IBM defines cybersecurity as “the practice of protecting critical systems and sensitive information from digital attacks.” You may not be in the business of defending critical infrastructure from online threats. But fraud, identity theft, and online scams that target your finances pose significant challenges for everyone in today’s digital world. Armed with knowledge, vigilance, and a healthy dose of caution, you can minimize risks and stay safe online.
Let’s start with SPAM
We’ve all received emails that are obviously fraudulent. Others, however, appear to be legit. Be careful. The best advise with SPAM is to ignore the email. It may contain links that ask for personal information. The link could be malware, which might provide the spammer with access to sensitive files on your computer.
Another risk is ransomware, which blocks access to files unless you pay a ransom (usually in Bitcoin) by their deadline. Avoid the unpleasant choice of paying the ransom or losing files. Back up your data on the cloud and/or an external hard drive.
SPAM is also becoming more prevalent via text or instant messaging. Have you ever received an unsolicited text from a major corporation? Maybe it appears to come from Amazon, FedEx, or a well-known corporation. While some messages provide updates and estimated delivery times, others are generated by criminals, hoping you’ll respond by providing them with personal information. Let me give you a quick example. “Answer Few Questions Get Paid (dollar emoji).” This was clearly an attempt to defraud unsuspecting recipients. Poor grammar added to its fraudulent tone. Or, “USP-We are unable to deliver your package due to missing address information, please fill in you address promptly (includes a link).” Yes, UPS was spelled USP, and the link didn’t include UPS embedded within a random string of characters. How might you sidestep a financial minefield? Don’t give out your email or post it publicly. Never reply since a response informs the spammer that your email or phone number is legitimate. Think before you click on a link. Download filtering tools and anti-virus software, both for your computer and smartphone.
Social media
Have you received a brief instant message from a Facebook friend that’s worded in a way that doesn’t reflect your friend’s personality but happens to include a link? If so, their account was probably hacked. Confirm by contacting your friend through another platform. Have you received a friend request from an established friend on Facebook? In most cases, a criminal has impersonated your friend’s profile. Before accepting the friend request, talk to your friend and make sure it’s legitimate. Some folks have more than one profile on Facebook. Also, be leery of accepting friend requests from strangers. You don’t know them. Why would they send you a friend request? Consider this: would you give your phone number or address to a total stranger if asked? Becoming a ‘friend’ with a stranger offers them a peek at your private life.
While we’re discussing Facebook (or, for that matter, social media in general), be careful what you post. It seems harmless to mention your anniversary, pet’s name, birthday celebration, first concert you attended, or your first job. But these can provide answers to security questions that will give a fraudster access to an account. Simply put, ignore the public post that asks, “Date yourself. What’s the first concert you attended, or first car owned?”
Watch for online scams
Some scams impersonate official government websites such as Social Security or the IRS. For starters, the IRS doesn’t send unsolicited emails and won’t discuss tax account information via email or use email to solicit sensitive financial and personal information from you. The IRS initiates contact with taxpayers via regular mail. Social security scams are also a growing problem. If there is an issue, Social Security will generally send you a letter. Callbacks occur only if you’ve requested one. Scammers may offer to increase benefits, protect assets, or resolve identity theft, but often demand payment via retail gift cards, wire transfers, pre-paid debit cards, or cash. That is a HUGE red flag! It screams fraud! The Social Security Administration won’t ask for something like a gift card, cash, or prepaid debit card. They may also threaten to have you arrested or take legal action if you ignore their overtures. Just hang up the phone or ignore the email. That seems obvious, but fraudsters wouldn’t be spending time fishing for cash if these scams didn’t work.
Cryptocurrency scams
Scams involving, for example, Bitcoin have proliferated and scammers are looking for ways to cash in. According to the FTC, no legitimate business is going to demand cryptocurrency in advance or payment in cryptocurrency only. Are you being pitched a risk-free investment in crypto that guarantees big profits? If you send them money, expect to lose 100% of your investment. Keep online dating and investment advice separate. If you meet someone on a dating site, and they want to show you how to invest in crypto or ask you to send them crypto, you’re staring down the barrel of a scam. End contact immediately. They are only interested in mining your savings, not romance.
Dodging identity theft
Consider freezing your credit. When you freeze your credit report, no one can request your report. No one (including you) can apply for a loan or obtain a credit card while your credit is frozen. Collect your mail daily and review bank statements on a regular basis. Install and keep anti-virus software updated. This not only applies to PCs. Apple products aren’t immune from malware and viruses either.
Create unique and complex passwords for each account. A good password manager program can easily assist you. But you may use the ‘default option’ if you use Google Chrome as your browser. Google will automatically supply you with a random string of characters, letters, and numbers and save the password for you. It’s generally considered to be a safe option and better than recycling a password that you’ve used numerous times (and one that might have been stolen and is available on the dark web). While we are on the topic of browsers, keep them updated. Updates not only incorporate fixes, new features, and efficiencies, but more importantly, they include the latest security updates. Free plug-ins for your browser can also provide an added layer of safety by warning you that a website you’ve clicked on has been compromised by hackers. Consider two-factor authentication. When you log into an account, a code will be sent to your phone or email that you must input before you can access the account.
Final thoughts
One can’t be completely safe online. But if you are proactive and take the necessary precautions, you greatly reduce your odds of becoming a victim. Many of the ideas we suggest may seem elementary. But in the moment we open that email, text, or answer the phone, our guard may be down. No one is immune from a momentary lapse of judgment. You’ve heard the adage, a penny saved is a penny earned. Well, a healthy amount of skepticism and caution online can pay huge dividends.
