Jan 192015

The Death of Corporate Reputation: How Integrity Has Been Destroyed on Wall Street (Applied Corporate Finance) by Jonathan Macey 
It will probably come as no surprise to anyone reading this book, but corporate reputation is at an all-time low. Once upon a time, a company’s reputation was a prized asset, guarded jealously. In this book, Jonathan Macey shows how that time is long gone, that companies who have lost their reputations have not lost business and sometimes even gained because of wrong-doing or even illegal activity. He picks apart everything from companies, brokerages, banks, the people who run them, even the regulatory agencies tasked to make sure they play by the rules. It is a disheartening look into just how corrupt commerce and government has become. Who loses? The consumers. Who do we trust? Who can we depend on to help make decisions? The simple answer is no one. And that is the saddest commentary of all.

The book is not an easy read. Macey does a good job of explaining the complex strategies employed. I understand junk bonds for the first time in my life from this book. But unless one is very interested in this topic, it will be a hard slog. I admit I used this book as a sleep aid more than one night. It is one of the best documented books I have read. I think the footnote references were half as long as the chapters.

Jan 112015

MONEY Master the Game: 7 Simple Steps to Financial Freedom by Tony Robbins  

The premise of this new book by Tony Robbins is listed right on the cover: Secrets from the world’s richest financial minds. Isn’t that what everyone who doesn’t have $1 million in the bank want to know? How did they get there and how can I get access to all the tricks the 1% of the world’s richest possess? What are the magic schemes they use to hang on to their money when all the rest of us seem to constantly be investing in the wrong thing?

I was asked to give an advance review of Tony Robbins’ new book, Money: Master the Game as part of their pre-launch marketing strategy. For the price of shipping and handling, I was sent a copy of the book. The problem? I didn’t receive it until after the launch. I was given the first two sub-chapters electronically, but about all those accomplished was to irritate me (and hundreds of others, based on Amazon reviews) by teasing me with everything I was going to be told in subsequent chapters that I didn’t have access to yet.

When I finally got the book, I started reading in earnest. Yes, I want those secrets. The first one? I am part of the richest 1% of the world. Yes, ladies and gentlemen, the first thing Tony points out is that if you make more than $50,000 per year, you are part of those evil 1%-ers the protesters all rail against. We in America are among the most blessed on the planet with what we have been given. With that out of the way, he then launches into questioning WHY we want to become rich. Make not bones about it, he absolutely expects everyone who reads this book to know why they want to have money, how much is ‘enough’ and what they will do with it once they get it.

Tony was frustrated with the lack of information given to the majority of the people in the world on what works and what doesn’t. Time and again, he would see people lose their life savings by turning their money over to “financial analysts” who would legally steal the money through fees, commissions and other legal methods. He was doing well with his pile, but he was able to hire the best and brightest in the world and had access to the smartest people on Wall Street through his myriad of connections. Four years ago, he decided to do something about it and enlisted those bright minds to get the information out in a format for everyone to see. The result is this book. He interviewed everyone from Sir John Templeton to Warren Buffet and asked them simple questions. Over the course of several years, he built up and extracted the strategies that are contained in the book.

Are they earth-shattering, market-rocking or super-secret? Nope. I have read every one of them before in one place or another. What IS helpful in this book is the way he puts it all together. For the very first time, someone showed me HOW to calculate just what I needed to retire on. Not only did Tony do that, he showed me how to calculate 5 different levels of retirement. I am thrilled to say that come this time next year, I will have achieved the bare bones retirement level. I won’t be having fun, but I will be able to live in my house, have food to eat, transportation and insurance for the rest of my days. It is very comforting to know that little fact/milestone. The next level up, a few other things added in, will be reached in 5 years. If everything stays the same as it is now, I will be able to retire at my current lifestyle one year before I actually retire. Well, that’s cool! I never knew that before. That in itself made me sunny and happy for the next two days! I’m not doing all that much for retirement beyond my 401(k) contribution right now, so I thought I was going to be living in a box, eating food out of a dumpster. At least, that is what the popular media had led me to believe.

What I do like about this book is the way everything is laid out. He explains things pretty well for the most part. There were a few times I got lost in some of the explanations. I even fell asleep several times throughout. But I have turned down several pages to go back and review as I work through implementing the plan. I enjoyed the interview transcriptions from the many people he interviewed. One of my favorite was with Kyle Bass and his concept of investing without risk of loss. That part was new to me and very profound.

One of the things I appreciated the most from this book was in the last chapter. Tony created a checklist to the entire book. I am a lover of checklists and this was welcome. I had been contemplating going back and rereading the book to make my own checklist when I turned the page and found it all assembled for me. The only addition I would recommend to Mr. Robbins is to add page numbers to the checklist for quick reference.

