the biography of Hjalmar Schacht – Hitler’s Banker, by John Weitz, Little Brown and Company, NY, 1997, there are many interesting stories in the book. One particular interesting one is why was World War 1 started? From the history books at the end of June a Crown Prince was assassinated, but nothing exciting happened. It was investigated however, all the countries were not getting along with each other or did not trust each other. Soon countries were drawing lines in the sand, which nobody thought would be crossed as well as to show its citizens back home they were prepared to take a stand. All the European countries had various reasons to “poke” their neighbours. By August each government never thought a world war would develop, nor was there any particular reason to go to war, except the leaders thought it would be a short one.

Linking to dividend paying stocks, all companies and the people that work within them think they are the best and do a good job. Some people hate the competition, with a passion, when that passion over steps good judgement, companies follow paths to fight the competition at the moment rather than serving their customers. Years ago, consumers were more loyal, now days it means an opportunity to look around at other providers. If you own shares in a company that hates its competition too much, look to move your shares to another company. The company may still be profitable but eventually it will need a change of management and restructuring.

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

David Chilton wrote the Wealthy Barber a number of years ago and its message and its delivery are still very valuable today. The message of pay yourself first and spend less than you make will never be bad advice. In his updated book The Wealthy Barber Returns, David Chilton, 2011, Mr. Chilton offers more advice in a different format. The first thing even though the message of spend less than you earn is great advice, it is hard to do – we live in a consumer society; often your spending habits depend on the neighbourhood you live in; we are “sold” on having everything right now; and as long as we are managing or look like we are managing, very few have an interest in us not doing what most of us do well – spend money. If you are in the wonderful position of not owning money, then investments come into your focus.

With investments the rules you will learn to quickly love are compound interest and the rule of 72. The years for your money to double is 72 divided by the rate you are earning. If you were receiving 12%, the answer is 72/12 = 6 years; at 6%, the answer is 72/6 = 12 years. In terms of investing – you maybe one of the 20% of the people who consistently beat the averages of the stock exchange, for the other 80% an index fund with low fees will get you there with less risk.

Linking to dividend paying stocks, another method is own stocks in mature industries that are profitable and pay dividends. The key is profitable and paying dividends, you will notice from the long list of companies on the stock exchange most do not fit the criteria. From the short list, then you choose what companies to invest in. The stock markets offer many stocks filled with hope for the future, and some of them will come through, but the bulk of your money should be in the companies already making money.

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

In races of all kinds – sports and politics are the easier to see, prior to the race both sides will be trying to manage expectations. As a fan you want whoever you are cheering for to win, but the team still has to perform. If your team is favoured, then the job of the leader and/or coach is to both manage expectations and to ensure whoever performs, performs well, for if you underestimate your competition, the competition can surprise you resulting in an upset. Similarly on the stock market, companies have expectations that can be profited from. Companies on the stock market have a track record of performance and expected performance. Sometimes the company is clicking on all cylinders and performs very well; sometimes companies are doing well but not quite meeting the expectations but still doing well. And sometimes companies are not doing well and the stock price deserves to go down. In the second case is where money can be made. We all follow certain sectors more than others because that is where our normal interest is. When the company is doing well but not beating expectations the stock price tends to drop, because those that bought it to double and triple their money need to sell and buy something else. There is likely nothing wrong with the company, but expectations have changed and people value it differently. As an investor, you can then ask yourself when do you believe the company will be clicking on all cylinders – 3 months?6 months? or a year?

Linking to dividend paying stocks, while the above process applies to all companies, it is easier to narrow your field for example which dividend paying companies are underperforming but still profitable to pay their dividend? When the prices go down based on changed expectations, it can be a buying opportunity and you will can make money both on the price increase and the continuing dividend. The market will tell you there is a reason for a drop in stock price, what the reason is always the big question that can be best answered in hindsight. If the company remains profitable and pays a dividend, then in the longer run the share price will tend to go upwards as it meets and beats expectations.

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

The other day one of the people the author works with asked do you collect anything? Originally the answer was not right now, it the past there were things that were of interest.However, upon arriving at home lots of magazines were easily found. As a subscriber of various magazines they arrive at the house and sometime in the next couple of weeks they are read and placed somewhere. Perhaps in the back of my mind the magazines are kept because they could be valuable similar to the first copies of Superman. Although the magazines that arrive for me tend to have a wide subscription and only go up in valuable to a very specific audience, who in all likelihood could find the same information on the internet.

Linking to dividend paying stocks, the stocks which are owned do pay dividends so in a sense I do collect something – dividends. In terms of the magazines they are looking for a home, perhaps my doctor’s office or medical clinic for the magazines could use an update. As you look around your home, and notice you collect something, collecting dividends is just as easy and rewarding in the present and over the long term. Be a collector-collect dividends.

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

A number of years ago, there was a movie called Enemy of the State staring Gene Hackman and Wil Smith and others. The premise of the movie was the Director of one of the Intelligence Services was trying to cover up a crime and the Wil Smith character accidentally was involved. The character raced around trying to go back to his normal life while the Intelligence Service was using all the tools of the US government to track him and do something to him. The Gene Hackman character used to design all the tools for the intelligence service, something happened and now was trying to live off the grid. Recently in one of the newspapers was a story about the latest thing to be soon in every new car. At one time the car was freedom to go anywhere because no one knew where you were going. Then GPS was put in the cars, you may remember GM’s commercials about OnStar, soon all new cars came equipped, similar to many cellphones which have GPS in them, which means someone can find out where you are, although 99.999% no one is concerned. The latest software to come was designed to see if you are a good driver or not. All of us who drive, believe we are at worst a good driver, some of us believe we are better than good. The latest software will detect how you turn corners, hit the brakes, or tailgate more than normal. If you are guilty of these and other infractions your insurance bill will go up. The software will be in car, the software is designed for the insurance companies to follow your habits and determine if they are good or bad.

