What happened after WW II is an interesting book by Tom Bower called the Paperclip Conspiracy, published by Michael Joseph Ltd. London, UK, 1987. The war is over and as in tradition, the winners divide the riches of the defeated land. For generations, the rulers would go to war against a opponent who had gold in the hills, to pay for the debts back at home and to expand the empire. WW II was a little different in that the method to the war, was who had the better machines? If you are a movie fan and think about Braveheart – Mel Gibson’s movie about Scotland, the people were motivated by passion for their lands, once they withstood the arrows (new improvement at that time) much of the battle was hand to hand. At the end of the “working” day everyone went back to camp, pick up the dead and wounded to try again the next day till someone lost. If you think about the Terminator movies – there is a line in the movie where one of the scientist says to the effect ” we found the arm of the terminator and learned vast amounts from it, so technology could do more for man.”  According to Mr. Bower, Germany had spent and was spending vast money on research and development and all their tanks, planes and rockets were years ahead of the British and US. For a other reasons, Germany lost the war, but had it gone longer, maybe a different result would have been the outcome. The vast amounts of research and development by Germany’s scientists was a treasure trove of information. Not surprising, after the War was ended, the leaders of US, Russia and England being focused on winning the war, were not that interested in the research and development; but there were agencies and private companies that could see how advanced the Germans were. The Paperclip Conspiracy is about those that did see and moved the files, the machines. and the people out of Germany to work in the agency and companies in US, England, France  and Russia.

One of the ethical concerns about war is the scientists, some maybe ardent supporters of the government in charge; some are just looking for ways to improve things, some are aware of conditions around them, some are not. How do you tell? if the development is further ahead than your own scientists have given you, much of the information is in the person’s brain, therefore you need the person even though before the end of the war they were the opposition. Given the scientists wish to continue to develop their ideas, do you want them on your side? In the book there are examples of after WW II, one of the reasons for the rise of Russia and the Cold War was the decision by the Russian government to spend great amounts of money on arming their country using German technology which they acquired. In addition, some of the key people who helped the US put a man on the moon were Germans scientists.

Linking to dividend paying stocks, as a profitable company, the company has the ability to do takeovers to improve its position in the market as well as to expand and diversity its reach to continue to be profitable. More and more takeovers are about gaining brain power or ideas, people come with baggage? some you can live with, some you do not want but want their ideas? what should the company do? 99% of large companies have skeletons in their closet, it is extremely hard not to. Every large organization can do a great deal of good, as well as some of its products are used for harm, it is part and parcel of the organization. How the company handles it, is called its public reputation.

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

Donald Rumsfeld has a wide variety of senior level jobs in his life time including elected government official, CEO of a couple of US Corporations, and Secretary of Defense. For most of his life he has been keeping rules or lists of leadership lessons in business, politics, war and life. Over the years because of his positions, many people have read the lists and it made into a book called Rumsfeld’s Rules by Donald Rumsfeld published by Broadside Books, NY, 2013. Many of the sayings you will likely have heard or read before, but the examples are from Mr. Rumsfeld and another one of the very good chapters is Lessons from the World’s Most Successful Leadership Organizations.

Everyone for many organizations people go and do their work, which Is great, but the focus is on the leadership of the organization. If the leadership is doing its job, the people below with make it work. Recently a tech company changed its leadership, which it needed to do, the focus on the business press was the one person, not the thousands he had let go to try to refocus the business. We focus on one person because it is the nature of the beast. The lessons to be learned include – in the armed forces thousands of people flow through the organization, the way the armed forces continue is the role of the chiefs in the Navy or the sergeants in the military. These people do not have senior rank, have long service, know the informal and formal rules of the road. If the organization respects them, the organization benefits.

In the military in terms of feedback, they have 360-degree-feedback – which means bosses continually giving feedback on the performance both positive and things to learn the next time. By doing it on a regular basis, good leadership skills are developed and engaged in future similar situations.

Nothing is static. For every offense there is a defense. For every defense there is an offense. Everyone is engage in competition, what is the competition doing? What do they do right? wrong? and how can the organization learn from them?

