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Reducing How to Think of Monopolized "Simple" Investments

Perhaps I should correct myself.....Investments that are "monopolized" are not necessarily simple.

When I use the word "monopolized" I am usually referring to industries that are "almost" forced upon consumers for purchase or "expected purchase".

So let's think for a moment about about our homes.

I, for example, live in an area of Ontario, Canada where homes have a certain number of "pre-installed" Supply networks that feed into our houses.

What are these supplies?

1/City Water
2/Gas for heating of Water heater and for operation of furnace for heat. The Gas supply is metered and monitored by the local gas company.
3/Sewage : removal of waste water through city wide pipe system.
4/Electricity: connection is metered, and monitored by the local electrical company.

For the sake of simplicity I am not going to refer to any kind of automotive usage, as that will lead me on a whole other discussion that will not be brief.

So for many homes in my city, we/they are buying or inheriting homes that have these hookups already naturally installed. To uninstall these hookups would be awkward and potentially dangerous and possibly even illegal.  So, most, if not all of my city's residents, when they own  a home in this city wind up using these three "predetermined" utility choices:
Water, electricity, Sewage Removal and Electricity.

All of the companies connected to these "preordained" utilities have a pretty much "guaranteed" cash flow from us obedient sheep home owners/renters. To consider using alternate sources, such as well water instead of city water or even using solar generated electricity instead of "city grid electrical supply" is considered "hard" or "dangerous" or labels you as an extremist or "off grid" enthusiast.

But permit me to get back to the point I want to make. If you are a newbie to investing and you want to look at companies or industries that have a "stable" and more or less "secure" cash may want to consider things like utilities. Most of the "customers" are obliged to go along with whatever suppliers are already installed by the "status quo" thereby steering cash flow into predictable pockets.

For example, Ontario Hydro is one of the electricity providers for my province. It currently trades on the TSX (Toronto Stock Exchange) under the stock ticker "H" and as of the writing of this blog post, sells for $30.48 Canadian funds per share. Do you know what company provides your city or town's electricity? Is it a publicly traded company or privately held? These are good questions to ask. These are good things to know, especially when considering the billions of dollars that these utilities may earn over a relatively short period of time.

I must admit that I don't know enough yet about the water industry, but only from what I have gathered from "water" focused documentary films, it appears that the thirst for "water based investments" has only just begun (pun intended") Everyone , every household and every apartment dweller needs water for drinking, cooking, cleaning, bathing, laundry and watering household plants and gardens, and or washing the family vehicles. Canada has one of the largest sources world wide for fresh water          (non salty). Our pristine lakes are the envy of humanity world wide.

So, if you could figure out how to invest in municipally provided water supplies, the corporation would also have a "stable" and pretty much predictable source of cash flow from every resident in your jurisdiction.

Now, let's talk about the gas supply. All the homes in our area were given gas hookups to the local gas supply . We were not asked if we preferred to buy our own propane tanks to power our water heaters. No, it was assumed that we would go along with the "status quo" and use the locally provided natural gas supplier and supply. This again provides another investment tap into virtually endless need for gas to heat our homes with gas powered furnaces and to heat our hot water tanks to the right temperature to please the average Canadian family. Canadians, by the way, love their hot showers every day...and are willing, for the most pay top dollar for the privilege of daily hot showers.
We also have wickedly cold winters and are accustomed to being able to heat our homes up to comfy cozy levels of warmth so that we are able to hop around inside our dwellings without wearing many layers of clothing. These demands on gas are also predictable "cash cows" and can be tapped into by those who know how to play this investment game.

Well, what have we reviewed thus far? Water, electricity, gas, and next we shall talk about sewage. Nobody likes to talk about sewage, but we all utilize and pay for a highly functioning supply & treatment & removal system through property taxes as well as through (depending on your locality) the way that your water supply is billed. 

Our municipality bills for water supply and sewage removal through the same "water billing" process.
This is a costly monthly expense in our locality...because our city water in it's natural form is "hard" with natural minerals etc that affect the taste and quality of underground aquifers and/or local lake water. Therefore we pay top dollar for high tech water refining and filtering technologies that "soften" and purify our city water supply. We also pay a pretty hefty sum for sewage removal of waste waters from household waste water, laundry water etc.

These "utilities" as they are known as , are virtual "cash cows" for those who understand how it works and know how to secure and maintain the  contracts and systems that operate these "invisible" but ESSENTIAL systems of supply that we often take for granted.

Well, that's enough chit chat for today. I merely wanted to help you to consider how you think about your investing strategy, and how "utilities" such as water, natural gas, electricity, and sewage removal may fit into your portfolio's "mix".

May God bless you in His perfect will with the investments that will meet His need to supply His children with everything they need and more so.

Peace out,


This post first appeared on You Can Know Anything, please read the originial post: here

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Reducing How to Think of Monopolized "Simple" Investments


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