Your Savings & the Liars, Cheaters and Thieves


Who are the liars, cheaters and thieves stealing our hard earned savings and wealth?

Hackers, for sure, want our money.

A recent Forbes article” “Hackers Are Hijacking Phone Numbers And Breaking Into Email, Bank Accounts: How To Protect Yourself” (1) explains.

The article shows: How if you have a cell phone and use Gmail, Yahoo Mail, iCloud, Dropbox, Evernote, Facebook, Twitter and the websites of banks and countless other web services: you are at risk of being hacked, having your money stolen and having sensitive information exposed.

With just your phone number and a little bit of what’s called “social engineering” in which a hacker doesn’t necessarily need technical knowledge but just to convince a customer service rep that they are you, a maliciously person can break into all the above accounts and more.  It starts by getting some readily available information about you like maybe address, number, birthday or last four of your Social Security Number and giving some combination of them and a plausible story to a telco customer service rep who then lets them into your account where they then proceed to have your phone number forwarded to their phone or “ported” to another carrier and the hacker’s device.

Then the phone hijacker simply goes to, say, your Gmail or your online bank account, tries to log in as you but clicks “forgot the password” and resets the password by getting a code texted to your phone number, which is now directing all its messages to their device. Then they are in your account — and you are locked out.

Thieves.

The article suggests setting up a pass code on the account as protection.  Use a mobile-carrier-specific email address to access that account.  Disable online access to your wireless account.  Tell your phone carrier you’d like to require changes to your account made only if you show up in person with photo ID.  That’s irritating, frustrating, inconvenient and wastes time.  But it makes good sense.

Is Wall Street an even bigger threat?

There are even greater risks we face though.

Here is one way the institutions… who say they look after our money… really look after themselves.

The Wall Street Journal article “Day Trading in Wall Street’s Complex ‘Fear Gauge’ Proliferates” (2) tells how investment banks have created products to invest for or against Wall Street’s index of volatility.

They are called VIX related exchange traded notes and are now among the most actively traded securities on the public stock markets.

They must be good. Right?

Sure they are good… but for whom?

One of the early developers of these securities (a financial professor at Vanderbilt University) warned that these securities are too risky nonprofessional investors.  The S.E.C. publicly warned investors about the risk.

And it’s true… the fund prospectuses warn that large sums of money can be lost.

They are murky, these warnings… small print.  Hard to understand legalese.

Promotions are in bold, however…

The message is loud and clear.  Get rich!

The message incites speculative fever.  It’s easy to catch and is at epidemic levels now.

At cult levels in fact.

The day trader disease is nothing new.  20 years ago, dot-com and tech companies soared and swooned.  People quit their day jobs to trade using new E-Trade outlets.  A new generation of day traders, now bet on VIX, as they are hyped up on social media led by Stock Twits, Twitter and Facebook where the claimed experts argue which easy way to get rich is best.

These supposed pros spread the disease like a virus among stay-at-home investors.

Liars!

Most investors get killed.  

The VIX related funds have a yearly return history of negative 58 percent.

Since their inception in 2009 buy and hold investors have lost 99%.

Negative!  That means minus.  Loss.  Money gone.  Finances ruined.

A few investors make a fortune.  Guess who is involved?

The leader of this pack is Barclays. Their iPath S&P 500 Short Term Futures ETN (VXX), and such investments have attracted over $14 billion since 2012.

Wait a minute?

Wasn’t it Barclays that was was recently fined $115 million by a U.S. regulators for allegedly attempting to manipulate the major benchmark interest rate between 2007 and 2012?

Is this the same Barclays that was slapped another $109 million fine for trying to keep a huge deal with super rich clients so secret that the bank  bought a new safe just to store the documents.  Regulators said the lengths Barclays employees went to hide $2.8 billion of an investment deal that included the bank’s own staff, “threatened confidence in the U.K. financial system.”

Yes… it did.

Didn’t Barclays and Credit Suisse get fined $154m by US regulators for their US “dark pool” trading operations.  Barclays mislead investors and their part of the fine was $70m.

Credit  Suisse was the other culprit. They had an even larger fine ($84 million).

By the way… can you guess?

Who is the other leader in these VIX traded securities that are killing so many day traders?

Dare I write the name?  Credit Suisse.

Cheaters.

Hackers, big banks, brokers and social media… the liars, cheaters and thieves.

They sell the Cinderella Effect.

Warren Buffet said it…

“The line separating investment and speculation, which is never bright and clear, becomes blurred still further when most market participants have recently enjoyed triumphs. Nothing sedates rationality like large doses of effortless money. After a heady experience of that kind, normally sensible people drift into behavior akin to that of Cinderella at the ball. They know that overstaying the festivities — that is, continuing to speculate in companies that have gigantic valuations relative to the cash they are likely to generate in the future — will eventually bring on pumpkins and mice. But they nevertheless hate to miss a single minute of what is one helluva party. Therefore, the giddy participants all plan to leave just seconds before midnight. There’s a problem, though: They are dancing in a room in which the clocks have no hands.”

This is the virus… “promises of large doses of effortless money”.

The inoculation is the search for value.

There is no value in VIX.  It’s just an idea… a gamble, a bet against fear .  Professional investors with huge reserves may gain by using VIX as a hedge.  They can use VIX to protect us when we are their customers.

But do they? Or do they offer up VIX as a speculation.

If they do to you…beware.   VIX is a disease that infects human nature and robs us of our savings and wealth.

Gary

(1) Forbes.com:/sites/laurashin/2016/12/21/hackers-are-hijacking-phone-numbers-and-breaking-into-email-and-bank-accounts-how-to-protect-yourself/#4f528aac360f

(2) NYTimes.com:  Day Trading in Wall Street’s Complex ‘Fear Gauge’ Proliferates


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