E-mail account hacking seems to be on the rise, based upon recent activity. We rely so heavily on e-mail that it is easy to forget basic security precautions we should all take. Here are four simple suggestions:
- Never provide confidential information via e-mail. E-mail accounts are vulnerable to hacking. For example, you could have an e-mail in your Inbox that references an account number.
- Use strong passwords. What is a strong password? A strong password includes capital letters, numbers, and special characters. I like to use lengthy phrases that include all of those items.
- Do not click on embedded links in unsolicited e-mails. Hackers are clever people. They can easily replicate the logo for your bank, making you think the e-mail is legitimate. Pick up the phone and call the institution if you are uncertain.
- Use security software. Install a personal firewall, anti-virus, and anti-spam software. And do not forget to run regular scans.
Be safe out there!
Cristy Freeman, AAMS
Senior Operations Associate
Medicare Open Enrollment began October 15 and will run through December 7. For those of you on Medicare, this is your opportunity to compare your existing plan to other options and to make any changes you may want.
Just as we recommend that you perform an annual review of your homeowner’s and auto policies, it is important for you to take the time to review your Medicare policies as well because the plan that’s best for you this year might not be the best next year. In September, you should have received an “Annual Notice of Change” letter from your provider. You should read it carefully for details of how your plan will change next year.
The Medicare Plan finder is a great tool to help you compare costs and coverage of the many plans available. Pay close attention to the prescription drug section. This allows you to enter your prescription medications and compare the policies that will cover them. https://www.medicare.gov/find-a-plan/questions/home.aspx
If all of this becomes too confusing or time consuming, you may want to consult with a counselor at the NC SHIIP (Senior Health Insurance Information Program). This free service is designed to help you better understand your options and benefits. To find a SHIIP office near you go to: http://www.ncdoi.com/SHIIP/SHIIP_County_Sites.aspx
I recently read an article by Morgan Housel about the detrimental effect emotions and memories have on investing behavior (you can read it here). Not surprisingly, people tend to recall bad memories more easily than good ones, and seek to avoid experiencing those emotions again. When such behavior interferes with investing, you get something called loss aversion. Housel explains it like this:
“The market falls 50% in 2008 and early 2009. That hurts. Then it rallies 130% over the next few years, recouping all of your losses and then some. This feels OK, but not nearly good enough to ease the shock you felt from the 50% crash, which was emotional and memorable. You remember the crash much more vividly than the ensuing rally, and you change your portfolio to make sure you never suffer through a crash again. You buy bonds, hold a lot of cash, and swear off stocks for good. We’ve seen quite a bit of this behavior over the last few years. And we know it comes at the expense of long-term performance.”
A study conducted on people whose brains suppress emotion (due to the presence of a lesion on the brain) found that they did not suffer from loss aversion, and were able to make rational decisions that resulted in a higher payoff. One of the study’s authors referred to these people as “functional psychopaths” since their choices were unaffected by emotions (personally, I think “Vulcan” would have been a bit less insulting, but perhaps this guy is the only scientist on the planet unfamiliar with Star Trek).
In addition, “our memories of emotional experiences tend to get rearranged and distorted, so much so that some of what we remember never actually occurred.” (I think the author must be acquainted with some of my extended family members – I am all too familiar with this phenomenon.) So what is an investor to do? Housel provides the same advice as that given to dieters – keep a journal. It’s easy to say you’ll be a rational investor (or a healthy eater) but far more difficult in practice. The best way to remain accountable is to keep an accurate history, refer to it, and learn from it.
Live long and prosper.
Sarah DerGarabedian, CFA
A bitterly divided Congress, a government shutdown, an impending debt ceiling debate – this must be a sign that our political landscape is as bad as it has ever been. But, from what I can tell Americans are instead coming together and becoming increasingly united…in their disgust with our government! The Onion, self-acclaimed as “America’s Finest News Source” (they are a satirical news outlet) had a spectacular headline recently titled “Psychiatrists Deeply Concerned for 5% of Americans Who Approve of Congress”. At least there is still a laugh to be had out of all of the political dysfunction out there!
Regardless of your political opinion and all jokes aside there are implications of the political debates in regards to your investments. Looking back to August 2011 when Congress narrowly avoided defaulting on our debt we can see the results of the poor work efforts by our elected officials. A last minute debt ceiling increase was passed back then, but Standard & Poors still downgraded U.S. Treasury debt from their highest credit quality of AAA based on the political dysfunction. Markets were shaken with uncertainty, and this resulted in a quick decline in the stock market – but oddly enough a rush of investors bought Treasury bonds for their safety. See the irony there?
Several days ago we saw a strong rally when headlines crossed that there were talks that both sides may agree to potentially a six week increase in the debt ceiling. I take this as showing how low the market expectations are for political outcomes – a strong rally on talks of maybe meeting about a maybe making a decision…not now, but within 6 weeks. Had you have tried to time the market reading the headlines earlier last week, you would have missed this incredible rally that seemingly came as a result of very little.
What we do know is that in the end, as messy as it may be, a solution will come, the government will reopen, and the debt ceiling will be increased. Though the near-term uncertainty can hurt markets, just look at the longer-term results from August 2011 when the S&P 500 traded below 1,200 compared to over 1,700 now. Over time a recovering economy and growing company profits drive the stock market. The politics is just an unfortunate and embarrassing side-show along the way.
Travis Boyer, CFA