Good book, great stories, fantastic interviews and actionable advice I can go implement. Yes, there are a few times when it felt like a sales pitch for some of Tony’s companies or seminars, but he makes a point to saying they are not required. That’s all I would ask from a guy who makes his living from providing services. This book was a gift to the world – he is donating all the profits to his foundation to feed 40 million people a meal this year. I can live with that. In fact, I am planning on donating to it as well.

Feb 232012

A few weeks ago I noticed an odd transaction on my bank account. For some reason, a very large bank deposited a penny into my checking account. It struck me as a little strange, especially since the only dealings I have with this particular bank is they hold my mortgage. I went to visit my local bank and asked them to investigate it a little. They immediately became concerned; they had seen this before.

Someone was trying to phish, or hack into, my bank account. They send an electronic transaction to a bunch of bank accounts. They may have purchased the list somewhere or, more likely, they just send it out to a bunch of accounts. If the transaction is not returned as having targeted an invalid account, they know they have a “live one”. My bank said they next step would probably be a little bit bigger transaction, like a twenty cent deposit. If that didn’t raise a red flag, they would next try a small withdrawal, like fifteen dollars. If that went unnoticed, they would try bigger and bigger withdrawals until they pulled all the money they could.

Fortunately, I caught them on the first transaction and we shut down the account. My money remains safely protected and the bank is on the lookout for their next move, should it come. That is the good news. Everything else about this story is bad news.

What a pain this has been for me! Changing accounts is time consuming! Even though the bank was kind enough to give me a box of free checks for the new account, I have had to spend hours changing all the hooks I have to my account. I had no idea how much I had integrated my bank account into my life.

One of my goals is to simplify my life by automating as many tasks as possible. High on the list for me was bill paying. Late last year I spent a lot of time setting up as many automatic payments as possible, everything from the electric bill to my son’s allowance. All that automation was wonderful for a couple months. Now it has come back to haunt me.

I have to call the bank every day to make sure I didn’t miss a bill that is now trying to fund out of the old account. I have to reset all my auto deposit information with my employer. I have had to go back over previous statements to find all the little automations I had set up and then take the time to change them over to the new account. I have been working on this for over a month now and am still finding things I missed.

Yes, I know I could go back to being a luddite and handle all my banking transactions by hand. I’m not willing to do that. This current pain will subside with time. I will still stay very vigilant on my account to watch for the next time. Yes, I believe there will be a next time. It is part of the world we live in, I’m afraid. Here is what I am doing now to help prepare to make it easier on myself, should there be a next time.

  1. Create a list of all authorized online transactions. The bank needed to know what I had authorized. I had created these over several months and years, and I hadn’t a clue what all I had authorized. Now I will keep a list, with all the account numbers, web addresses, contact information and expected dates of transaction in a file.
  2. Store this information in an encrypted file. Should my computer get hacked, I don’t want this information just lying around, open for all to see. There are a few methods of encrypting this data, with the easiest being to add a password to the spreadsheet. I need to research just how safe this method is, but I suspect even this basic level is enough for my needs.
  3. Check my bank account weekly for odd transactions. This is easy for me anyway, since I spend a few minutes assigning my transactions to their associated envelops in my budgeting system. I’ll be on guard for anything that looks strange.
  4. Set up alerts on my bank’s website. I discovered they have several ways of notifying me when something happens to my account. Check your bank. They may have something that will help. For example, I now have an alert set up for every transaction that comes through ACH (the method that rogue transaction used in the first place). Some banks will text the information to your phone. Mine will send an email. I can put up with a couple more email to keep my money safe.
  5. Tighten up the security around my home Internet connection. I’ll write more on this in the coming weeks. There is a lot that can be done to make things more secure and reduce the chance of data being stolen. Practice safe searching. I will use OpenDNS to protect my connection and keep the bad guys out. They are generally lazy. Even some security will discourage the, causing them to move on to easier targets.
  6. Continue to shred everything that has personal information on it. It sites right next to my ScanSnap. As soon as I scan a document, I drop it in the shredder. Anything with identifying information needs to be shredded.

I don’t believe there is a way to completely safeguard myself from getting hacked. However, these steps will hopefully reduce the risk to an acceptable level. I was fortunate I was able to thwart this attack, but only with a lot of work on my side. These steps will hopefully ease my effort, should there be a next time.

What have you done to help protect yourself in the digital age? I welcome your comments. There is much to learn. We need a digital neighborhood watch program.