Whenever an event happens there are a multiple methods to look at what has happened. On the news the human side or the human story is the first story and it should be for news involves people. After the people side is the corporate effect, did a company benefit or not benefit from the news. After becomes the analysis side from engineers, disaster recovery people and all the other people involved. The book A Hole in the Bottom of the Sea by Joel Achenbach, Simon & Schuster, NY, 2011 is the engineers side of the story of the BP Oil Gusher in the Gulf Coast. There were many things to learn, some of the lessons were very expensive, but lessons to be learned.  Some of the lessons to be learned are Take care of the little things. Pay attention to the stuff that does not quite make sense. Do not ignore those anomalies and hope they will go away of their own volition. Respect the rules. Follow proper procedures. Do not ignore low probability, high consequence scenarios. Hope for the best, but plan for the worst.

The BP Oil Gusher story is interesting of many levels including why it is almost impossible to keep things secret anymore. Many of us tend to believe government because they generally have our best interests at hand, although similar to any organization downplaying what is going on is usually done, which means we are healthy sceptics. In the case of BP, there were people with access to NASA images and monitor oil spills. For the rest of us, that is good because as much as owning oil stocks are good, in the back of your mind we know no company is perfect. What we expect is every year they do better at their jobs. People outside of the oil industry help monitor the oil industry is a good thing. The story is interesting because as much as undersea drilling is a technical marvel, when something goes wrong, no one really knew how to fix it. The systems were designed, the policies were designed to have fail safe and backup fail safe but they did not work. The proposals which were offered ranged from outrageous to redrill, all of which took time. And the clock is ticking and no one really knows, but everyday someone else was thinking about another method the environment we live in is connected and the oil needed to be stopped sooner than later.

Linking to dividend paying stocks, BP earned and has earned billions of dollars for its shareholders, at the time of the oil spill, the stock price (rightfully) went down and the cost of the clean up kept rising. The pressures on everyone in the system were great and the well was eventually drilled to stop the oil from leaking into the Gulf. It has taken BP a number of years to return to  a stabilized dividend paying company, including selling of some of its assets. When big events happen, as a shareholder, you loyalty can remain to the company but lower your stock holdings for a period of months. You can buy back at lower prices. Big negative events means a time of exit, sooner than later, but the underlying reason for the company to exist means you can repurchase in the months to come and then continue to earn dividends.

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

Every industrial city has a Frederick Street, if we look back to the industrial age there was a transition from a economy based on agriculture to one on manufacturing and the most exciting aspect was a steel mill. The steel allowed for rails to be made for the railway, steel for automobiles and buildings. It was an era which is celebrated in the accomplishments of industry. The down side of the era was for a long time, the pollution or excess materials which accompanies the industrialization was considered a by product of the great age. If the smokestack is pumping out smoke, jobs are being created and that is a good thing. As the economy goes up and down, in many areas of the country that is still a good thing. If the economy has moved to a more service based, that attitude has changed. In the book Frederick Street, Life and Death on Canada’s Love Canal by Maude Barlow and Elizabeth May, HarperCollins, Toronto, 2000.  The book outlines the steel industry in Sydney, Nova Scotia and for a long time – given the area was very dependent on the steel mill, what the steel mill did or did not do was accepted by most people. The by-products that was dumped into ponds, hopefully the oceans would clean it (it does not), and the air pollution caused those living closest to the plant to have high cancer rates and lower life expectancy than those living further from the plant. The big issue is who should clean up the pollution, given the large expense and cleaning up the pollution does not necessarily make money for the steel mill. It can create spinoff jobs, it can create better living conditions, longer lives but it does not directly make money for the mill and the mill was never very profitable anyways.

The mill was located where it was because of the abundance of raw material (inexpensive to transport) to make the steel in the first place. The authors detail the number of grants from the government to assist in the operations, which should mean the government is partly responsible for the clean up. However, if you think about 25 to 50 years ago, many people did not know the affects of chemicals or if they did know they did not know how to clean it up. Solutions of leave it alone but do not add more and bury it (out of sight, out of mind); dig the mess up and treat it somewhere else (someone else’s problem) or burn it (however that has it is own problems – dispersing the material over a wider area is not the best solution). Just a few years ago and years for waiting for the steel plant to close and the senior levels of government disagreeing on who should pay and how much? what should be the cap? in the end it was a 50 – 50 ratio. A cement like material was poured into the ponds to thicken it. Then a tarp over the harder material, dirt was put on top and now the old ponds are a green space for the community to enjoy.

