Bones is a TV show on the FOX network based on the Kathy Reichs books one is called Fatal Voyage, Scribner, 2001. Ms. Reichs is a forensic anthropologist and writer and is a writer with the show. The main character on Bones is Temperance Brennan who examines human bones to determine how they died. Then she works with a FBI agent ,who she finally married, and if you have ever watched the show the actors on screen chemistry works. Brennan works at the Jeffersonian and has the supporting cast of skilled people in the study of bugs, facial recognition and people trying to understand the why?

In every episode a body is found and the cast recreates the scene to understand what happened to the person, why they were found where they were and how did they die. It takes resources to do what they do (and on TV the cast has the best resources), it takes hours of study to find clues, in order to solve how the murder (usually) was done and who did it. If you have never watched the show, you will likely enjoy it. In the books, there are more people with their own agenda to throw a monkey wrench in the process.

Linking to dividend paying stocks, on shows similar to Bones, the process is the same, start with an idea and then research to find if the facts match your idea. There may be new information which leads you in a different direction. For example, the stock markets have reached new highs, which stocks should you buy? In investing the only known answer is the past, because no one knows which stocks will go higher, but many have ideas. A tried and true past performance is the companies that are profitable and one method to measure it is if they pay a dividend? In that fashion, the company has enough cash to both reinvest in the business and pay its investors. The total return of dividend stocks over the years has made them the less risky investment, with the higher return whether the market goes up or down.

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

There was an interesting article in one of newspapers concerning Alibaba, the Chinese e-commerce company which is soon to go public. The article was written by Nathan Vanderklippe title Goldman’s Alibaba regret, Globe and Mail July 5, 2014. It is expected the total value of the price of the shares will be the biggest initial public offering (IPO) in history. Alibaba will be worth north of $200 billion should the IPO goes as expected. There are many ways to play an IPO and one method is to look at which institutions who own the existing private shares – three of the existing companies are Fidelity Growth Partners Asia, Softbank and Yahoo. Softbank is a Japanese phone and internet giant. Softbank invested $20 million for a 34% share and the investment could be worth $ 60 to 70 billion. Yahoo holds 22% of the shares.

One would expect the shares of the companies will increase giving the value of holding of the stock. One company which held shares in the past and sold was Goldman Private Equity.Peter Lynch, a former Portfolio Management with Fidelity talked about investing in multiple companies to gain increases in stock price. At the time one of his favourites were the emerging cell phone companies of the world including in Mexico. The big investment houses are continually pitched and at the time nobody knows which one is the best company or which company will emerge to be a leader. When there is a rush into a space where there is great opportunity, there are many companies trying and few succeeding. In the article is was noted in the year 2000, there was about 2,000 companies with a similar model as Alibaba, which would company would you choose with limited resources? Goldman was receiving 500 business plans a week and had to narrow the field. Money is to be made, but equally lost. Goldman bought into Alibaba and when it sold was satisfied to make 7 times on its $ 2 million investment. In 2014 there would have been an opportunity to make 10.000 times its investment. Every fund has different time frames, and sometimes the desire is to get in and out, to move onto the next investment opportunity.

Linking to dividend paying companies, if you buy these types of companies, you will miss the generally miss the excitement of IPO, but most companies have investments in other companies which benefit them. It is very difficult to pick the one or two companies out of the 2,000 which at the time seem similar. As the company grows, different management styles are needed, can the company adapt? many different flowing parts are needed for the company to transform from a start up to more mature company. It is easier to invest in the mature company which has an existing profitable centre and its focus is to keep it. It is easier to investigate if the company is keeping it or not. IPO are exciting, brokerage companies need them to make money, but your concern is money going into your account and for most people the best choice is dividend paying companies.

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

The East India Men is the story of the multinational firm from the 1600’s to 1857, published by Time-Life, NY, 1980; the company operated out of England and started with involvement in the spice trade, evolved to trade with China and India. For many years the company controlled the state of India and the tea production from China for those in England love to drink tea; also the company was involved in the opium trade with China.

For a long time, the East India Company was the most profitable company in the world, however as time went on there were causes for the decline of the company in 1857. One aspect was the sailing fleet, the original plan was not to use capital to own the ships, they were contracted out. What was suppose to be a semi-open process for each ship, evolved to contracting out the same ships until the ship was put to rest. The process was called “hereditary bottom” and the syndicates became wealthy and continue to invest in each others ships. The ships decided the freight rates to charge and not surprisingly, the over charges were expensive to the East India Company. The company said little because the investors in the syndicates, while not Directors of the company, through various interlocking financial relationships were tightly linked to the Directors. Greed played a part, there were many other things going on it terms of directors fees and bonuses but as long as the 10.5% dividend was paid, few complained

Other things which happened around the 1850’s was The East India Company, a foreign private company effectively governed India, eventually the people tired of them and the India Mutiny happened. In addition, the industrial revolution allowed mills in England to manufacture cloth cheaper than India cloth which was one of the imports of the East India Company. The development of the steam engine lead to steamships for the passenger travel, for they were faster than the sailing ships of the East India Company. The Company was folded but not before the Government bought them out with the shareholders receiving a 10.5% dividend for 40 years on their shares.