When your enemy is making mistakes, do not stop him in the middle. Studying your competition can mean the difference between success and failure by providing advance clues of their potential innovations that could disrupt your efforts. Studying your competition can also suggest new techniques that could benefit your company. Mr. Rumsfeld was on the Board of Sears, they saw and studied Wal-Mart, however the Board decided not to act as they did not see the threat or need to change.

Linking to dividend producing stocks, by there existence of providing a dividend, these stocks are the profitable ones. There is and should be competition among the space, the long term dividend paying companies either have a very entrenched monopoly or are aware of the competition and within the organization continually trying to innovate. note the entrenched monopoly is fading fast for all organizations who do not watch, learn and act from the competition. A dividend producing company can take baby steps, make mistakes and still continue on making a profit? is it?

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

Donald Rumsfeld has a wide variety of senior level jobs in his life time including elected government official, CEO of a couple of US Corporations, and Secretary of Defense. For most of his life he has been keeping rules or lists of leadership lessons in business, politics, war and life. Over the years because of his positions, many people have read the lists and it made into a book called Rumsfeld’s Rules by Donald Rumsfeld published by Broadside Books, NY, 2013. Many of the sayings you will likely have heard or read before, but the examples are from Mr. Rumsfeld and one of the more interesting for this blog is about Think Strategically.

In many instances if you can get the strategy correct, you have accomplish more than 50% of the work for the tactics will fall into place naturally.

Step 1 is Set the Goals. Remember when you set goals, you have decided what you are not going to do, which is every bit as important as deciding what you will do. What do you say no to? The next thing to do is set your priorities and ask why?

Step 2 is Identify your Key Assumptions – note if a key assumption turns out to be wrong, it will require a major change in strategy. A question to ask is what do you expect the competition to do?

Step 3 is to Determine the Best Course of Action understanding there are always other alternatives – some better, some worse but there are alternatives. There are multiple ways to do this.

Step 4 is to Monitor Progress through Metrics – because what you measure improves. A great rule of thumb is you get what you inspect, not what you expect. One way to see how things are moving remember the adage the middle income  people vote with their feet or if they have a bad experience they will go to some where else. Upper income will voice their opinion more.

Linking to dividend paying stocks, every company has a strategy plan for public companies they are in the Annual Reports. As you have invested in the company, you can determine if their strategic plan is the correct one, given the things you know. What does the company say they are doing? and equally not doing? if they are not doing something do you like it? do you like the direction the company is going in?

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

If you wish to read a good book, the books of John Grishman’s books are well written and easy to read, the latest one read was The Racketeer published by Doulbeday, 2012. Without revealing the entire plot, if you ever seen the movie the Sting with Paul Newman and Rob Redford, you will have an idea of what is going on. Suffice to say, with every sting, you need seemingly credible  people, you need seed money, and institutional help. In order to look credible. In addition, there is something interesting which we all tend to forget – just about anything can be leased or rented for a short time. Part of the sting is to give the illusion of more wealth than actually exists which allows  for the person to let their normal guard down.

Linking to dividend stocks, if a company has paid dividends for a number of years there is little chance of a sting operation going on, for sting operations tend to be short term in nature. Additionally, through various sources you can determine if the dividend is sustainable or the company’s business plan makes sense to you and a host of others. Sticking to dividend producing companies means the companies are profitable, have low debt and can continue to pay their dividends for multiple years or the risk factor for you is low and the rewards are high. Leave the stings to fiction novels and movies and in real life enjoy the benefits of dividend producing companies.

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

A few days ago was Remembrance Day and for every country in the world, sooner or later some of its citizens will die in armed conflict. It is worth shutting down the markets for the day, because some things are more important than making money. As a North American, my bias in remembering WW I and II is for the Allied forces partly because relatives enlisted in the armed forces and some lost their lives. It is very important to remember the same words at the Remembrance Day ceremonies are said for the other side’s Remembrance Day ceremony. That part seems to be missing while attending the ceremony. The leaders of the countries all made decisions which to them were the right thing to do and to achieve their ends used the propaganda machine to achieve the good will of the people they represent.