A gloomy September
For reasons that are not fully understood, September has historically been the worst month for stocks, according to the average S&P 500 return for each month (St. Louis Federal Reserve dating back to 1970).
As illustrated in Table 1, this past September was indeed a weak month. It was also the worst month of 2022 for the S&P 500 (MarketWatch, monthly return data).
Source: Wall Street Journal, MSCI.com, Yahoo Finance, Bloomberg; MTD: returns: August 31, 2022–September 30, 2022; YTD returns: December 31, 2021–September 30, 2022; *in US dollars
What worked against stocks last month?
Headwinds that have battered markets this year remain in place. For starters, rate hikes. The Federal Reserve hiked the fed fund rate another 75 basis points (1 bp = 0.01%) to 3.00%--3.25% last month, maintained its aggressive stance, and suggested in its economic projections that we might see another 125 bp by year-end.
Why is the Federal Reserve raising interest rates at a pace not seen since the second half of 1980? (Rate data from the St. Louis Federal Reserve) Inflation remains stubbornly high. Ultimately, price stability is the foundation of a strong economy and long-lasting economic expansion. But the Fed’s rate hike hammer hasn’t landed without pain. While the Federal Reserve is not publicly forecasting a recession, its latest set of projections released last month show it believes its inflation-fighting campaign will boost the unemployment rate next year. Investors are also growing concerned the economy could sink into a recession next year, which would depress earnings.
In addition, the sharp increase in interest rates has led to a much stronger dollar since parking cash safely in the U.S. offers a higher return to foreign investors. A strong dollar reduces the price of imported goods and the cost of an overseas vacation, but the rapid increase in the greenback against foreign currencies is raising fears the Fed could unintentionally “break” something in the financial markets, either at home or abroad. It happened during the early 1980s, when sharp rate hikes put a heavy strain on Latin America, and again in 1994, when rate hikes exacerbated problems in Mexico, leading to a bailout. It also led to bankruptcy in Orange County, California. We’re not forecasting an imminent financial crisis, and any unexpected shift by the Federal Reserve could alleviate financial market pressures. That said, we recognized that the Fed’s steely resolve to bring down inflation has created pain in financial markets.
Bear history
Taking a longer-term view, we want to emphasize that bear markets eventually come to an end, and bottoms typically occur when negative sentiment is high. According to Charles Schwab, the average bull market since the late 1960s ran for about six years, delivering an average cumulative return of over 200% for the S&P 500 Index. The average bear market lasted roughly 15 months, with an average cumulative loss of 38.4%. The longest bear market lasted just over two and a half years. It was followed by a nearly five-year bull run. The shortest occurred in 2020 and lasted only 33 days.
One final remark
We won’t venture to guess how October might end, and we would counsel against making portfolio adjustments based on a one-month time horizon. October has a spooky reputation—1929, 1987, 2008. Since the 1970s, it has been a volatile month but historically has been a strong month, according to S&P 500 data (St. Louis Federal Reserve).
I trust you’ve found this review to be educational and helpful. If you have any questions or would like to discuss any matters, please feel free to give me or any of my team members a call. As always, thank you for the trust, confidence, and the opportunity to serve as your financial professional.
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This communication is designed to provide accurate and authoritative information on the subjects covered. It is not however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought.
The views stated in this letter are the opinion of the author and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change with or without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results. Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.
The return and principal value of stocks fluctuate with changes in market conditions. Shares when sold may be worth more or less than their original cost.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.
The NASDAQ Composite Index includes all domestic and international based common type stocks listed on The NASDAQ Stock Market. The NASDAQ Composite Index is a broad based index.
The S&P 500 is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
The Russell 2000 Index includes 2000 small-cap U.S. equity names and is used to measure the activity of the U.S. small-cap equity market.
The MSCI World Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of developed markets. The MSCI World Index represents 23 developed market countries.
The MSCI Emerging Markets Index is a free float-adjusted market-capitalization-weighted index designed to measure the performance of global emerging market equities.
The Bloomberg Barclays US Aggregate Bond Index, or the Agg, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States. Investors frequently use the index as a stand-in for measuring the performance of the US bond market.
The hypothetical investment results are for illustrative purposes only and should not be deemed a representation of past or future results. Actual investment results may be more or less than those shown. This does not represent any specific product or service.
A diversified portfolio does not assure a profit or protect against loss in a declining market.
The return and principal value of stocks fluctuate with changes in market conditions. Shares when sold may be worth more or less than their original cost.
The return and principal value of bonds fluctuate with changes in market conditions. If bonds are not held to maturity, they may be worth more or less than their original value.
Distributions from traditional IRAs and employer sponsored retirement plans are taxed as ordinary income and, if taken prior to reaching age 59½, may be subject to an additional 10% IRS tax penalty. A Roth IRA offers tax free withdrawals on taxable contributions. To qualify for the tax-free and penalty-free withdrawal of earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59½ or due to death, disability, or a first time home purchase (up to a $10,000 lifetime maximum). Depending on state law, Roth IRA distributions may be subject to state taxes.
Before rolling over your retirement account, consider all available options, which include remaining with your current retirement plan, rolling over into a new employer’s plan or IRA, or cashing out the account value. When deciding between an employer-sponsored plan and IRA, there may be important differences to consider—such as range of investment options, fees and expenses, availability of services, and distribution rules (including differences in applicable taxes and penalties). Depending on your plan’s investment options, in some cases, the investment management fees associated with your plan’s investment options may be lower than similar investment options offered outside the plan.