Linking to dividend paying stocks, the East India was one of the first global corporation and for as long the age of the sail reigned, it was a powerful force in the English economy. It was also structured to fail, with only the wealthy benefiting from the ongoing operations and the government bailed it out (many in the upper house of Parliament had interests in the company). As a shareholder you would not necessarily complain, but 99.9% of the time, government bailouts does not happen. Greed is a force to be used to continue the company however it must be tempered with structures and innovations to remain on top of the heap, otherwise the company and dividend will not be existence.

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

The East India Men is the story of the multinational firm from the 1600’s to 1857, published by Time-Life, NY, 1980; the company operated out of England and started with involvement in the spice trade, evolved to trade with China and India. For many years the company controlled the state of India and the tea production from China for those in England love to drink tea; also the company was involved in the opium trade with China. The Chinese traded their silver and gold and not surprisingly the end came with wars – the opium wars in China and the India Mutiny in India. Along the way, the East India Company helped make England a great global power and its ships ruled the seas.

The start of the East India Company was a Portuguese ship returning from the Orient was captured in 1592. The ship was large, larger than anyone in Elizabethan England has seen and was filled with merchandise and spices. The value of the cargo was nearly 50% of the existing British treasury and as the wares from the ship made their journey to London, the merchants and politicians were envious of the Portuguese and wanted on the trade routes. The ship had been carrying pearls, diamonds, gold, and spices – pepper, cloves, cinnamon, nutmeg and others. Now days we can walk into any supermarket and have the spices, but in 1600’s only the wealthy had access to spices, which made the price of the spices high. It was shortly afterwards the East India Company was founded to gain the riches of the Orient and break the Portuguese monopoly. In addition to the English, the Dutch and the French established trading companies. After a number of wars, the countries split up the countries in South East Asia so peace could develop. Peace is more profitable than war, even if the Navy of your country is involved in fighting your battles.

The East India Company took control over India and began to import the tea leaves from China. At the time, England drank ale or coffee, but converted to drinking tea. While in India, the East India Company tried to begin trading with China, however the Emperor’s decided not to trade with outside forces until 1868 and Canton, now called Guangdong was opened up seeking Western technology and information. The Chinese for generations had a problem with opium, there were many dens where it could be smoked and the East India Companies saw an opportunity for it needed the money. The way the deal was structured, the company tolerated side deals by its employees. The investors would buy the Benegal opium, it would be smuggled in holds designed for it, and unloaded in Macao and Batavia (Jakarta, Indonesia) and the gold and silver would be used to buy the tea to be sent back to England. The company gave its protection to the smugglers. To outsiders the company was involved in the tea trade.

The East India Company for many years was the company for innovation of the design and construction of sailing ships. If you have hardwood floors and ever thought how the wood is put together, the same idea was used to make ships. The ships looked like it was one piece of wood and the barnacles were not as much a problem as other designs.

Linking to dividend paying companies, the East India Company was formed when people saw the riches from the monopoly the Portuguese had in trading with South Asia. The Portuguese were the first to sail around Africa to India then to South Asia and come back with large loads of spice and jewels. The other method was up the other side of Africa much of it on land on routes that had existed for thousands of years. The trading companies had the backing of their countries’ navy and soon broke the monopoly. Later the company had to diversify, change management styles and reach to other markets (China) and try to establish its own monopoly to stay in business and pay the dividend.

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

Most of us will not be responsible for investing billions of dollars, however Mohamed El-Erian is and has been through the Havard University Endowment Fund, Pimco and now Microsoft. Mr. El-Erian wrote the book When Markets Collide, McGraw-Hill, NY, 2008 and you can follow him on LinkedIn for he is a good writer with interesting insights. As your portfolio grows, you move into diversification for somewhere in the world there is always an opportunity, if your natural home declines in value. If you review mutual funds or your own holdings, you will quickly be able to see the natural home of the people operating the funds. As your funds grow, you should think and begin to act in accordance with the global economy. Insights provided by Mr. El-Erian will help you along in the process as you wish to maintain a strong performance and reduce the risk of sudden and large losses.

