You may seen TV advertisements asking you to donate money to help people around the world for they live on $2.00 a day. In many western countries, although it is possible to live off of (2 x 365 or 730 dollars a year), it would be very difficult. In many western countries, there are few squatter areas as well as there are social assistance that should push that number up. An interesting book called Portfolios of the Poor was written by Daryl Collins, Jonathan Morduch, Stuart Rutherford, and Orlanda Ruthven published by Princeton University Press, 2009. The book is subtitled How the world’s poor live on $2 a day and the researchers went to a number of countries around the world and convinced people to keep a dairy of their financial transactions. How does money come in, what are the expenses, are there savings? what needs to be done to make the lives of people better?

It turns out the $2.00 a day while accurate for gross income, does not reflect the consistency of the money. Most of the world’s poor have very irregular income – which means some days are good, others are even tighter. The non consistency of money means having savings or some savings is critical to living. It also means that most of the poor will be borrowing money from moneylenders at high rates but depending on the flexibility to repay the loans, the loans are seen to be good value by the borrowers. The analysis by the authors shows in all income groups people do roughly the same thing – the difference is institutional supports. The wealthiest have the most, the poor have the least. For financial institutions dealing with the poor the principles of reliability, convenience, flexibility, and structure must be followed. When the principles exist taking account of the irregular income, the poor will use the institutions. It is noted many institutions often do not want to deal with the poor and are delighted other informal methods exist.

Linking to dividend paying stocks, all companies which cater to a broad market place will deal with the poor. A critical but important factor is poor people over the course of the year typically have access to money, most of it is not at the same time as obligations have to be met or the money comes in irregularly. Are they penalized or does the company use flexibility with them? Does the company want them as customers? Do the rules and regulations help or hurt customer relations? The internal rules and regulations of any company will determine the continuing ethics of its people and long term financial dealings. The longer you hold onto your stocks, the more you should look to the internal rules and regulations of the company to see if you should continue to hold it.

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

Not so long along a play by a local community group was attended, as a local group there was people in the seats which is good. However, the cost per ticket indicated a more break even event. There was some advertising in the program, hopefully a few grants from government, likely more at the local level, and some people in the community who gave donations to ensure the theatre continues to perform. As an investment in ideas or community building, the money was well spent. As an investment in year over year continuing dividends, it would be a thin one at best.

Linking to dividend paying stocks, we all pick our individual holdings for particular reasons that is what makes us human. That is a good thing, one person may want plus 10% return with no risk (hard to do in a low interest rate setting); another wants something else which is equally good for them; another maybe interested in gaining dividends and not worry about the stock price as long as the dividend is almost guaranteed; this is why investing often has an depends answer. Whatever you decide what is good for you, that is good. There are always many alternatives to choose from.

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

If you look at the world’s billionaire names – you will see people from around the world and all of them likely have or should have a book about them. To earn a billion dollars is a major accomplishment and makes an interesting story. One of the billionaires on the list is Li Ka-shing whose made his first billion in Hong Kong and now makes it around the world. A book titled Li Ka-Shing was written by Anthony B. Chan, Macmillian Canada, 1996

Two more lessons from Li are what is your attitude towards the government and what other opportunities are there? If you talk to anyone over the age of 65 or considered a senior citizen – they will have lived through many governments – some very helpful, some neutral and some not helpful to them. As an entrepreneur in Hong Kong Li had to deal with the end of Hong Kong by the British and the rise of China. Similar to most wealthier people in Hong Kong buying assets in other countries was done, but Li decided to stay because he believed in the long term future of Hong Kong. After being vertically intergrated in property development, Li added cell phones, satellite TV and property developments in China. At the time there was a large risk but it worked out. Part of the thinking of Li on his investments was always do your homework first and considering how to narrow the odds of not losing money. In terms of cell phones which everyone seems to have now days, think about 15 years ago and where the industry was? did you own a cell phone company? those who invested in them made money and still do.

Linking to dividend producing stocks – when Li made investments into non property developments he did not put all his money in. He saw the opportunity, and put some money into the ventures. This is what you can do with your dividends – most of your investment dollars should be can be in very stable consistent paying dividend stocks. With some of the dividends you can diversify into other sectors of the economy. In this fashion you have some growth, but stability in your investments.

