A security credit freeze is one way to achieve peace of mind instead of worrying about identity theft. I just tried to extend a credit freeze and replace a lost PIN. I forgot my PIN, so I needed a new one in case I wanted new credit. I contacted all three credit bureaus--Equifax (EFX), Transunion, and Experian--to request new PINs.
I learned in California, a credit freeze is indefinite, so I didn't need to worry about "extending" my freeze. (In less consumer-friendly states, a freeze may be limited to seven years unless extended by the consumer.) If you are a victim of identity theft, you may receive a credit freeze without charge. If you are not a victim of identity theft, you may have to pay a fee to activate a credit freeze and to unfreeze your account later. When you apply, you are given a PIN that allows you to temporarily deactivate the freeze.
It appears each company protects and allows access to consumer information in different ways. I am now convinced Congress and a few good law firms need to extend their influence over credit bureaus to better protect consumers' personal data.
Transunion: I had a good experience with Transunion, which provided me a new PIN over the phone. An agent who spoke perfect English answered my call. She walked me through the process perfectly. I had to give her my SS# and basic information over the phone. She confirmed other personal information also, and I had to provide a credit card limit and the issuing bank to get a replacement PIN. It felt good to see so many different levels of security questions before Transunion would reset my PIN. When I checked to see whether I was listed as an identity theft victim, the representative told me I was not listed as such. After confirming more information, she told me she had fixed the issue. I was pleased with Transunion's professionalism.
Equifax: I had a harder time with Equifax. The agent gave me a different mailing address than the one listed on Equifax's own website, so I got worried. When I asked to talk to a manager, it took several minutes before I was connected to him, and he didn't seem to think there would be a difference between the two PO Box addresses.
In addition, Equifax (EFX) just wanted basic information--full name, SS#, date of birth, and address. This information isn't extremely difficult to get, so I was surprised. Smart identity thieves could probably reset my PIN and potentially open my credit to abuse. I asked if more information was needed (like a copy of my driver's license). The manager said no information beyond the basic information was necessary, and he provided me with a confirmation number to assist the transaction when I sent Equifax the information over snail mail. Overall, I did not get a good feeling about Equifax's commitment to protecting consumer information.
Experian: These guys are geniuses...when it comes to avoiding phone calls. Unless you have a specific code of some sort, you can't get through to a live representative. I tried every trick I could, including hitting zero and random numbers, and the system terminated my call each time.
At the same time, I couldn't help but appreciate Experian's method. Unlike Equifax and Transunion, I didn't see any information on Experian's website specifically about a replacement PIN. Experian's snail-mail process creates one significant upside: the company has more stringent requirements before it allows you to re-set your PIN. Experian requires a copy of your driver's license and recent telephone record before issuing a PIN. I sent the information over the mail. We'll see how quickly Experian responds.
Overall, I am surprised at the differences between the three companies. Laws relating to personal information ought to be more uniform and more stringent. As my experience shows, we have a long way to go in terms of protecting ourselves.
Disclosures: I do not currently own any Equifax (EFX).
"And if an epitaph be my story, I'd have a short one ready for my own: I had a lover's quarrel with the world." -- Robert Frost
Tuesday, October 20, 2009
Monday, October 19, 2009
eBay's Founder (2009)
Pierre Omidyar at eBay's 2009 shareholder meeting. Bonus points if you can correctly guess the ethnicity and birthplace of these two men.
Sunday, October 18, 2009
Plus ca change, plus c'est le meme chose
From the 1938 Frank Capra film, You Can't Take It With You:
Lincoln said, "With malice toward none; with charity to all." Nowadays they say, "Think the way I do, or I'll bomb the daylights out of you."
The more things change, the more they stay the same. Military-industrial complex and animal spirits, 1; human wisdom, 0.
Lincoln said, "With malice toward none; with charity to all." Nowadays they say, "Think the way I do, or I'll bomb the daylights out of you."
The more things change, the more they stay the same. Military-industrial complex and animal spirits, 1; human wisdom, 0.
Saturday, October 17, 2009
Friday, October 16, 2009
Teachers' Unions
The NYT on schools:
http://www.nytimes.com/2009/10/15/opinion/15kristof.html
The effort to remove the [allegedly incompetent] teacher is expected to cost about $400,000, and the outcome is uncertain. In New York City, with its 80,000 teachers, arbiters have removed only two for incompetence alone in the last couple of years.
Whoa.
http://www.nytimes.com/2009/10/15/opinion/15kristof.html
The effort to remove the [allegedly incompetent] teacher is expected to cost about $400,000, and the outcome is uncertain. In New York City, with its 80,000 teachers, arbiters have removed only two for incompetence alone in the last couple of years.
Whoa.