The propaganda machine is used on both sides, the latest and most outrageous one was the weapon of mass destruction, whatever that was suppose to be, but from a message selling point of view – it meant whatever you wanted it to be and was truly an effective message. In business war words are often used but the results do not kill people for they are customers and are needed. Wars represented different problems – if you are a manufacturer you want to diversify your portfolio and ship to all the countries who desire your product. Some of the countries at one time or another are not friends of your host country. Do you ship? do you continue with the profitable business? if you have no particular concern with the country, do you find ways around it? at what stage do you go back into the country? seemingly easy answers become hard ones.

Linking to dividend providing stocks, unless the company has a monopoly or monopoly like position in a region, you will want to ensure there is consistent and profitable diversification where the company earns its money. Diversification has many good roles to play, as you move across country borders, there are simple questions to ask about friends and enemies and how the roles sometimes switch for little good reasons and the best methods to act in those situations.

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

We all love music in one form or another and maybe you have read a book about your favourite singer. If you focus on the instruments invariably a piano is used . An interesting book about the history and the companies which made pianos is called The Piano Makers by David Wainwright, Hutchinson of London, UK, 1975. The book focuses on piano making in England and part of the book is how to sell the merchandise. For a long time the institution user included the church and if you drive into the countryside you will see many churches. In the area where the author lives, the church was given land or the cost was zero. Given the rural nature, when the church was built the neighbours came together to build the church for free and then the church was the social hub of the community, some also came for the religious services. In each church there is an organ or music and this is the natural customer base for piano makers. As time goes on, people entertained in their homes and at even now days at most parties there is some music being played, whether live or on the radio. The music always sounds better if someone can play live. Given the above what choice of piano do people make? The same as it is today, the influence makers helped make decisions. The influence makers were the gifted musicians who toured, but what the audience may not have known was the piano was donated for the tour by the manufacturer. The manufacturer also built concert halls which featured their instruments being played translating into the captive audience would hear and see their piano and be influenced to buy one. If you do not know how to play, the manufacturers teamed up with educators or someone to teach you to play for to play the piano. In order to play the piano, you must practice and it is easier to practice if you own a piano. Many of the branding and marketing methods you see in a variety of consumer goods you can see  with the piano.

Linking to dividend paying stocks, most piano companies have over the years stayed in private hands, the business end is in the public and needs goodwill of the public to continue. The cycle of taking lessons, buying the piano, going to concert halls and maybe updating in the future are linked to the continue prosperity of the manufacturer. The other activities pay dividends to the manufacturer and for all industries a cycle is needed to ensure each generation continues to use their product. Over each generation many challenges will happen, whether they are dealing with wars, natural disasters, conflict between partners or craftsmen and the general economic cycle to name a few. The art of staying profitable, staying in business and continuing in business is something to celebrate and that is why receiving a dividend is a great tune.

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

We all love music in one form or another and maybe you have read a book about your favourite singer. If you focus on the instruments invariably a piano is used . An interesting book about the history and the companies which made pianos is called The Piano Makers by David Wainwright, Hutchinson of London, UK, 1975. The book focuses on piano making in England and the customers were often found in in upper income homes because in the 1800’s entertaining was primarily done at home. The musicians would travel between countries or go on tour and play at homes many times those related to the Kings and Queens of Europe. Eventually what the royals do, other will tend to follow and pianos were bought by the wealthy for there was a time when all proper young ladies were expected to play the piano. The choice of the brand of piano was the ones being favoured by the royals or their favourite musician. The piano companies of the day would ensure their pianos were available when the musicians went on tour. The musicians at the time were Beethoven, Paganini, Liszt, Clementi, perhaps names you not only have heard but maybe even performed some of their work.