A lesson to be learned is while everyone in government will say there should be something done, actually getting it done is a huge task. An interesting story was in one of the homes, stuff was coming through the basement. To clean it up, the building people asked the government what precautions would they need to do the work, the government supplied the answer. It was interesting, those in charge of compensation allowed people to live in the homes, but contractors needed high protection to do the work. Insurance whether it is government or private never want to set a precedent or offer higher claims.

Linking to dividend paying stocks, often times because of their history, dividend paying stocks are involved with pollution and what should you do? When politicians talk jobs, jobs and jobs, that does not mean pollution and its effects are at the highest priority levels. However many of workers are now in service sector which means they do not see the pollution aspects just the wage aspect of jobs, jobs, jobs. For companies there is a balancing act to be a good citizen for their employees and shareholders live in the community and making money for their employees and shareholders. Every year there seems inventions of how to minimize pollution and that is a good thing. The issue often is money – there never seems enough for the company to pay and if you can not pay, sending the issue through the courts will help delay things for someone else to make the final decision.

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

Sir Arthur Conan Doyle is known around the world as the creator of the fictional character Sherlock Holmes – one of the best detectives in the world. Mr. Holmes through wit and observation would see what others missed. He uses deductive reasoning which is combined with forensic science to solve the problems. The reasoning is the interesting part because he reasons if x is observed, then likely y is true because to observe x something must have happened. All people do reasoning, most of us are not at Sherlock’s level nor do we care to be. However we all do reasoning on a regular basis whether it is on family members or people we meet on a semi regular basis. In the book The True Crime Files of Sir Arthur Conan Doyle, edited by Stephen Hines, Berkley Prime Crime, NY, 2001- the author must have been sent hundreds of true crime files and ask for his advice, he reacted to a couple of files. Why only a couple, we do not know, but two in particular were reacted to. The method was to write articles in the newspaper for the newspaper of the day were similar to the function of the internet today. People read the papers and sent letters to the editor offering their views of what is happening or if there is a miscarriage of justice.

Linking to dividend paying stocks, each of us focuses on a different facet of the economy, there is no right and wrong part. After we achieve the level where we have savings, then investments come. It easier if you stick closer to the area in which you make a living or are passionate about because there is where you will tend to spend more time learning. Investing is taking what you know and seeing it in the marketplace – does it make money? if I invested would I make money? what is reasonable in the sectors that I am interested in relative to the overall markets. Just the knowledge of the sector you are involved with will allow you to make deductive reasoning. The homework is the forensic science aspect – using balance sheets and income statements. To make it easier to narrow the field start with the companies making profits and returning dividends to the shareholders. When the market goes down, the dividends still are deposited to your account. When the market rises, the profits the company makes allows for the price to continue to rise. In investing there is many choices, keeping and growing your money is the best choice and until interest rates rise, dividend stocks have been a great vehicle for your investments.

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

We all approach intersections differently, yet we all know the rules or we could not pass the drivers licence test. To turn left is the biggest challenge people tend to face particularly if it is a busy intersection. Some people will confidently approach the intersection, bide their time and make the turn as it was a normal part of driving. Others will approach the intersection and only want to turn on the green light if the way is absolutely clear – which is near impossible because it is a busy intersection. Others behind them will become frustrated as noted by their reaction after they turn – they step on the gas to make up for lost time. In addition to the vehicles, the other players on the road are people and bicycles and each of them at times make up their own rules. The cyclists using the pedestrian crossings, the people walking not following their rules. Together it can be a complex problem to solve, although it sounds simple.

Linking to dividend paying stocks, there are similar characteristics to investing as driving. Some are too confident, the market will teach you humility. Some are too cautious, although that can be a good strategy. As many times of drivers, there are investors and as long as the drivers end up home safely that is what is important. One method to get the best of both worlds is buying profitable stocks that pay a dividend. For the cautious, the dividend and on going profitability are the keys. For the too confident check out the ten year records of many mutual dividend funds – they tend to be higher than great performing funds one year ( then is when people should have sold) which lose money the second year (this is when many people sell), your average return was lower than the dividend fund.

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

Last week it was reported by Reuters that Koninklijke Philips the Dutch conglomerate that started making light bulbs 123 years ago is splitting off its lighting business in a bold step to expand its higher margin health care and consumer divisions.