Thursday, October 15, 2009
Dow 10K: the Higher They Rise, the Harder They Fall?
The Dow Jones Index Average (DJIA) closed above 10,000 yesterday. Unfortunately, hardly any American understands the reasons for the increase and bounce off the March lows.
Most DJIA companies receive at least half of their revenues from abroad. Coca Cola, McDonald's, Proctor and Gamble have been expanding overseas for decades. Even Walmart--unfairly stereotyped as a rural, "red state" store--has been expanding aggressively in Mexico, the U.K., and the EU.
Why are these international forays relevant? Over the past year, the American dollar has collapsed. The Canadian dollar, once the laughingstock of the world, is almost at parity (again) with the American dollar. Almost every major currency, except for the Mexican peso (FXM), has increased approximately 30% against the greenback. Thus, as a result of international sales, most DJIA companies will receive an artificial boost in earnings per share due to the dollar's decline. For example, let's say GE sold 1,000 widgets in Germany in February 2008 and made 1,000 dollars. If GE sells 1,000 widgets at the same price one year later, it will record approximately 1,300 dollars. On paper, GE appears to be making 30% more money; in reality, nothing has changed except currency values.
While the dollar's weakness has caused an artificial boost to earnings per share, the DJIA has also increased because other countries' currencies are strong or artificially depressed. For example, despite some barbed words between China and America, China continues to depress the value of its currency. China is smart to do so--its manufacturing sector is still booming (while America's is declining), and a weaker currency gives Chinese companies an advantage in exporting their products. In the meantime, the euro and yen continue to be strong. The ECB, unlike the Federal Reserve, has a singular mandate to maintain a stable/strong currency, and Japan's Finance Minister doesn't seem interested in devaluing the yen.
Where does that leave the United States? It leaves American companies in a stronger position to sell products to Europeans, the Chinese middle class, and the Japanese. In fact, I would not want to own any Japanese or EU-based stocks right now. European and Japanese companies now have to compete against American products, which will be cheaper because of the dollar's decline. Although American products used to have quality issues when compared to European and Japanese products, most American companies have closed the quality gap. Thus, I see American products cutting into "home-team" sales in Europe and Japan, especially with Germany being more willing to open up its markets to outside competition. One exception to increasing American dominance will be European healthcare companies, because European governments subsidize healthcare. Thus, if you own Sanofi-Aventis (SNY), Roche, or Novartis AG (NVS), you may ignore this paragraph. Meanwhile, the Chinese will continue diversifying away from the American dollar by buying hard assets and commodities. The Australian and Canadian dollars will continue to benefit, and the American dollar will continue to seek support.
Why should American investors care about these currency-based developments? The DJIA has increased because companies and investors expect the weak American dollar to boost spending by Europeans, British and Japanese consumers. If the foreign consumers fail to buy, the market's gains may perish.
What about Indian and Chinese consumers? Although both countries have increased the size of their middle class, Indian and Chinese consumers tend to save money, not spend it. While this cultural predilection towards saving may change in ten or twenty years, it is naive to believe that Chinese and Indian consumers will spend enough now to return the world economy to its glory days. Although it is easy to imagine Americans (and Russians) spending like drunken sailors, it is more difficult to imagine Chinese and Indian consumers spending money they don't have. (Note: I said spending money they don't have, so please don't cite Indian gold-buying binges and opulent weddings, which are usually paid with cash or some other non-credit source.)
Why do I lack faith in the Chinese and Indian consumer? Currently, Chinese and Indian culture tend to focus on family and tradition, not unbridled individualism. Such a family-oriented, traditional approach dampens unreasonable or wild materialism. Of course, this is changing, but for now, I believe my hypothesis holds true. If I am correct, that means Mr. Market expects Europeans, Russians, and Japanese to spend enough to boost the world economy, and this expectation is already priced in the DJIA. God help the DJIA if this anticipated spending fails to occur.
There are other signs Mr. Market has gotten ahead of himself. First, look at the price of gold. Gold is an excellent barometer of consumer sentiment. Right now, gold is above $1,000 an ounce, which tells you that consumers are skeptical about any long-term economic recovery.
Second, don't forget the U.S. unemployment rate. It keeps getting worse, and the BLS numbers don't seem to accurately record people working multiple jobs or people who've given up looking for work. Also, as an employment lawyer in Silicon Valley, I'm seeing some unique layoff notices, which might disrupt any steadily improving employment numbers. For example. some major companies are informing employees that they will be laid off in six months unless they find another position within the company. (This unique form of notice is done partly to comply with the federal and state WARN acts.) In addition, a small business came to me yesterday for advice on laying off one employee. My limited personal experience indicates the unemployment rate is getting worse, not better. Why does the unemployment rate matter if it's a "lagging indicator"? Without a lower unemployment rate, wages will stagnate or decline, and consumers cannot and will not spend. If American consumers do not spend, then businesses will not spend or hire. Surely, you see the problem: if the Europeans, Chinese, and Russians don't come through, and the United States continues to have a high unemployment rate, no one will be left with the financial capacity to boost the world economy.
