dividend. In this fashion as you learn, you are earning money and learning the patience of investing. After you have learned about investing then you may want to try the rapids, but it is safer and easier to stick with what you have learned. Overtime profitable companies are good investments and as long as they pay a dividend, you can spend more time on the lake canoeing.

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

The shooting down of the Malaysia Airlines was a terrible in many regards, particularly for the people. When a plane goes down it is easy to see how the world is connected as there were people from and had relationships to many countries around the world. The world should react and punish whoever gave orders to shoot the plane down – for there was a chain of command, it would be very hard to believe in someone making the decision to shoot on their accord. The airline business is a tough business to make money and Malaysia Airlines is no exception to the fierceness of the marketplace. The airline was bleeding red ink as people have been going to the super discount airlines. As a partially government owned airline, the government has the dual role of running an airline and ensuring people remain at their jobs and services to the airlines continue. Many government airlines find it very hard to balance, but they still want to ensure the airline runs smoothly. It is suspected in order to stay in business, the airline needs to restructure.

Linking to dividend stocks, the airline has not paid a dividend in years but when something bad happens opportunity can rise up. There is the opportunity to buy shares if desired, generally companies stock prices will bounce back to where they started. In terms of investing, in times of disasters, think of the humans first. Then think what is the opportunity and is it worth it as the price of the shares react to the disaster – usually they will have fallen. How was the bounce the previous time? is management handling the pressures? what is the outlook for the company? all questions that need to be asked before deciding to take a well educated investment. By not asking you are gambling and the rule of gambling is know when to hold and when to fold, or you still need to ask questions.

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

Ralph Nader is an interesting person – from his early days crusading against GM for safer automobiles to running for President to being a good person trying to make the system better, for he sees many areas of improvements. Mr. Nader has written many books and when a person wishes to run for President, often times they sign a book deal, which helps finance the campaign. The biggest supporters buy books and give them away, hopefully they are signed for a small contribution to the campaign. Mr. Nader never did that as a Presidential candidate – his books are more thoughtful including the 17 Traditions, Harper Collins, 2007. The traditions are the ones that make any family successful – the traditions are listening, the family table, health, history, scarcity, sibling equality, education and argument, discipline, simple enjoyments, reciprocity, independent thinking, charity, work, business, patriotism, solitude and civics. For each of the 17 Mr. Nader describes his family and particularly his parents directions and how each of the above fit into the traditions.

Linking to dividend paying stocks, the traditions of meeting customer demand and staying in business for a long time are wonderful traditions. Similar to the 17 family traditions of Mr. Nader, it is to be expected not everything went well all the time. Each family has setbacks, challenges but manage to keep the right attitude and continue. From an investor point of view, one can understand the setbacks, but as long as the company is profitable and pays the dividend, it is someone else’s problem. The 17 traditions that Mr. Nader lists are excellent traditions for everyone to have and bring to the workforce which would make the world a better place.

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

If you like running, the book 4:09:43 Boston 2013 through the Eyes of the Runners by Hal Higdon, Human Kinetics, Champaign, Illinois, 2014 is a terrific book. The book focuses on the Boston Marathon race and the people who come from around the world to run it. If you are a marathon runner the biggest and most famous race is from Hopkinton to Boston, Mass or the Boston Marathon. It is run the third Monday in April and to run you had to qualify at other marathons. For most of the 23,000 runners, winning the race was not something to be considered but finishing the race is the victory. For the Boston race is more than a Marathon, as the book discusses the day is called Patriot’s Day and the race is packed with spectators. Most races have friends and family at the end of the race, Boston has spectators for all of its 26.2 miles. People gather for BBQs, to cheer, to be the added value in the race, they are part of what makes Boston special. The book uses a variety of people’s perspective on running the race, including the logistics of it as running is seemingly an individual pursuit, but there is a great deal of community and support involved through running.

Linking to dividend paying stocks, while there are many marathons to run in, there are only a few great marathons and the granddaddy of them is Boston. The tradition, the need to qualify to run the race, the spectators that line the course, all lead to the Boston race as something greater than just a race. Similarly there is many, many investments to choice from but from the many are stocks that pay a dividend seem to last for a long time. There is tradition of paying the dividend, from being a profitable company, from the shares to increase in value over time. The race from the company’s perspective is a marathon for every company goes through management changes, trying to execute their strategic plan, and do good by their customers. From an investor point of view, the long term perspective means the dividend payments should be continually paid and shareholders benefit.

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

Clockers is a term for street drug dealers who are on 24 hours a day to supply the people who buy some drugs for a hit or two. The term came from a book by Richard Price called Clockers, Picador Publishing, NY, 1992. In 1995 this best selling book was turned into a movie directed by Spike Lee. When a person is a clocker they are very close to the bottom of the food chain of drug distribution, however they will likely earn more money than someone working in many 9 to 5 jobs. In between earning more money, there is the cycle of police and violence associated with the job. Drugs are still illegal and the police have to enforce the law; knowing when one person is removed others will take their place for the money for consumer goods is a heavy draw to the job. In the book the Clockers which takes place in a fictional job in New Jersey, but one does not have to look hard in the closest city you live in or near to see representative buildings. The people see the lifestyle and focus on the consumer lifestyle, not what they will be doing in 30 years time. Everyone thinks they will be the exception, including one of the leading characters who tells people to save some of their money – included in their accounts should be an account for bail money. In addition owning rental real estate would be a good idea, but somehow the character never gets around to doing it, for they want even more cash for consumer goods and living below the radar, but the police have them on their lists of the known suspects.

Linking to dividend paying stocks, unlike the clockers who live day to day and expect their life to include high consumer spending, jail time, and hanging around. investors in dividend paying stocks expect to live into the future. Whether that is 5 years away or 30 years, the consistent dividends will make financial lives easier and your overall wealth to increase with no jail time. If you expect to live well into retirement, then dividend paying stocks are for you.

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