In many homes, the light bulbs have the Philips name on them, Chief Executive Frans van Houten said he appreciated the magnitude of the decision but the time is right to take the next strategic step for Philips. Mr. van Houten said “Great companies need to reinvent themselves and we can do that, we can stay relevant, we can grow and we can stay successful. It takes courage, but it is a path we have been preparing carefully.”

The move is designed to bring better returns for investors as the lighting division is either sold  off to investors or listed on the stock exchange. Philips has built and spin off other companies including ASML the chip maker, Polygram the music and film label.

Linking to dividend paying stocks, because we are people, we often get attached to the reason why we bought the shares. In Philips case, you might have started buying the light bulbs, researched the company and its share in lighting and then bought. It has evolved and it still a large company. If the lighting is separated from the other sections, the other sections because they make more money on each sale or higher margins, the stock should trade higher on higher multiples. It is important for companies to look at their history and prepare to sell the parts if that is desired by the board.

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

Those of who live in large cities are spoiled when it comes to making food choices, particularly if the city has many people from another the world living in it. The reason we are spoiled is food from around the world is not far from our doorstep, even though most of us will buy very similar types of food when we go shopping. An interesting statistic was 97% of the purchases at the supermarket are for 3 % of the items offered. When we begin to think about food – it is a very broad subject, but Reay Tannahill in Food In History, Stein & Day, NY, 1973 tried to paint us a picture and allow you to do more information if you desire. Some of the early observations are even if we can get food from around the world, most of us eat according to where we live or the norms of where we live. The food is easily available and relatively inexpensive. When people travel from one part of the world to the next, they bring their food habits with them and will try to obtain them or grow them where they are. It has been done for thousands of years and likely will for more years to come. Even though many over the years  could not tell you the Nutrition Facts, on the label of many foods we purchase today, they knew what foods kept one reasonably healthy. There has been for centuries a divide between what the rich and the poor eat, history is written by those focusing on the rich. The other aspect is you may have heard of the 100 mile diet, for the reasonably wealthy there has not been a 100 mile diet for centuries, remember North America was founded because the mark up on spices (pepper, cinnamon, ginger). In 1621 on 3000 tons of spices bought in the East Indies (Indonesia) for $227,000 by the time it reach Aleppo, Syria  – the buying center at the eastern end of the Mediterranean was now selling for $1,972,000 and still needed to be marked up at retail.

Linking to dividend paying stocks, everyday we must eat in order to stay alive. As many of live in urban areas, there are wonderful choices available to us. If you live close to a mall, the food court has an array of choices as well as in many neighbourhoods there is sufficient demand for restaurants of one country or another. The neighbourhoods are easily accessible for you to try and like the food. From the food you begin the journey to the culture and soon the world is your oyster. To continue to try the foods, it is good to have dividend payments from your investments – whether you reinvest or whether you try something new, it is always good when the income is put into your account. On top of that over time, the stocks will rise in value and you can visit the countries of the food you enjoy and have the best of all worlds.

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

In many newspapers over the years, ideas of how to live well without spending too much money were published, one such column was The American Frugal Housewife by Mrs. Lydia Child, Harper & Row Publishers, NY, 1972. Mrs. Child wrote in the 1830 to 1850’s and was a very popular column. The definition of frugal is not cheap, it means not to waste. Frugal means reusing fabrics for other things needed in the household and knowing which chemicals around the house can be used for more than one thing. This aspect of frugal means you need to understand which cleaning materials can do more than one job. If you think about your cleaning products in your home – can one solution do most of the work or do you have many? one for each specific use? i.e. a solution for windows, a solution for floors, a solution for bathroom? do you have any idea what the main component is except for the lemon or orange freshener like me? One of many ideas about furnishing a house is do not spend all your money at once. Nothing is cheap that we do not want. Buy merely enough to get along at first. It is only by experience that you can tell what will be the wants of your family. If you spend all your money at first, you will find you have purchased many things you do not want, and have no means left to get many things you do want. As riches increase, it is easy and pleasant to increase in hospitality and splendor; but it is always painful and inconvenient to decrease.

True economy is a careful treasurer in the service of benevolence; and where they are united respectability, prosperity and peace will follow.

In the 1800’s most people lived outside the big cities and grew vegetables, thus many of the pages deal with household chores, cooking and canning for the winter.

