When you read the heading, you are thinking about the world’s shoppers and potentially that is a large market, but reality is you will not likely sell to most of them. In pitches to potential investors there is generally a wow factor, how the market is x amount and if the product or service captures just 1% or more even a little more, the revenues and profits will just flow in. You do not have to look very hard to find numerous pitches that sound like the above, what you need to hear are about real numbers and why the product or service is going to capture those sales?

In a book called Six Billion Shoppers by Porter Erisman published by St. Martin’s Press, NY, 2017 the issue is how will shoppers be captured by internet shopping. During the pandemic, the number of online shoppers climbed dramatically, and some companies benefited, and some companies were left by the wayside. The book was written before the pandemic but does help explain under what conditions online shopping will tend to grow.

In North America and parts of Europe, the mall and the acceptance of the mall and supermarkets normal retail business. In the book, the author describes different countries and regions and how they shop. For them to become online, how does it happen?

In most countries around the world, the shopping experience is dominated by thousands of small independent stores who over the years have determined how to stay in business. In most countries around the world, the infrastructure – the roads, the highways, the distribution channels, and the phone system are not as good as the US. For that reason, there was limited choice for shoppers. With the invention and continuing lowering of prices of the cellphone, choices open up. Due to the cellphone, millions of people that were unbanked are banked and they have access to a phone. If your choice was to deal with a moneylender and now there is the ability to use the phone to pay bills, what would you choose? That was the choice in many countries and with cellphones monthly rates declining many other services come forth. There is opportunity, but according to the author shopping has to be catered to the fashion which people traditionally shop. In India, it tends to somewhat chaotic, or at least from the outside. When a mall was opened up, it was too quiet and people needed to hear more chaos for the mall to have customers. The owners lost money then realized he needed to hire more workers to make the mall seemingly a little chaotic and achieved success.

In a previous post, there was a post about a book called Bank 4.0.(you should see the You Tube media talks), the change of the bank leads to change in shopping online. If a company is going to sell online, it has to determine how customers will shop and how to ensure the distribution works in the company. In many countries, the infrastructure in the US of the Postal Service, FedEx, UPS and the rest of the suppliers do not exist, but other channels could work.

The author Mr. Erisman provides a wealth of detail of the trends and what can work in different countries and many are different. If you see a company doing a one size fits all, watch it lose money, just try to ensure it is not your money it is wasting.

Linking to dividend paying stocks, you invest in these types of companies because they are successful and can generate profits. It is harder than you think, but fortunately for you the companies report quarterly, and you can measure how they are doing. If you believe they are following the correct strategies, then it helps to be a passive investor. If you are suspect, find alternatives. Reading a book such as 6 Billion Shoppers can help you formulate questions.

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

In the movie My Fair Lady, a professor bets a friend, he can teach proper English to a flower girl and present her into upper society. In the movie, he does and then there are consequences what happens to the girl? In addition, her father inherits some money, and he sings a song about middle class morality or values. Before inheriting he had less than middle class values or living day to day. Now he has to think about tomorrow. Every society has values for its citizens to live by and they teach the public what is good and not so good. Values can and do change, sometimes it is the economy of the country which influences them.

In a book called Butler to the World by Oliver Bullough published by St. Martin’s Press, NY, 2022 the values of Britian have changed and Mr. Bullough would suggest not for the better. During the Victoria times, Britian or UK or England emerged as the most powerful country in the world backed by the British Navy. At the heart of the success was trade which brought raw materials to the ports to be transformed into goods to be shipped back to over 2/3s of the world’s population. The British institutions became the most important in the world because of the resources to maintain and enhance them. After WWII the empire fell apart and the wealth that flowed to Britian fell. What was the country to do?

The country tried to maintain some semblance of power by seizing control of the Suez Canal which connects the Red and Mediterranean Seas or the short cut between trade from India and Europe. To seize control the British sent in the army to run the government of Egypt. If British could not control India, at least it could control the sea routes. It was the top reason why General Nasser led the revolt to change governments in 1952.

After Britian could not control the seas, what could she control. In Mr. Bullough’s book, the British economy moved slowly at first now it is a given to help the world’s worst people launder money and ensure the global powerhouse of the City remains a powerhouse in financial services. Within the billions of dollars that are traded in the City are what middle-class morality says is dirty money and the institutions of the banks, hedge funds, insurance companies, law firms help to ensure the money is not dirty. Some of the clean money pays for expensive real estate in and around London.

In the old movies, one of the middle class moral sins was gambling. In the online world, one of the most profitable industries is online gambling and some of the biggest firms are formerly based in London. If you are a sports fan, read the sporting advertisements for the names. At the time of the writing, many companies moved their operations from London to Gibraltar whose government welcomed the companies as they built new offices and provided employment to those living in Gilbraltar. The country is one of the tax havens of the world where domiciled companies pay no tax. The other tax countries mentioned in the book are British Virgin Islands and Cayman Islands. If you go to the Cayman Islands, you will see office buildings with many financial firms that are based in and around New York City.

