If you own shares in a company, invariably it will be involved with a takeover or sales campaign to tackle the competition. Ideally they are friendly, but some will turn unfriendly or there will be a war. Thankfully with trading in company stocks, bullets do not fly just money and if you put enough money on the table many people will take the money. For the unfriendly takeovers, there will be many strategies offered, and some will look and sound like war strategies. The files will be coded, the meeting places will be in places where hopefully few if any will recognize your face and you will be subject to takeover laws. In terms of studying war – there are a great many books written about military strategy and why some people won and others lost with what lessons are to be learned. For an introduction to the topic The Art of War – War and Military Thought, by Martin Van Creveld, Cassell & Co, London, UK, 2000 is a good book.

One of the oldest civilizations is the Chinese and they have may texts about warfare and one of the most popular was written by Sun Tzu. The Chinese used war as a last resort and would try other ways first. The best way to solve is use diplomacy or talk it out and come to an agreement. The second best is use of dirty tricks – kill the enemy commander or bribe his officers. The Chinese believed force was to use in limited conditions, when you are strong, pretend to be weak so as to tempt the enemy; when are you are weak, pretend to be strong so as to deter him. Use speed and secrecy to make out that are concentrating at one place, then attack at another place. If weaker than the enemy, avoid him, harass him and draw him into terrain that is unfavourable for him; if equal to him, wait patiently until he commits an error, as in chess. Confuse him and keep him ignorant of your designs by offering bit, mounting feints and/or spreading disinformation as appropriate. Finally when you have the enemy where you want him – or just when the enemy feels secure – fall on him like a thunderbolt.

Thus the strongest, most successful action is at the same time the most economic one. To achieve this ideal, two things are needed. The first is flexibility to take advantage of fleeting opportunities: said Sun Tzu ‘an army is like water which adapts itself to the configuration of the ground’. The second element is intelligence Sun Tzu distinguished between 5 types of spies – local spies, internal spies, turned spies, dead spies and living spies. Local are people who know the terrain, resources of the enemy. Internal are people who hold position inside the enemy’s focus. Turned spies are double agents. Dead spies sent out disinformation. Living are ones who go to the enemies side and comes back and delivers a report. It requires the wisdom of a sage when it comes to perceiving the truth. All the spies are grouped under the heading know them and know yourself.

Linking to dividend paying stocks, if you go into battle it is foolish to pick up your arms and rush out of the door. It is better to know your enemy or do homework or research them. Gain intelligence before you begin your move. With investing it is the same, doing nothing or sitting on cash can be a good strategy, before you do something. One method to protect yourself is buy stocks which pay a dividend or with give you income  while waiting and because the company is making money with have upside growth.

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

We all start with investing in our own country or region because we know the companies and want to gain a benefit from them or it is easier to watch them. How are they doing? who the people are? are they on the correct track to continually making a profit to pay the dividend? As we accumulate wealth, we look to companies in other countries, some will be very similar to each other for example G8 countries have similar rules and regulations. For countries that are blessed with mineral deposits but not a stable government or a government in flux, there is money to made with healthy profits. In countries such as those, security plays a role and as investors we do not often have to think about it. However there is an interesting book about the subject called Fortune’s Warriors by James R Davis, Douglas and McIntyre, Vancouver, 2000. The book is about Private Armies or Soldiers of Fortune or Military Advisors or Mercenaries and is a very good introduction to the field. Every country in the world has an military and with luck many will not have to use their weapons. However, there are countries where bullets fly on a consistent basis and those that retire – consult or continue in a private army using their skills at a higher pay and focusing on private property for example mines or tank farms. There are very good reasons to use private security in order to protect the assets of the company, other people with a different agenda often want to control the production of the mine to pay for other uses.

Linking to dividend paying stocks, one hopes the companies that consistently makes a profit uses the better of the companies involved. It is worth asking which type of security company, your company uses for some are publicly traded. The companies vary in what they do or what they do not do. It is one thing to do analysis to provide advice, set up the conditions to minimize security threats and another thing to kill people. Private security is a broad field with many different types of firms and characters involved, hopefully your company is using solid reputable firms and the cost remains a small one.