What, then, is a conservative investor supposed to do?
1. Recognize that the DJIA's recent gains are due in part to artificial reasons, not organic reasons like increased sales or better margins.
2. Understand that cash is still king, even though it may not feel like it. I, too, grit my teeth over abysmal money market rates, but I also own foreign currencies (FXA, FXC, CYB) to earn more interest.
3. There is some debate about deflation versus inflation. I have hedged my bets by buying a seven year Treasury note paying 3% and also iShares Barclays TIPS Bond (TIP); T. Rowe Price Inflation-Protected Bond Fund (PRIPX); and Pimco 1-5 Year U.S. TIPS Index Fund (STPZ). Months ago, I added a GNMA fund (PRGMX) to earn a higher yield. Even with these investments, most of them in retirement accounts, I am still cash-heavy.
Mr. Market's recent euphoria--caused by currency fluctuations, expectations of foreign spending, and stimulus money--should subside in time. While everyone else seems happy to party like it's 2006, I will be ready to take advantage of opportunities in 2010. As the DJIA rises day by day, I am reminded of Shakespeare: "Only / Vaulting ambition, which o'erleaps itself, And falls on th'other..."
The information on this site is provided for discussion purposes only. Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result.
Most DJIA companies receive at least half of their revenues from abroad. Coca Cola, McDonald's, Proctor and Gamble have been expanding overseas for decades. Even Walmart--unfairly stereotyped as a rural, "red state" store--has been expanding aggressively in Mexico, the U.K., and the EU.
Why are these international forays relevant? Over the past year, the American dollar has collapsed. The Canadian dollar, once the laughingstock of the world, is almost at parity (again) with the American dollar. Almost every major currency, except for the Mexican peso (FXM), has increased approximately 30% against the greenback. Thus, as a result of international sales, most DJIA companies will receive an artificial boost in earnings per share due to the dollar's decline. For example, let's say GE sold 1,000 widgets in Germany in February 2008 and made 1,000 dollars. If GE sells 1,000 widgets at the same price one year later, it will record approximately 1,300 dollars. On paper, GE appears to be making 30% more money; in reality, nothing has changed except currency values.
While the dollar's weakness has caused an artificial boost to earnings per share, the DJIA has also increased because other countries' currencies are strong or artificially depressed. For example, despite some barbed words between China and America, China continues to depress the value of its currency. China is smart to do so--its manufacturing sector is still booming (while America's is declining), and a weaker currency gives Chinese companies an advantage in exporting their products. In the meantime, the euro and yen continue to be strong. The ECB, unlike the Federal Reserve, has a singular mandate to maintain a stable/strong currency, and Japan's Finance Minister doesn't seem interested in devaluing the yen.
Where does that leave the United States? It leaves American companies in a stronger position to sell products to Europeans, the Chinese middle class, and the Japanese. In fact, I would not want to own any Japanese or EU-based stocks right now. European and Japanese companies now have to compete against American products, which will be cheaper because of the dollar's decline. Although American products used to have quality issues when compared to European and Japanese products, most American companies have closed the quality gap. Thus, I see American products cutting into "home-team" sales in Europe and Japan, especially with Germany being more willing to open up its markets to outside competition. One exception to increasing American dominance will be European healthcare companies, because European governments subsidize healthcare. Thus, if you own Sanofi-Aventis (SNY), Roche, or Novartis AG (NVS), you may ignore this paragraph. Meanwhile, the Chinese will continue diversifying away from the American dollar by buying hard assets and commodities. The Australian and Canadian dollars will continue to benefit, and the American dollar will continue to seek support.
Why should American investors care about these currency-based developments? The DJIA has increased because companies and investors expect the weak American dollar to boost spending by Europeans, British and Japanese consumers. If the foreign consumers fail to buy, the market's gains may perish.
What about Indian and Chinese consumers? Although both countries have increased the size of their middle class, Indian and Chinese consumers tend to save money, not spend it. While this cultural predilection towards saving may change in ten or twenty years, it is naive to believe that Chinese and Indian consumers will spend enough now to return the world economy to its glory days. Although it is easy to imagine Americans (and Russians) spending like drunken sailors, it is more difficult to imagine Chinese and Indian consumers spending money they don't have. (Note: I said spending money they don't have, so please don't cite Indian gold-buying binges and opulent weddings, which are usually paid with cash or some other non-credit source.)