Linking to dividend paying stocks, if you are in the position to enjoy a good income from dividend paying stocks it tends to mean you have accumulated money. At one point you will think can I even pay less tax on my income after going through the income tax. What will your middle-income morals think you should do? Open an account in a tax haven? It is relatively easy to do. If you own a company that has been a leader and has a downturn, at some point in time the old management will want to grasp at something that made them feel as they were the leaders again. Think of the reason why England took control of the Suez Canal and had to send an army to maintain it. It is wise to watch from the sidelines till management has changed, then you can nimble again.

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

Every large company has a profitable division and investors purchase the company expecting the revenues to flow every year. The division is not the primary reason for the company but either it evolved or purchased as a smaller entity and grew. It would be a powerhouse if the company either sold it or split it off, but the division continues to earn money. For nearly 30 years, the financial engine for Disney is ESPN.

In an article by Kevin Draper and Brooks Barnes of the New York Times News Service, very few people bought Disney because if own ESPN, but because Disney owns ESPN. However, the money it generated allowed Disney to buy Marvel, Lucasfilm, Pixar, 21st Century Fox, and while Disney is movies and theme parks, the consistent moneymaker was ESPN.

The issue is ESPN’s best days as a money generator over?

ESPN is the sports channel of Disney and in the first 6 months of 2023, ESPN generated $14 billion in revenue and $3 billion in profits. The problem for Wall Street are the revenue numbers were done 6% for the year before and 29% less profit.

The bulk of ESPN’s revenue comes from are called affiliate fees. These are the monthly fees that cable providers pay ESPN for the right to offer its TV channels to household subscribers. Last year around 71 million US households paid for a TV package that includes ESPN and those TV providers gave $8.81 a month to ESPN according to S&P Global Marketing Intelligence. In addition, ESPN brings in $2 billion in advertising.

A decade ago, the number of people with TV channels was over 100 million. According to PwC, the accounting firm, it is estimating the 71 million will fall to 50 million subscribers.

On the cost side, which is good for the profession sports league is not so good for ESPN, their costs are rising. For the NFL package, ESPN will pay an average of $2.7 billion for the next decade, a 42% increase. At the moment, Disney will pay $57 billion in future commitments to sport leagues. It is noted both Apple and Google’s You Tube are interested in sports programming.

Disney is consulting on what to do with ESPN.

Linking to dividend paying stocks, all large companies own divisions which make money and as long as they make money profits roll in. Similar to all industries there are changes for every industry, understanding which divisions are the large revenue generators will allow you to analyze whether to continue to hold or look for alternatives.

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

What the wise do at the beginning, fools do in the end, according to Warren Buffet. Who are the fools, Mr. Buffet is referring to?

In an article by George Athanassakos a Professor of finance and Chair of the Ben Graham in Value Investing at the Ivey Business School at the University of Western Ontario, the fools are retail investors.

In a research paper by Harvard University and Shanghai Stock Exchange, the panic on the Shanghai market in 2015 was examined. The number of retail investors buying shares at the peak was 7,100% larger than prebubble period.

Charles Kindleberger, researched bubbles and published articles, a typical bubble starts with good fundamentals. But prices start trading on speculation, which fuels media reports which means more people enter the market for fear of missing out. Eventually prices fall from panic selling. Some paid more than others and will takes years before markets ever recover.

The reason why there are bubbles is there is follow the leader process as households see that others are profiting for speculative purchases. There is nothing as disturbing to one’s well-being and judgement as to see a friend get rich.

According to the Harvard and Shanghai researchers, retail investors accounted for 78% of the volatility of stock returns. In the expansion phase, new retail traders accounted for 43% of the volatility of stock returns.

The large tech companies have risen in prices, is there a bubble or a change in society?

Linking to dividend paying stocks, the bubbles come up with a get rich quick message, if you wish to avoid the bubbles, try staying with profitable stocks which pay a dividend. There is a reason why you rationalize the trading multiples, and the dividend ensures as the price goes up and down, you receive monetary feedback. Bubbles will come and go, just remember most stocks on the exchange are not profitable, stay with the ones that are. If you happen to own stocks in a bubble, remember taking profits is good and reinvest in profitable stocks.

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

In many law cases, one of the over used phrases is follow the money. It is over used, but it is true. If you follow who had or would monetarily benefit, you can narrow the suspect pool to more plausible suspects. It is not a perfect method, but it helps. In investing, follow the money means asking where are people or individuals investing their money?

In an article by Summer Zhen and Patturaja Murugaboopathy of Reuters, global investors are increasing looking at other countries besides China to invest their money.

Reuters analysis shows a massive jump in the assets of emerging markets (EM) mutual funds and exchange traded funds that exclude China. The countries which or benefiting include: Mexico, India, Vietnam and Brazil.

Refinitiv data shows China focused mutual funds suffered a net outflow of $674 in the 2nd quarter of this year.

The ishares MSCI Emerging Markets exChina ETF, the world’s largest emerging market ex-China ETF whose biggest holdings are firms in Taiwan, South Korea and India attracted a record $1 billion inflow in the first half of 2023.

Data from Goldman Sachs showed that as of mid-July, foreign buying of emerging markets Asia ex-China equities amounted to $39 billion over 12 months, the first time since 2017, the buying exceeded inflows into mainland China equities.