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

A couple of weeks ago, the book Fire on the Horizon, John Konrad and Tom Shroder, HarperCollins ,NY, 2011 was read and there was a connection to current events. Last week in the  Wall Street Journal, it was announced BP could be fined up to $ 18 billion for the 2010 Deepwater Horizon disaster. The book Fire on the Horizon is written with the people who did the drilling on the rig in mind. Their lives away from drilling, their training and how they ended up on the rig. Similar to all industries, because of the nature of them, the community tends to be close net. For example in the case of the rigs, most people tend to live within a day’s drive of Houston, because the company was not flying them anywhere in the US. The companies head office tends to be around Houston – that is where the companies which manage rigs are located. The book relays the people tried to do a good job, in the back of their minds delays cost millions of dollars, but success can mean billions for the company. There is always a balance between extreme safety, they are dealing with a very flammable material and  art of drilling which is backed by realms of data and experience.

Linking to dividend paying stocks, the Deep Water Horizon costs billions to clean up, but would have made BP even more billions of dollars had the well not exploded and the oil leaked into the Gulf of Mexico. At the time of drilling, BP was not expecting to send the oil to the mainland for the immediate future, but at the time of the blowout the company said it would pay for the clean up. Companies have a lag time between going to court and payment if found guilty. The President of BP has sold off divisions in order to place the money in a reserve fund until when the courts ruled their final verdict. As expected, as the dollar amount rises, all levels of appeal are used to extend the time between payment and guilty plea. It is also a risk management exercise in determining what the company feels is fair and what the courts rule. Companies unlike most individuals get sued on a regular basis, one expects lawsuits with every disaster, as long as the amount of the money does not cripple the company, it pays the fine and continues – hopefully with no disasters in the future.

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

In the US, Prohibition was on the books from 1920 to 1933, or it was illegal to drink liquor in the US. This had two effects – one society more or less decided law makers were wrong and wanted their liquor, which lead to smugglers getting wealthy. It also made liquor barons in countries outside the US because the profits were enormous and there was no Prohibition in their country. The society included the police and law enforcement who both took brides or just looked the other way for the salons to operate as they had before. The book Booze Boats and Billions – smuggling liquid gold by C. W. Hunt, McClelland & Stewart, Toronto, 1988, talks about the process and people involved in the operations focusing on Lake Ontario. However, all the Great Lakes were involved and the biggest importer was the group lead by Al Capone. In the western states – the booze came by truck; in the eastern states – the boat played a role. When the US government passed the legislation, distilleries expanded in Canada – Seagrams, Hiram Walker, Corby’s became some of the world’s largest distilleries in the world. The process was the customer was based in Cuba or Mexico (all three countries did not have a prohibition) and once the booze was picked up, there was plausible deniability of where the booze went. With the plausible deniability, it was legal therefore legitimate business.

Linking to dividend paying stocks, owning the distilleries at this time and well into the future was very good business to own. The markups were very large and that means profits were high. In 1929, a Seagram owned distillery was producing whisky at $10.50 a case and selling for $50 or a profit of 39.50 a case. The Al Capone organization was buying between 8,000 and 10,000 cases a month or Seagrams was making plus $300,000 a month. To run the business, all levels of government needed to overlook the law which most people believed was too harsh, but governments move slowly to change laws. For example until the late 1920’s the US Coast Guard had 10 slow ships to enforce the entire Great Lakes system. the In this example, what is a law abiding citizen to do? buying shares in the liquor companies means you must know the liquor ended up in the US, but it is legal in Canada or Cuba (rum distilleries). The profits are great and the government moves slowly to change a bad law. When the law changes the price of the middleman should drop and distillery can keep producing spirits, profits and dividends.