Why do I lack faith in the Chinese and Indian consumer? Currently, Chinese and Indian culture tend to focus on family and tradition, not unbridled individualism. Such a family-oriented, traditional approach dampens unreasonable or wild materialism. Of course, this is changing, but for now, I believe my hypothesis holds true. If I am correct, that means Mr. Market expects Europeans, Russians, and Japanese to spend enough to boost the world economy, and this expectation is already priced in the DJIA. God help the DJIA if this anticipated spending fails to occur.
There are other signs Mr. Market has gotten ahead of himself. First, look at the price of gold. Gold is an excellent barometer of consumer sentiment. Right now, gold is above $1,000 an ounce, which tells you that consumers are skeptical about any long-term economic recovery.
Second, don't forget the U.S. unemployment rate. It keeps getting worse, and the BLS numbers don't seem to accurately record people working multiple jobs or people who've given up looking for work. Also, as an employment lawyer in Silicon Valley, I'm seeing some unique layoff notices, which might disrupt any steadily improving employment numbers. For example. some major companies are informing employees that they will be laid off in six months unless they find another position within the company. (This unique form of notice is done partly to comply with the federal and state WARN acts.) In addition, a small business came to me yesterday for advice on laying off one employee. My limited personal experience indicates the unemployment rate is getting worse, not better. Why does the unemployment rate matter if it's a "lagging indicator"? Without a lower unemployment rate, wages will stagnate or decline, and consumers cannot and will not spend. If American consumers do not spend, then businesses will not spend or hire. Surely, you see the problem: if the Europeans, Chinese, and Russians don't come through, and the United States continues to have a high unemployment rate, no one will be left with the financial capacity to boost the world economy.
What, then, is a conservative investor supposed to do?
1. Recognize that the DJIA's recent gains are due in part to artificial reasons, not organic reasons like increased sales or better margins.
2. Understand that cash is still king, even though it may not feel like it. I, too, grit my teeth over abysmal money market rates, but I also own foreign currencies (FXA, FXC, CYB) to earn more interest.
3. There is some debate about deflation versus inflation. I have hedged my bets by buying a seven year Treasury note paying 3% and also iShares Barclays TIPS Bond (TIP); T. Rowe Price Inflation-Protected Bond Fund (PRIPX); and Pimco 1-5 Year U.S. TIPS Index Fund (STPZ). Months ago, I added a GNMA fund (PRGMX) to earn a higher yield. Even with these investments, most of them in retirement accounts, I am still cash-heavy.
Mr. Market's recent euphoria--caused by currency fluctuations, expectations of foreign spending, and stimulus money--should subside in time. While everyone else seems happy to party like it's 2006, I will be ready to take advantage of opportunities in 2010. As the DJIA rises day by day, I am reminded of Shakespeare: "Only / Vaulting ambition, which o'erleaps itself, And falls on th'other..."
The information on this site is provided for discussion purposes only. Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result.
Wednesday, October 14, 2009
Judge Sanctions "Obama Birth Certificate" Lawyer
A Republican-appointed judge has sanctioned Orly Taitz, "birther movement" lawyer, 20,000 dollars. See opinion here. Apparently, Ms. Taitz clearly lacked standing to bring the motion and publicly criticized the court. At the same time, her motions may have produced a favorable result for her client--the military withdrew her client's deployment order, deeming him a distraction. Basically, because of Orly Taitz's frivolous motions, the officer does not have to go to Iraq or Afghanistan.
I've been sanctioned before, and so I generally disfavor sanctions. In this case, however, the judge warned the lawyer not to do something, and she went ahead and did it anyway. In addition, she compared herself with Thurgood Marshall and failed to comply with several procedural requirements. In the case where I was sanctioned, the federal judge--Samuel Conti--sanctioned me without a hearing and without any prior judicial warning. When I called to request a hearing, the court immediately moved the case file back to state court (opposing counsel had filed a motion to remand).
Even a lawyer like me, who generally favors pushing the envelope, has to agree that Orly Taitz got what she deserved.
Bonus: Ms. Taitz had a previous run-in with this judge. See here for details.
I've been sanctioned before, and so I generally disfavor sanctions. In this case, however, the judge warned the lawyer not to do something, and she went ahead and did it anyway. In addition, she compared herself with Thurgood Marshall and failed to comply with several procedural requirements. In the case where I was sanctioned, the federal judge--Samuel Conti--sanctioned me without a hearing and without any prior judicial warning. When I called to request a hearing, the court immediately moved the case file back to state court (opposing counsel had filed a motion to remand).
Even a lawyer like me, who generally favors pushing the envelope, has to agree that Orly Taitz got what she deserved.
Bonus: Ms. Taitz had a previous run-in with this judge. See here for details.
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