The first consideration is noise. Everyone comes to the table with some preconceived ideas that have been around for a long time as measured in years. The ideas are taken for granted for example lower interest rates, low inflation should stimulate the economy. They make sense, they should work and what happens when it does not as well as in the past? Is this an anomalies or will it work in the near future? Noise can matter in so far as it contains signals of fundamental changes that are not captured in conventional monitoring tools. Governments capture data and report them, then people try to interpret the numbers; asking what is not being captured is a good thing, asking what signals are in the noise is another. Then you will be in a position to begin to do something. Mr. El-Erian believed one of the root problems is the tendency of structural transformations to enable activities that initially outrun the ability of the system to accommodate and sustain them. The mismatch will continue to play out both at the individual firm and national economies. In other words, regulators and government information are one or more steps behind than the private companies ability to generate fees, particularly when leverage is involved.

Leverage enhances returns and losses, but if you are right the profits roll in. If you are right, you are bound to do more and other firms will follow the example until returns fall to what is considered normal levels. It will take weeks before regulators catch up to the firms and the amount of leverage they are taking. Thus what is an investor to do? Mr. El-Erain has some steps:

1. Identify the source of the noise that creates an unusual market dislocation.

2. Be disciplined in treating each episode of such noise as potentially containing important signals.

3. Assess the signal content through an evaluation based on the prioi modeling of the economic or market phenomenon.

4. Differentiate between factors that influence the destination and those that influence the journey when assessing the content.

5. After you have gone through the process, and not until then, you should pursue the views of the talking heads and experts.

6. Be open to finding not only cyclical influences but secular ones.

What to do is the big question and one step to take is following a simple management framework – four boxes – urgent and not important, important and urgent, important and not urgent and not important and not urgent. the axis are urgency and importance. Mr. El-Eraim’s coach at the IMF David Coleman noted most people were pretty good at recognizing what is important and urgent and they acted accordingly. They also tended to be able to identify and avoid the not important and not urgent. It is the other two boxes that separates success from average or mediocre performance.

The successful mangers never lost sight of the important and not urgent. Those tasks are highly deterministic when it comes to positioning oneself for sustained future excellence. The others got diverted by the urgent and not important tasks. Most of these end up claiming an enormous amount of time and effort but have little material impact on the longer term success of an endeavor.

Linking to dividend paying stocks, the beauty of these form of stocks is the markets will go up and down, which is a given, but if the company is profitable and pays a consistent dividend, you will continue to receive a cash flow from the holdings. If you are not leveraged, then if markets go down, but the company is still profitable, you do not have to do anything but to continue to collect your dividends and maybe add to your holdings. The price of the stocks will vary but due the dividends there will be a solid floor and will bounce back faster than non dividend paying stocks. Unless you own a tens of millions of dollars in assets, let the companies you own worry about global diversification while you earn your dividends.

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

For the average person, a road trip somewhere is part of the summer events. Many of us have relatives across the country – brothers, sisters, aunts and uncles, grandparents and the long days of summer are a great time to visit. That coupled with the end of school, many companies encourage summer holidays (in the old days some shut down for a couple of weeks in the summer) and with warm weather, the summer trip is forecasted. Did you ever wonder about the road or highway you will be driving on? Most of are more concerned with the destination and the people and places we will see and as long as the road is smooth and the trip is safe, we tend not to worry about the road. Peter Unwin concerned himself with the road and wrote the book Hard Surface, Key Porter, Toronto, 2009. The book tells the story from a time when there were over 14 million horses to a time of horsepower in the engine. Transportation in North America was shaped first by the waterways, then by horses, next by the train and finally by the car. Each time, society had to change and each time there were naysayers because that is what people were use to. For the most part society did change and Mr. Unwin’s book is about how we changed, in some ways it is better, in other ways not so. One method it has changed was at the turn of the century, many people had a month or two of vacation time, now it takes a number of years of working for an employer to have close to a month of vacations. People would escape the hot dirty city to the cooler cleaner country and come back in last August. Now we escape for a weekend or long weekend.

Linking to dividend paying stocks, as society changed with the use of car and our desire for the government to pay for good roads, companies had to change. Many of uses of the roads were advantageous to the companies or it was easy to change. Similarly communications has changed in the last 15 years, for your company to continue to pay their dividends is a strength of the people and how they have adapted to changes. On your road trip enjoy the road and the people you will meet along the way.

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

The Bible is the most published book in the world and billions of people have one in easy reach of them. Millions of people attend church or a religious institution to hear the word of God. It is an important book and the book Who Wrote the Bible? by Richard Elliott Friedman, Summit Books, NY, 1987 offers an opinion about who wrote the old testament of the bible. For hundreds of years, the  bible was considered written by Mosses. In turns out while Mosses is the most important person in the old testament, the words were likely not written down by him. The actual writing was likely scribes and priests, but someone had to edit the books or put them into a fashion for the world to read. It appears at least 4 primary authors were involved. When Mosses lead the tribes out of Egypt to Israel, they were each allocated a piece of the land. For a while all was good, but similar to most countries over the years there was addition and subtraction to the lands both internally and from outside forces. Eventually there was two countries Israel and Judah. One scribe was likely from Israel who was an advocate of the priestly family or ways of Israel (Shiloh) and possibly a descendant of Mosses. The other from Judah likely for the Davidic royal house. Then an editor skillfully put the two books together as the kingdom was reunited.