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

The Gestapo refers to the Nazi Party in Germany which had great plans for a 1000 year reign except for the leadership really never left its purpose and campaigning and running a government are different. The Gestapo – A History of Horrors by Jacques Delarue, Frontline Books, 2008 although the original version was published in French in 1962. The Gestapo were the troops dedicated to the Nazi Party ethnic cleansing and German Nordic ideal. It is estimated 10 million people died from their actions, plus the second Word War was needed to stop the ambition of the Party. They had expected to take over Europe with no consequences and all would be peaceful. In some countries the ability to take over power was easier than others and since the major powers essentially slapped their wrists, the party kept going.

There were many lessons from the Nazi and one of them is it is easier to takeover power than to retain it. In Germany, the Nazi party had made Hitler as the great leader, as the war was finishing there was a great power struggle to who should be the next leader. Another lesson is the top management structure of the Nazi Party, after the war was killed or in a few cases went into hiding which meant living similar to the opponents of the Nazi Party, there was poetic justice in it. Most leaders tend to want to live a long life, if you run the company or country where killing people is just another meeting, then your life will likely be short. If you want a long life – there are much better options.

Linking to dividend paying stocks, because no two people are alike there is a variety of management styles that are successful. If the company has a monopoly or monopoly like position, there will be all types of management styles. If the company has to protect its position in the marketplace by adding value to its products, then there are fewer management styles that will translate to actually ensuring value is added. Buyers of dividend paying stocks are looking to the long term and when management changes, people in the organization and those using the services of the company do not change very much. One method to doing research is to look who the seniors managers are for the past 5 years.

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

The Gestapo refers to the Nazi Party in Germany which had great plans for a 1000 year reign except for the leadership really never left its purpose and campaigning and running a government are different. The Gestapo – A History of Horrors by Jacques Delarue, Frontline Books, 2008 although the original version was published in French in 1962. It is often hard to read about a government who believes in purifying a race to the extent the Nazis did. A government that did not think about economics but stressing nationalism, patriotism, secrecy and was great on the propaganda fronts. Unfortunately, none of the above actually bring in revenues into the country but makes it go into debt. The government used massive amounts of slave labour, treasuries of other countries and eventually many of its citizens were killed in the war. The legacy leaves much to be desired.

There are some very good things the Nazis did, although most of them did not pass the test of time. The Gestapo function of the party was obsessed with controlling the police and military and thus the important posts were Interior Minister and Defence Minister. The Interior Minister emphasis was the police and information about everyone. The party had some of the best information access systems in the world, unfortunately it was used to spy on its own citizens. By controlling the police, meant the propaganda machine could be used to justify any action against somebody who did not agree with everything the Gestapo wanted to do. This meant legalized killing for the investigation would come to the proper conclusion. One has to remember, when the party was formed, part of its appeal was to street thugs who were brought into the Nazi government to continue doing the work of street thugs. Along the way if they stole, beat, controlled the black market  is was all in the name of the Nazi government.

This need to control the police and functions lead to something else the Nazi were very good at – when they moved beyond their borders to countries with “ethnic” Germans, the propaganda machine and how the police functioned were very carefully examined. The police were examined in terms of operations and people, so when the Germans occupied the lands the correct people could be put in or promoted to ensure a smooth transition to Nazi thinking. In some countries, the locals were much more accommodating to Nazi cleaning of anyone who did not agree with the party ideals. The non desired people were killed or used as slaves.

Linking to dividend paying stocks, a book such as the Gestapo has lessons about changes in leadership and how far one goes to ensure the directives of the existing leaders is carried out. In all companies, the President eventually will leave office and the new people will have to give loyalty to the new one. If the focus is on making money first, and other things well below the primary focus, shareholders will likely not interfere. If the focus shifts to pet projects of the President without making profits, shareholders will vote against the leadership.

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

At the beach before Labour day, the young children were building sand castles by the water’s edge and it was something people have been doing for generations. Many of the kids castles were simple in nature – use a bucket, fill it with sand and then use your imagination. On a different scale, there are very talented folks who build beautiful sand castles for competition and to attract the locals to a beach festival. If you ever are in the area, dropping in to see them is a worthwhile use of your time.