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

If you look at the world’s billionaire names – you will see people from around the world and all of them likely have or should have a book about them. To earn a billion dollars is a major accomplishment and makes an interesting story. One of the billionaires on the list is Li Ka-shing whose made his first billion in Hong Kong and now makes it around the world, A book about Li Ka-shing was written by Anthony B. Chan, Macmillian Canada, 1996

A lesson to be learned from Li is about debt. When Li first went into business he made plastic flowers (the type you see in the dollar store), when he received a large order it was time to move to a larger premise. Li did not like debt and moving allowed him not to be a tenant but an owner. Over time the value of the property went up and Li started doing real estate where he found his niche and soon was making more money in real estate than producing plastic flowers. In time emerging as one of the largest real estate players in Hong Kong, Li began to diversify for as everyone knows property values go up and down. Li needed something else with consistent cash flows, this lead to buying an electric company – Hong Kong Electric. The reason why he could buy the company was the previous owner was in large debt burden and had to sell. Li had done his homework and was ready to buy when the opportunity came along.

Linking to dividend paying stocks – in both business and personal lives debt can be your best friend and worst enemy. Debt can be friendly to help you buy your property, but take on too much debt or property values fall, those nice institutions which lent you money will only want their money back. If you own dividend paying stocks which has a consistent cash flow when others get into debt, you can purchase assets at a reduced cost. If you have a long term outlook for the assets, the assets will tend to rise in the future and you will be wealthier. To do such a thing means you have to do your homework first and be prepared to take advantage of the ebbs and flows of the market.

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

If you look at the world’s billionaire names – you will see people from around the world and all of them likely have or should have a book about them. To earn a billion dollars is a major accomplishment and makes an interesting story. One of the billionaires on the list is Li Ka-shing who made his first billion in Hong Kong and now makes it around the world, a book about him was written by Anthony B. Chan, Macmillian Canada, 1996.

Li says he has a simple recipe for financial success – one needs to have many important qualities to succeed, a capacity to work hard, loyalty to those working with you and the job at hand, good judgement and a little luck. These plus a sense of direction – for if you have no direction you will be pulled to the sides of the advice of others and if you follow everything you will have less. Li also said before I make a final decision, I study everything very carefully – from supply and demand to the political situation. Once I make a decision, I go quite fast to catch the market at the right time. However good a situation looks, I always prepare for the downside. in addition, as a dealmaker I have a well deserved reputation as being above board and honest. If I say yes, we go ahead, sometimes I say yes too quickly and it is not to my advantage, but I keep my promise. That wins me trust and my word is golden.

Linking to dividend paying stocks – one of the lessons you can learn from Li is doing your homework to know which of the many opportunities to move into. When you own a dividend paying stock that has consistently paid dividends and even raised the dividend, money will be coming to your account on a regular basis. You have your choice what to do with the money – spend it, reinvest in the same company or invest in other companies. Before choosing other companies you should have done your homework because share prices go up and down – which other companies do you want to own? Doing your homework means taking your time and when the money flows in you are in a position to make a decision or take advantage of the opportunities that you see.

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

If you ever wondered how a newspaper works, books about newspaper wars are worth reading. About 10 years ago in Canada, a new national newspaper was launched and the story is written about in the book Ego and Ink by Chris Cobb, McClelland and Stewart, Toronto, 2004. The paper was launched by Conrad Black partly because he owned other newspapers and wanted to have a marquee paper and for a few years, the paper was the best newspaper in the land. However it was heavily subsidized by the other newspapers in the owner’s chain of newspapers and eventually the competition  revamped their offerings to be better newspapers. Eventually Mr. Black sold to a media baron who believed in the convergence of media properties.It only seems to work when there is a national crisis, the other times it sounds like a good idea and money is invested in it. To show how things change quickly, the idea and the billions of dollars that very reasonable people believed was a good investment in 2000 has turned and very few people would spend money even millions if they believed an area was underserviced in newspapers.

Linking to dividend paying stocks, prior to the internet, newspapers and the companies that owned them were a very good stable investment. The papers enjoyed both influence or access to influence makers, steady profits and a desire by wealthy people to have both. Since the internet, newspapers margins have shrunk as advertising dollars have moved, the competition is tougher every year and fewer people read newspapers. Even though newspapers are still printed (full disclosure – the author has subscriptions to 3 papers and generally reads more than that) and money is made, the margins are getting lower every year and the next generation will be putting less advertising dollars into the papers. From an investment point of view, you would want to invest in the other properties of the company which owns the newspaper and expect a modest profit for the paper.