Linking to dividend paying companies, while the software company is not public, the ones that are process the data are. At the moment there is little to invest in but your insurance company should be a user. Most of the time, no one is interested in your habits but something that is habit forming is receiving a dividend from a company you have invested in. The money either flows to your brokerage account or bank account and the folks that process the money are interested to ensure you receive the correct amount.

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

Recent media reports we are living longer, that is great. However living longer does mean other considerations, as long as you have your health or are reasonably healthy then living longer is wonderful. After your health, hopefully you still are in touch with family or have a support system if the need arrives. Given smaller families over the past few decades, staying in touch with family maybe even more important. From a financial consideration the old adage from asset allocation is take your expected life expectancy minus your age and that would be the portion of growth stocks in the portfolio, the other part would be in fixed income. For decades the old adage worked beautifully.

Linking to dividend paying stocks, since 2000 the old adage has not worked beautifully because of the drive by governments to lower interest rates. The economy of the world changed and there was a tremendous pressure to keep interest rates low allowing inflation to remain low and try to have more jobs in the economy. There are a number of problems with the job front – technology gives us more but there is a growing income gap between what is known as skilled and unskilled work. Due to this growing gap, governments are going to keep interest rates low for the next 3 years plus or when the job rate falls. In 5 to 10 years the job rate will fall because the baby boom will be retiring leading  to job shortages and a low unemployment rate. The issue from a fixed income point of view is your return owning bonds will stay relatively low. The solution is to ensure your portfolio has a very healthy dividend stock portfolio. The last number of years the rates of return have been healthy, the risk to own the best companies on the market is relatively low and there is little to suggest the next few years are going to be different.

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

The reference is to Barbara Kingsolver’s book titled High Tide in Tucson, HarperCollins, 1995. In the Library this week the cover of the book was a crab and knowing Tucson is in the desert, my interest was captured. There are many stories is the book which makes it a very interesting read. One of them was about an adventure Mrs. Kingsolver  took to Haleakala Crater in Haleakala National Park in Hawaii. If you have a wide variety of interests in looking at nature this is one spot you need to spend time in – from desert like areas with lava, to rain forest all in one day’s hike. To walk through would be what it was like hundreds of years ago and how the plants and animals have adapted to life in the Crater are incredible sites. Due to the inhospitable crater, people generally avoid it, but to go inside is a marvel of sights and sounds.

Linking to dividend paying stocks, we often avoid the hard things because the easy ones are placed in front of us first. Brokerage firms make more money off smaller growth stocks so they entice us with their potential earnings. As an individual, we make more money from dividend stocks because they have the dual capacity of earning a dividend and if the company can pay a dividend, it is profitable, and profitable stocks go up. Most of the time dividend paying stocks will not double and triple, although if you bought bank stocks over the past couple of years you likely have. Your risk level is low and the return high, also many dividend stocks are earning better than your money in the bank account. If you stay with profitable companies over the long term, the value of the stock will increase over the years.

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

The reference is to Barbara Kingsolver’s book titled High Tide in Tucson, HarperCollins, 1995. In the Library this week the cover of the book was a crab and knowing Tucson is in the desert, my interest was captured. The story is Mrs. Kingsolver went to the Bahamas (the island between Florida and Cuba) and the crab was hiding in the shells which Mrs. Kingsolver collected and did not noticed under she arrived in Tucson. What would you do with the crab? Take in the desert and release it? throw it in the garbage? take it to the river or lake and release it? or keep it? The family decided to keep it and learn about and from the crab.

Linking to dividend paying stocks, when you first buy a stock you are hoping the price goes up and you will become wealthier. It happens, but sometimes you venture into other stocks for example dividend paying stocks. The stock price does not jump up or the reason you bought it does not cause a large jump but you receive a dividend and it now seems worth holding. Other stocks are similar to gold which has no return and maybe the price has fallen but it could go up. The wonderful thing about a dividend paying stock is even if the price does not go up in the short term, the dividend is being paid and as time goes on, you will be rewarded in the capital appreciation aspect. Some will buy for the dividend first, some will buy on future price increases, some will buy for defensive reasons, whatever the reason the added feature of a dividend has been proven to help in the long run. While you decide what is the next greatest thing to go up in price. In the meantime a healthy total return is being received.

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

Every year one of the local department stores in the urban area in which the author resides has a birthday celebration and on that day or week, there are many extra bargains in the store. On the birthday, the management often has a number of items for sale which is similar to the year in which they opened. Similar to all retail stores, looking around and knowing some prices in advance will help save you move.

Linking to dividend paying stocks, there are a thousands of stocks on the stock exchanges around the world representing companies trying to make money and change the world in their sphere of influence. Of those thousands you will drop to hundreds around the world that pay dividends. Of those there is a handful which have paid dividends for over 50 years. Examples are 3M (you may know they from Post-it Notes and Scotch tape (they do other things as well); Diebold (they make the ATMs we all use), Johnson & Johnson; and P&G. There are others but if you looked at companies that have paid dividends over 50 years to see the total return on your dollar if you invested in them. You would have and continue to do well, for over 50 years the dividends would have flow into your account and the share price over the years would be worth much more than you bought it at. With names such as the above companies, they should be around for another 50 years and any year is a year in which you can still buy a 50 year dividend producer.

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