Linking to dividend producing stocks, there are many people connected to the piano business, although most of the companies are not publicly traded, you can still learn from the industry. Over the years, there has been many manufacturers which brought about improvements to ensure when the proper keys are engaged the tone and quality is rich and high. There continues to be a wide variety of price points and learning to play an instrument is still high on many people wish list for themselves and their children. How the piano was developed and manages to stay relevant is a very interesting journey.

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

Recently reread a book called Fool’s Gold by Brian Hutchinson, Alfred Knopf, Toronto, 1998 which is about Bre-X. The company Bre-X was a gold mining promoter whose stock went to over $100 a share before crashing down because there was no commercially mineable gold. Along the way, the saga exposed many different layers of human greed and gullibility.

In the case of Bre-X as well as many other cases of fool’s gold there is a reliance upon experts. We all rely on experts, the world is too complicated not to, however if you are going to allocate a large amount of your resources, the rule is you have to at least know the process of how the industry works in. For example, in the case of Bre-X, the company was in the mining business, but most of its life was spent in buying claims near proven deposits and trying to raise money to drill a few holes hoping the mineralization of the earth was in its claims. All those actions are high risk, high cost and under normal circumstances do not translate into a commercially feasible mines. The reason why the company existed was to issue shares at pennies and sell them based on hope – the possibility this time it is different and ideally the shares are worth more than a dollar or two. Then it is on to the next hot area of mining. In the case of resource extraction the above is the normal and accepted method of attracting funds for mining development because the only method to know what is in the ground, is to drill. Given the nature of the industry – experts are used to look for the best claims; to drill; to look at the drill cores and make estimates given the sample size what the level of mineralization under the ground should be. There is a number of steps in the process which rely on experts and as the courts have found – there will be experts on both sides on the argument.

Linking to dividend paying stocks, while the above process is interesting and can be very exciting, it does not pay consistent dividends, unless you focus on the large mining companies. To focus on small mining companies is to speculate on price appreciation and you will need to become familiar with whatever exchange you are using insider reports and who is buying and selling shares; also which companies are issuing even more shares because they actually believe the hype they have released in the form of press releases actually matches reality.

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

Recently reread a book called Fool’s Gold by Brian Hutchinson, Alfred Knopf, Toronto, 1998 which is about Bre-X. The company Bre-X was a gold mining promoter whose stock went to over $100 a share before crashing down because there was no commercially mineable gold. Along the way, the saga exposed many different layers of human greed and gullibility. The greed was to buy shares in a company who continually said their drilling samples were giving the indication of the biggest gold mine in the world. There is gold in the area, as in most areas of the world, except there is not enough gold to be commercially mined. There was however a great number of people who were fooled, as well as people made money, and when the saga was finished  the shares were worthless after a few months the look for the next greatest thing was underway.

To give context to the story, there are remarkably few large deposits of minerals discovered, even though the mining companies have access to more information than ever before. In the late 1990’s new mines were being discovered based on looking at different theories of how minerals were formed. Unfortunately, the key to any mine is to drill into the earth to verify the theory works. This leads to a great many people looking for the big one, but very few ever discovering one. Bre-X came at a time when it seemed what they discovered was more than possible and everyone wanted to believe. Bre-X also exhibited many signs, which everyone saw in retrospective, to be troubling. However since everyone wanted to believe, the experts who others believed were doing more but were actually dependent on other experts who thought the other experts were doing more and as long as the fees were coming in, few were cynical to ask the tough questions and receive answers.

Linking to dividend paying stocks, if you only bought dividend stocks, the episode would have passed you by. Although the price of Bre-X shares were worth a great of money, the company had never made a profit and had not mined a single ounce of gold. However, if you read the papers, Bre-X due to the large increase in share price was all over the news, until it came trumbling down to worthless. The dividend producing mining company were still making a profit from their other mines, it just their investment in Bre-X turned to be a bust or a write down. The story also tells how even though business says the government should not be in their business, how quickly business turns to the government for help and to keep others away if all the rules were not fully carried out. If you speculate, which is a natural thing to do, do not have all your eggs in one basket, because one may be fool’s gold and one maybe the real thing, but which is which?

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