Why is the money leaving China, because the Top 10 China-focused mutual funds slumped over 40% in 2021 and growth did not happen in 2022 or 2023.

The global supply chain is moving, and money is flowing into Mexico, India, Indonesia and Vietnam. There are reasons why the government of China is trying to stimulate growth in the country.

Linking to dividend paying stocks, for the past few decades investing in China was an easy thing to do and many funds paid well. In the US manufacturing moved from the US to China and now it is moving from China to other countries. The process is interesting to see how quickly the landscape can and does change. For the new manufacturing countries, growth will be easily seen, for China it has depend on a domestic economy including government incentives. For companies moving, it is in the best interest of the company not the country, and you are investing in the company. Follow the money is a good rule to see what is happening

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

Investor expectations is a very difficult phrase to define, but investors will know if a company did better than expected or not. The easiest way to describe it is through the Price/Earnings Ratio is a multiple. The stock price divided by the earnings per share. The stock is trading at 15 times earnings, if the earnings is good, the price should move up to stay with the 15 times ratio. If the earnings is not so good, the stock price should fall to stay with the 15 times ratio. All stocks trading on the exchange have investor expectations which are delivered quarterly. It is up to management to meet or exceed investor expectations or to ensure investor expectations are down if they are going to not meet expectations, without allowing more sophisticated investors the signs to say bad things are happening. One company that surpassed investor expectations was Amazon.

In an article by Chavi Mehta of Reuters, Amazon reported sales growth and profit ahead of Wall Street expectations as the company delivered goods cheaper and faster to shoppers, as well as cloud computing is looking good.

Amazon is the world’s largest cloud provider through AWS and online retailer.

CEO Andy Jassy said investors will see practical applications of AI in Amazon’s 3rd quarter.

Amazon’s revenue grew 13% to #134.4 billion compared to estimates of $131.5 billion.

AWS growth stabilized as customers shifted from cost optimization to new workload deployments. Its revenues were $22.1 billion.

Amazon had a quarterly profit of $6.7 billion.

Prime Day is one of the biggest sales day and Amazon has high expectations for the next one.

Linking to dividend paying stocks, all the large stocks have analysts watching the stock and trying to determine how it will do. Most of the stocks, the analysts will get right or within 1 or 2%, it is the quality of the estimates, however once in a while a company beats estimates and the price goes up. That is a good thing if you are selling, if you are not selling, it is nice thing. If a stock beats its estimate or does not meet it, you have to ask yourself why did you buy the stock? what kind of return were you hoping for? should I sell some now or hold on for a longer period of time. It is important to understand why you bought in the first place?

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

In the world of stock markets, there are multiple players who range from individuals with a small amount in their account to billionaires; on the institutional side – money managers include pension funds, mutual funds, index funds and a whole host of others. When people discuss the stock market they are typically discussing one of the above – individuals or institutions. Generally the institutions are into wealth preservation; while individuals are about growth until a certain number means they want wealth preservation. In between are traders or day traders and hedge funds

One aspect of a company becoming public or selling its shares is it has to share its overall data with the general public. Within the general public will be analysts looking at the past and trying to forecast what will happen if the company continues along the path it and every year it seems easier to forecast. During earnings season, the analysts will get it right 99% of the time. For the largest companies, there will greater scrutiny, an example is Amazon.

In an article by Arriana Mclymore of Reuters, the expectations of Amazon was written about. Amazon has a number of business units, although its e-commerce division is what the public knows most about the company. The company also generates income through cloud services, ad revenue and because of its size signals the health of the American consumer, which helps when 2/3 of the economy is based on the consumer spending money.

The cloud services is called Amazon Web Services (AWS) and is the most profitable division of Amazon. For a number of years, it had the largest market share and investors want to compare it to Microsoft and Google’s growing web services. In the first quarter, Amazon’s CFO Brian Olsavsky said there was pullback in growth of AWS because its enterprise customers were being cautious in their spending.

Amazon sells lots of ads, along with the Big Tech companies, Google reported a 3.3% increase to $58.1 billion, ad sales at You Tube was $9.51 billion. Estimates are $10.3 billion for Amazon.

Prime Day sales are the core of Amazon shoppers, Amazon delivered more than 1.8 billion units the same or next day, which is 4 times faster than in 2019. Doug Herrington, Amazon chief executive of worldwide stores, said that creating a regional fulfilment network, placing products closer to shoppers and expanding its same day delivery have reduced costs for consumers and the company.

Amazon’s profit margin was 46.77%, but analysts expect 46.53%.

Amazon is increasing the number of 3rd party sellers on its platform. Vendors can purchase ad space in search results and use other tool’s to catch customers’ attention in an ocean of products.

Linking to dividend paying stocks, when you buy these types of companies one of the very good assurances you have is the companies have a long history of making profits and coming in around the estimates that Wall Street believes it will be. There are many people examining the future of the company and as long it executes, then the estimates tend to be correct. When they are not correct, if they are worse, it is time to find alternatives; if they are better then capital gains are coming.

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