Going back to the kid’s creations, often with the help of a parent and you never know who is having the most fun. Sometimes the parents would display a perfect mound of sand then their child would quickly change the clean edges with the use of their shovels. Later the castles were built and the time is to leave, the waves will come and reclaim the castles. Castles built on sand do not have a strong foundation, either the next day or the next week, the waves will go on to the shore and the castles will disappear. Everyone building sand castles expect this to happen.

Linking to dividend paying stocks, when you examine your portfolio of investments what material are they built on? If you are a normal person, you first put money into stocks with companies you expected to go up 5 times their value and more, and that might have happened. Some people seemingly make money on lower priced stocks. Another method to make money is buying companies that pay a dividend and  are profitable. Those two elements allow for a strong foundation in the future and will make you money with limited risk taking. The companies stocks may go up and down, but they tend to go in the long run and along the way, because they are profitable they pay a dividend or income to you.

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

Labour Day tends to mean the end of summer as many schools are back in session, but it also tends to mean the growing season is beginning to wind down. Crops are still being harvested before the frost, but many should have been picked and sent to the local farmers markets or supermarkets for farm produce. In between all this is the fall fair, the big and splashy ones are in the large urban centres but the ones the author likes is relatively small town ones. The rides are better in the urban centers, but the food and artwork seem more desirable in smaller fairs. The portion size seems bigger, and the artwork because the fair is smaller and space for the artwork takes on greater significance – a whole building devoted to it, Also the young people showing their animals seem to represent any young farmer. The bigger fairs, people selling stuff which only is bought at these types of fairs is more prevalent. Whether you like the smaller fairs or large ones, it is hoped you attend or try to attend at least one or try to attend every other year.

Linking to dividend paying stocks, whatever fair you attended to, likely it has the annual one and the number keeps getting larger. Whether it is the world’s best or the best in the area, as long as you are there it had to be good. Similar to dividend paying stocks, some of the best profitable companies raise their dividends every year which makes the price of the stock higher or more valuable. Keeping it basic – invest in profitable companies paying a dividend allows you to look forward to next year’s fall fair.

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

In many libraries there are two sections of DVDs – the fiction or Hollywood type movies and the nonfiction or more educational video. Most people go to the fiction but every once in a while, try the nonfiction side. One video you may find is Fraud Squad which is one of those 10,000 channels on TV or you can go to their website http://www.fraudsquadtv.com and watch the shows online. In this case, Fraud Squad TV is the first season of the show or 13 episode TV series dealing with fraud. The headings are moving fraud, counterfeit money, charity fraud, travel fraud, home improvement fraud, identity theft, employment scam, pump and dump or investment fraud, car insurance fraud and others. The series gives you some ideas how the fraud works and measures to counteract the fraud, lessons everyone needs to learn. If you have a consumer fraud – the consumer protection act and letters to either VISA or Mastercard, will help you get your money back.

In terms of investment fraud, many appeal to high great consistent returns or earning money fast. The reality – it is very hard to earn great returns consistently unless there is something illegal going on – for example investing in the illegal drug trade. It is entirely possible to earn a good return consistently and every once in a while earn a great return, but generally that means somewhere along the line values had fallen. The last crisis was in 2008 where stock markets decreased in value. Now the global financial industry has stabilized, the markets have returned to where they were resulting in good returns if you bought after the markets went down you should had great returns, if you bought before and held, you should have returned to normal and made some money. If someone offers you consistent returns much higher than current interest rates, you have to wonder.

The other aspect of investment fraud tends to be the need to act now or lose the opportunity. If you have to act fast, do the opposite, the author belongs to a service club which meets every two weeks which means decisions only happen every two weeks or there is a process. For your investments try something similar in terms of process.

Linking to dividend paying stocks, at the moment because of low interest rates, one of the best investments with low risk has been dividend paying stocks. You can buy anytime and buying on a regular basis helps you (the author has a monthly plan) or  there is need to act as soon as possible. There are always opportunities in the marketplace, but if you make great money today but cannot sell, or when you can sell you lose money, those are opportunities to be passed by.  For a low risk and good return dividend stocks or investing in companies already earning profits is a good thing to do.

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