Next there is a book written from the perspective of Aaronid priesthood of Jerusalem which many chapters are written about the duties of the priests, in similar fashion many professional organizations have their rules within the government. This perspective tries to enhance the role of Aaron and has a different view of history that those connected to Mosses.

The priests not connected to Aaron wrote their version and the two competing versions were intertwined in the books of the bible.

The final piece was to edit all the above books into what is known as the bible and Mr. Friedman believes the terrific editor was Ezra.

From a layman’s perspective, the bible can be whatever view of the world you have, because the bible has elements of victory and defeat, love of God and destruction, it is a story of life and compromise to live. What is meant by a passage can be seen in a variety of perspectives – one method is to figure out who wrote it? why they wrote it? and what does it mean? or you can just read it for what it is.

Linking to dividend paying stocks, the book reads like a detective story pointing to clues if you understand what the clues mean. As a layman, the narrative behind the clues help support the argument one way or another. Similar when you are investing you are looking for clues. One easy way to look for clues looking at the past history or does a company pay dividends? if yes, the stock can be on your radar; if not, move on to the next company. There will always be opportunities, but losing less money and having the possibility of making more has always been a good strategy with dividend paying stocks.

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

If you ever read the Dan Brown books, you may have wondered about Mary Magdalene – who was she? A wonderful resource is the book Mary Magdalen – Myth and Metaphor by Susan Haskings, Random House NY , 2011. From the bible you will find Mary played an important role in the life of Jesus. Mary and Joseph lived in Nazareth where Joseph employment was a carpenter, and similar to most people in the world he had relatives – one of the them was Mary Magdalene. Jesus met her when he was young, before he entered the Ministry. The bible talks his birth, a episode when we was a teenager, and his Ministry when he was in his late 20’s and the end of his life on the cross in his early 30’s. He died to so others could live by forgiving their sins. Each of those segments were very important for the Christian church, but what was he doing the other times in his life. Study? living as a carpenter (his family taught him the skills)? married? no one really knows which is where Mary Magdalene comes into the story. At the very end of Jesus’ life at the cross Mary his mother and Mary Magdalene were there. If you look to yourself as an example when a family member has died, who was there at the end of their days – the answer is usually family members. There are many sides to who Mary Magdalen was and who she is portrayed to be, how her role was changed to fit into the image of Christ the formal church wanted to give although Mary’s most important role that everyone agreed was she loved Jesus the man and his message.

Linking to dividend paying stocks, the start of every company has some myth attached to it. Why did the company become a success with a similar company did not? What propelled into it into the next generation? What stories are embellished? Which ones are not told very often? Invariably all companies have them because all people have similar stories. Sometimes we are interested in all the stories, sometimes we are interested in only part of the stories for those ones enhance the finest aspects of the company. As long as the existing company is not breaking the rules of the government, and is consistently profitable to pay a dividend, things will be overlooked.

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

Play to Win is a book about strategy from A. G Lafley and Roger Martin, Harvard Business Review Press, 2013. Mr. Lafley was the President of P & G for 10 years and Mr. Martin is a business educator and consultant. They believe strategy while complex, it is also simple and the important aspect is to answer 5 questions:

1. What is our winning aspiration?

2. Where will we play?

3. How will we win?

4. What capabilities must we have to do 1 to 3?

5. What management systems are required to do the above?

All the questions tie back and forth to one another which is the complex part, but they have to interlink in order to answer the questions. The reason to answer the questions is to lose less money, than the alternative.

The how and why of the questions are the reason to read the book or watch the video clips on You Tube. The answers to the questions are choices every company makes and it is important they link. For example if you define yourself as a market leader, are you? In what location are you the market leader? If you define yourself as better, better than who? better than the market leader? What distribution channels do you use and need? and the questions will keep coming based on the original choices of winning aspiration.

A wonderful example was GM had spent a couple of billion dollars are a new midsized car the Malibu, Mr. Martin asked what is a success? GM responded to better sales towards doubling it. At the time, the sales were 5% of the market with Toyota Camry as the market leader. Mr. Martin said better sales was good, but how does the new car compare to the Camry? It turned out Camry was better in 9 categories. GM went back to the drawing table spent $700 million to equal Camry. Sales were more than double. The issue is what aspiration were they trying for – to be better or be the best? Better than what? within the competitive landscape is that good enough or aim higher?

Linking to dividend paying stocks, all companies have strategies, the questions is how well they are defined and do most people in the organization understand and live them? By reading the President’s letter to the shareholders you should have an understanding of what the strategy is, if you do not then start by asking the 5 above questions.

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