Thursday, April 17, 2014

Reading Review: Week 10

4 Things to Know About Dividend Investing

This article is actually a summary of another article, so I don't want to create a summary of a summary!  Instead, I'm going to comment on the excellent third point of the article, which is that "the market is good at sniffing out dividend cuts well ahead of time."  I stress this point because it's a widespread practice of many dividend investors to sell when dividends are cut and/or frozen.  Some investors do this for portfolio style reasons - they want a portfolio of stocks with growing dividends, and when something violates that style, they get rid of it.  Although that isn't strictly my approach, I'm fine with that.  I understand why that's done.  Where I have disagreement is when investors assume they can avoid losses in capital (or at least losses in dividends) by selling on dividend cuts.  As the article points out, this is almost certainly not going to be the case.  Markets invariably predict.  This means the price will fall first.  The options market will also inevitably predict the cut.  Bond ratings (or at least bond prices) of the security in question will often deteriorate.  The actual announcement of the cut is usually the last thing to happen.  By then, it's too late to avoid a loss.

Six Ways the New Panama Canal Will Change the World

Investors should be aware of important world developments, such as the completion of the Panama Canal expansion in 2015.  This project has a lot of positive implications for global supply chain efficiencies.

Lithium: A Metal Than Floats on Water and Power Our Phones

This is a good primer on lithium from the BBC.  The article discusses what it is, where it's located, and why it's valuable.  The importance of lithium has only emerged in our present generation, and due to the basic chemistry involved, it's unlikely there will be convenient substitutes.  (Lithium is actually number 3 on the periodic table.  Only hydrogen and helium are lighter.)  Although best known for batteries now, lithium also has various uses in manufacturing and medicine.  I found it interesting that while we don't know exactly how lithium helps those with bipolar disorder, we suspect that it's related to the same ion flow that is so useful in batteries.

Serious Reading Takes a Hit From Online Scanning and Skimming

At the risk of sounding like a Luddite, I do sometimes worry about how our brains are adapting to the continual skimming of online information.  The article expressing this concern, indicating that "this alternative way of reading is competing with traditional deep reading circuitry developed over several millennia."  If you read the article carefully, the warning is not really about print versus e-reading.  The concern is over the current form of most online media.  You read an article, and there are videos playing in the sidebar, music playing in the background, ads being shown between every paragraph, and hyperlinks on any words that could make a buck for the site.  Now I am the first to admit that those links (and even some of the ads) can be helpful, but if that is the only way we are going to consume information, then I do think something has been lost.  Personally, in addition to my online reading, I have been trying to read three books each month "offline".  This means either reading in traditional print form or if electronic, in some form that does not include distracting ads and hyperlinks.

French Scientists are Working on an Acoustic Earthquake Shield

While I've seen a lot of research about how we might possibly predict earthquakes, this is the first I've read where scientists are actually trying to mitigate the effects of earthquakes.  It seems that the incoming seismic energy can be dampened and reflected by arrays of boreholes.  A more technical article can be found here.  All in all, it's pretty amazing stuff.