One of the most common methods to run a company is top down, it can work and for many organizations works well because there is a very defined result that needs to be done. For example, in a fire, senior people need to take control because of the dangers in fighting fires and the experience in fighting the fire and staying alive need to have a chain of command to ensure the fire is brought under control and then put out safely.  The military is also an organizations that needs a top down organization most of the time – when the troops go into battle discussions are not made by all, but through the chain of command. For many other organizations, they can adopt something in between most of the time. One of the problems of organizations that run from top down is they are highly dependent of the agility, the passion, the ability of the leaders. When the leader does not see anything beyond the way it has always been done, the organization suffers.

One of the books which tries to look at changing a top down organization is Cultural Intelligence and Leadership, Editor Karen Davis, Canadian Defence Academy Press, 2009. All military organizations love traditions including the method of decision making that has been passed down from past leaders. Those that wish to change often go to important but smaller military structures to learn the past is the best before coming back to the larger military structures to move up the chain of command. The problem is institutions and countries change quicker than the top down institution, for example in many cities in North America police were Irish, it was not that others could not be, it was it was so much easier if you were Irish to be a cop – having a relative made it easier to get into the force. A good police force reflects the population it serves, things move slowly.

In the book Cultural Intelligence and Leadership looks at least learning about the other cultures in the country and the world and try to determine which approach to use to better procedures of the military and sometimes that means not engaging in battle. Although one quickly learns there are always more than one agenda by groups of people, sometimes they work in together, sometimes they work to take apart.

Linking to dividend paying stocks, competing in the marketplace is easier for people to vote with their pocketbook than with guns. However, with cultural differences one needs to be able to determine how to get an entry to develop a continual market share. If your dividend paying company does not have cultural intelligence and leadership, it is missing a large portion of the market, just because it never had them in the first place. There is money to made in linking to all people not just the ones you have always appealed to.

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

During the summer many people have extra time and novels are read. sometimes they are adventure stories, sometimes romance, and sometimes there is a little of everything. The Rule of Four written by Ian Caldwell and Dustin Thomason, Dell, NY, 2005 is that sort of book. The setting is University of Princeton and a book brings the main characters together – Hypnerotomachia Poliphili, a Renaissance text that has battled scholars for centuries. The context of the book is the author wrote many clues or puzzles to solve the big mystery. In was generally assumed or expected there was treasure at the end of the book and the students and professors would profit by discovering the answer. Although the book was written in Italy, the students were in the US because the libraries in the US, particularly in the universities have some of the best libraries in the world or it can be done. The trick to all the puzzles is link back to the way the author thought and the references he knew. In 500 years, what is being referred to has changed over the years. To understand the answer meant research into what was thought back at the time of the writing. The Renaissance is a great place to have any story because at that period of time – the world’s greatest artists and thinkers were in Florence. They met, they shared ideas, new ways to see the world, to see where man fit in, and it was put down on paper which meant different perspectives were automatically noticed and changed those who could see. Eventually, people who could not see or did not want to see or wanted to go back in time to what they thought was a simpler time rose to power and soon the Renaissance would move from Florence. The book is about saving those books, paintings, music, etc from those who would destroy them.

Linking to dividend paying stocks, the research into finding the answers to the puzzles took weeks and months and years to nibble away and come with an answer. Eventually the answers seem to flow in days and weeks. Investing is sometimes like that, we all invest to make more money, which is a good thing. We buy a stock and it does something (goes up or down)  and we learn what risks we like, what we do not like, what makes money, what rarely makes money and what could make lots of money. It is process that everyone goes through and there is no wrong answer. In the author’s case the process led to dividend stocks which were doing better than the alternatives with less risk. The short answer is profitable companies make good investments – if you can receive a payment for owning them, a dividend, and when the market values companies at higher multiples for making money, profitable companies stocks move up. The big question is which companies will do the best? no one knows until the day is over, but a strong record of consistently earning profits to pay in dividends will have more ups than downs.

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

In the movies, the sniper has found the best location in the city or the country laid wait for a long time till the right moment to shoot the intended target. The bullet moves in slow motion and the affects are final. What is like to be the person that shoots the bullet, in the book Sniper Elite, Rob Maylor, St. Martin’s Press, NY, 2010 tells about his tales to be a Top Special Forces Marksman. Similarly to every craft in the world, there is a lots of training, the quote of it takes 10,000 hours of training to become an expert is very relevant in the book. The reason is in terms of being a sniper, Mr. Maylor believes 70% of the sniper trade is no more than basic infantry skills applied to a higher standard. The other 30% is what makes a good and great sniper. If you think about a sniper, after the first shot or two, people will determine approximately where the shot came from. Depending on the time they have, they will determine the exact spot, the sniper had to get in position, which means gone through the terrain and not be detected by the equally good people on the other side, stay in a position for a period of time, do the shooting allowing for the wind, sun, rain, whatever the weather conditions are and then leave the area safely to do the next task.

In the book, Mr. Maylor is very task oriented, the problem is ahead of you, the troops devise a strategy, either the strategy works or does not and return to base for the next task. Mr. Maylor outlines the steps to be a good sniper, but you need training to do them. The shooting and result are important but the steps up to get where you need to be and getting away safely are the key considerations, if you wish to live another day.

the steps are

Keep all movements slow, and always look before moving

Use the Shadows

Never Enter and Exit a hide by the same route

Use Natural Foliage

Only fire 1 to 2 shots from the same location – if possible move after 1st shot

Whenever possible have a deception plan – false hides, false trials, etc

Marksmanship principles

Eye on the crosshairs, target slightly blurred

Shoot past a solid object

Always have an escape route

Never sacrifice security

Linking to dividend paying stocks, the process of being a marksman is important here, the focus is taking your time, doing your research in advance, trying possibilities, do what you set out to and try not to lose money. If you were a carpenter doing home repairs, the most important thing is the set up, taking your time the board is correctly measured. In buying stocks, for the past number of years buying dividend stocks because of their capital appreciation (stocks price goes higher as the company makes more money or a higher multiple) and the continual dividend payment have made these stocks a very attractive place in the portfolio.

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

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