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

As consumers we believe the end product we buy has found its place into the marketplace legally and generally as ethical as we are. Recently a book called Bitter Chocolate by Carol Off published by Random House, 2006 was read. The book tells both a history of the chocolate companies who supply us with delicious chocolate and about the sourcing of the beans. At one time the beans came from Latin America (think Columbus discovering America) later it was realized the plant would grow in Africa. Similar to all companies who wish a diversity of suppliers having both locations is a very good solution and does not mean reliance on the commodity markets. In terms of the people who harvest the plant or the subcontractors, unfortunately the story of very poorly or almost slave wages is a continuing theme throughout the history of people enjoying chocolate.

Linking to dividend paying stocks, if you keep your focus on the companies at the end of the food chain and on the positive aspects of the product, keep your readings on Hershey, Mars, Nestle, Rowntree and others is the way to go. In many industries they rely on subcontractors who rely on subcontractors, and the division of resources gets smaller. Near the top of the group is where the profit margins are consistently higher and that is where your investment dollars should go.

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

If someone in your family had bought one share of Coca-Cola in 1919 at $40, the single share would be worth $102,000 in 1994 and if they had reinvested the dividends, the value to the shareholder would be over $ 2 million. That single fact is worthy of ensuring the bulk of your investments in the market is in dividend paying companies. In a book by Frederick Allen called Secret Formula – How Brilliant Marketing and Relentless Salesmanship Made Coca-Cola the Best-Known Product in the World, HarperCollins, NY, 1994. Since the book was published, the values listed in the first line have increased as the profits of Coca-Cola have increased, it is still a highly recommended stock to buy and hold.

Shortly after Coca-Cola was being sold, the company embarked on a selling campaign. At the time, it was one the biggest companies in the advertising business. It gave away millions of items including school supplies, clocks, lighters, trays, Japanese fans, tiffany-styled lampshades all marked with the Coca-Cola name. The idea was to make the drink part of everyone’s life or be part of the national culture. The company was the biggest advertiser on billboards and painted over 20,000 barns around the US, with the idea where people go they should be part of Coca-Cola. If the drink is part of people’s lives then they will order it by name. When the automobile was invented, the company ensured the driving public was served well.

Linking to dividend paying stocks, there was a large upfront payments for the advertising, but combined with a legal department which vigorously fought off similar named companies, Coca-Cola was able to prevail. Part of the reason why they prevailed was the company provided the raw materials (the syrup), the quality assurance (sent out its own inspectors) for independent franchise holders (bottlers) to sell the public. In many ways you can think of successful franchising companies. The company used franchising to save money and because the owner did not recognize the money that was to be made in doing it yourself.

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

If someone in your family had bought one share of Coca-Cola in 1919 at $40, the single share would be worth $102,000 in 1994 and if they had reinvested the dividends, the value to the shareholder would be over $ 2 million. That single fact is worthy of ensuring the bulk of your investments in the market is in dividend paying companies. In a book by Frederick Allen called Secret Formula – How Brilliant Marketing and Relentless Salesmanship Made Coca-Cola the Best-Known Product in the World, HarperCollins, NY, 1994. Since the book was published, the values listed in the first line have increased as the profits of Coca-Cola have increased, it is still a highly recommended stock to buy and hold.

From a corporate point of view, the history of Coca-Cola is attached to the families who owned or controlled the majority of the shares. If you live in Atlanta area, the names of Candler and Woodruff are well known. As Coca-Cola became successful, the two families became very wealthy. At first the Candler family ran the company and then came time for the next generation, none of the Candler family wanted to be President and the company was sold to the Woodruff’s and the public. The father gave the Presidency to his son, times changed and the company is now run by professional managers. The transition from family control to managerial control and how decisions are made often means companies go through less than stellar financial years. Partly because of control issues, but also because people do not want to change what has been successful in the past. Two examples at Coca-Cola involving the little bottle. Management believed consumers bought the product because of the bottle (not what is inside it). It took years and new management before the change was approved. Another example is in the 1940’s, costs were up and a desire to raise the price of the bottle from 5 cents to less than 10 cents. One solution proposed which was sent to the White House and turned down was to mint a 7 1/2 cent coin for the vending machines. At the time many bottles were sold at the vending machines, not the grocery stores as now is the case.

Linking to dividend paying stocks, if you own shares in a family controlled company you have to pay attention to the Boardroom. Every company attracts good people to it, however not all good people want to work for dysfunctional companies. If you see a heavy then normal rotation among the senior executives, the best you can hope for is a buyout of the shares or takeover. For the alternative is the President or Chairman giving little authority to people who want to do good.

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