Linking to dividend paying stocks, it is easier to buy into a company making profits than may make a profit. For one those making a profit will tend to have higher multiples for the price of stock and if they are profitable they can pay a dividend to the shareholders. The lesson to learn from the Frugal Housewife is take your time, buy what you can afford without using margin, and add to your holdings in the future. Prices of stocks will move up and down or fluctuate, which ones go up and down we do not know until they already have moved. We do know profitable companies will tend to go up in the long run and with a dividend payment, when the shares go down, you are still receiving a return on your investments.

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

The book Spoils of War – The Human Cost of America’s Arms Trade by John Tirman, The Free Press, NY, 1997 while wrapped around the sales of helicopters to non US countries also explores the history of Middle East in terms of geopolitics. For many years, the influence of the French and British and the countries ensured the oil was pumped to their countries. The countries would back leaders who continued to assist them. After the second world war, the US begin to play a greater role in foreign affairs in particular its substance against communism or to stop Russia via the cold war. The Middle East because of its geographic location became much more important and Turkey, Iran and Iraq with borders and particularly Turkey controlling the entrance to the Black Sea (Russia’s southern Navy). The countries of US, Russia, UK, and France were less interested in the internal operations of a country and like most countries around the world there tends to be wide opinions between the best religion and which style of governance there should be. All countries in the world have a left (tilt towards communism) and a right (tilt towards capitalism) as solutions to solve the underlying problems of the people in the region. All countries tend to have a relatively small group having large land holdings (feudal society) and many people barely surviving. Within the mix is besides different types of religion – Christianity, Islam and others; all the different types of Islam and Christianity and all the different divisions do not necessarily always get along. The leaders play off the different types to stay in power. In the book, Turkey as a member of NATO, buys Black Hawk helicopters to attack the communists within its borders – both known and suspected sympathizer, also affected were Kurdish which the leaders of Turkey wanted to surpress.

Linking to dividend paying stocks, as a shareholder you favour capitalism and desire the goods and services your company produces is used by as many people to ensure the company continues to produce profits to the benefit of the shareholders. When you go beyond your country borders, there will be all sorts of agendas and old grievances in play. Ancient countries have great stories and terrible stories in their past, your product may or may not be in contact with the terrible stories but all political parties do some sort of propaganda to allow them the greatest support. Sometimes it gets carried away till politicians rely whatever system they pick has a need to balance the books. What seems simple looking in, is actually very complicated puzzle to keep power. Worry about your goods and services, not the internal workings of the country where your goods and services are sold.

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

When the book Spoils of War – The Human Cost of America’s Arms Trade by John Tirman, The Free Press, NY, 1997 was picked up my thinking was how diversification of buyers leads arms manufacturers to ethical decisions. Instead while there is some of the that in the book, the focus of the book is American Policy in the Middle East with a focus on Iran and Turkey and the manufacturing towns in the US where the arms are made. The arms trade were the biggest employers in Connecticut, the Fort Worth area of Texas and LA. The state of Connecticut at one time had over 200 arms company forming the bedrock of the manufacturing industry and employing thousands of workers. At the time of the revolutionary war – Colt, Winchester, Remington Arms, Smith & Weston and Sharps were based there. Later GE engines and the Sikorsky helicopters were based in Connecticut. The GE Engines powered many jet engines as well as helicopters which changed the manner in which warfare was and is conducted. The book focuses on Helicopters and pays homage to Sikorsky’s strengths as an engineer were the necessary attributes of persistence, discipline, and hard work. Plus he had a remarkable mysterious faculty or intuitive insight to leap forward the technology needed. If you know the Blackhawk Helicopter that is one of his inventions.

People generally know about the left wing policy think tanks, there are similar right wing think tanks. When the right wing think tanks offer ideas the military suppliers like, money flows into them. All American Presidents must decided what he wants in foreign policy buffered by the largest and most advanced military in the world. Do you build up the military with the idea the lesser countries will not attack a strong military country? do you cut back the military and have the money go into something else or do a tax cut? Time will tell for no one is really positive of the best answer.

Linking to dividend paying stocks, all profitable companies are drawn into policy think tanks – the senior management’s job is to consider 5 years and beyond and anything the government can do to help your business, is a good thing for your business. By helping the business there will be spin offs into the community and larger boundary defined governments. Jobs are important because in some communities the industries that are there, were there for a reason and if you live there you support your local industries. If a company manufacturers arms, and government policies change every few years so who you sold to was your friend and now is your enemy, it is your fault the arms are used for things that are considered unacceptable in your country? in the Middle East who the friends and enemies changed every 10 years, but to grow the business sales are needed beyond the domestic borders.

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