On this episode, Karl discusses whether or not this rally can continue and the big change in interest rates. Plus, cyber security is on the rise and Karl shares some valuable tips on ways to protect yourself.
Hey. Hey. Good morning, everybody. Welcome to the show. This is Creating Richer Lives. This show is brought to you by Covenant Lifestyle. Legacy. Philanthropy, and of course at covenant we are always trying to unburden folks from the daily tasks of financial management, and our goal is to really help you figure out what to do with the money you have accumulated. Some of you are in the process of accumulating. Where do those dollars go the most effective? From a growth standpoint, obviously trying to reduce taxes as much as possible, but the Lifestyle. Legacy. Philanthropy, very important, because, again, you can spend it, you can give it away to kids or grandkids, or you can give it to charity. Our job is to help you figure out which of those you want to do or all of them. Right? To talk through that and then to effectively position yourself to accomplish that, and that’s what we do each and every day at Covenant.
All right. Our telephone number, (210) 526-0057, if you need help in that arena. Of course, our website CreatingRicherLives.com. I’ve Been traveling all week. I don’t know why I did this, but I flew … Get this. I flew from San Diego to Atlanta, then from Atlanta to San Antonio. Don’t ask me why I booked it that way, but needless to say, I arrived a very, very, I’ll say early in the morning and then turned around and had to go out the next day again somewhere else. So, it’s been a busy week, and because of that flying and touching dirty armrests and all of that, my throat’s a little scratchy this morning, but bear with me. We will get through this. Look, we’ve got a really busy week going on or a busy week we had. I’m going to spend some time talking about that, because we have some big developments this week. I’m also going to spend some time talking about cybersecurity.
One of the trips I was just recently on, I was at a Schwab IMPACT Conference out in San Diego, which all the top advisors around the country are there and a lot of thought leaders. We’re getting information from cybersecurity experts, from Charles Schwab. You know, some of these folks used to work for the FBI, and so they know what’s going on. I’m going to share some of the tips. I’ve kind of consolidated some of the the tips and thoughts and put my own spin on it, and I’m going to share those with you today, because there’s a lot of stuff going on, and you have to be aware of it, because a lot of it is just prevent defense on your part. All right.
But first of all, let’s get to the markets. We saw positive trade news, right? We know that we saw some positive economic news, but we’re seeing some really interesting things. For example, we’re seeing international stocks have really been outperforming since August, and they continue to do so on probably easier … a deescalation of the trade tensions, tariffs being rolled back, things of that nature. But we also saw interest rates move up this week. Now, interest rates crossed a pretty important threshold. You know, we’ve been in a downtrend really since the fall of ’18, and here we are in the fall of 19, approaching the winter, and we’ve been making lower, and lower, and lower highs, from around 3.2% all the way down. But we broke out this week, technically speaking, and we’re now above 1.9% on a 10 year, so everybody’s watching will we break 2% on the upside, and it’s quite possible.
That’s going to happen in pretty short order. But it’s interesting, because the yield curve is no longer inverted, and it’s also, on top of that, what’s interesting is that not only is it not inverted. It’s normal again. You don’t have some of these kinks in it, and it’s quite different than even a month ago. So, the market is telling us that perhaps we should look forward to perhaps some improvement in the economy coming up. We know manufacturing’s been weaker. We’ve talked about the last few weeks watching the consumer, watching how many hours they’re working, all of those things, but the stock and bond markets may be telling us a little bit of a different story, that we’re looking maybe in the rear view mirror. Maybe it’s the things we don’t know, and things may be improving. So, interest rates went up, so bonds obviously got got hit this week. They have clearly broken trend. So, let’s see if this continues or not.
We have the positive trade stuff going on and then some positive economic news. Look, stocks have done very well this week, and we’re at new highs, close to new highs or at new highs really, but some of my term indicators are showing that we may be getting a little tired on the upside. If you look at some of the rallies in the last few days, you look under the hood, it’s been a lot of of churning, not a lot of overall leadership. So, it would not surprise me here to see us pause, if not pull back a little bit. Now, these aren’t warning signs like last fall. These are simply if you have new dollars to put to work, maybe you defer, depending on your situation, just to see if you get some better entry points. But the bears have been proven wrong. Everybody thought that we have to go down. We have impeachment, right? That’s there. Lot of geopolitical risk, but yet, as we’ve broken out to new highs, it’s caused a little bit of a panicky buying for those folks that are under invested.
Again, we have the calendar on our side. The markets typically do well for the rest of the year, so it’s quite possible we continue to run, but there’s a lot of positive things going on. You know, look at transports making a new highs. You look at international stocks participating once again. You look at financials doing really well, primarily because of the yield curve steepening. These are all really good things. I’m just saying in the short term we could be getting a little exhausted, especially if you look at some of the sentiment indicators that are still negative in terms of flows, but if you look at some of the put/call ratios, things of that nature, they’re a little stretched the other direction. We actually have kind of the extremes, and again, that may sound a little confusing, like wait a second. I thought that we were seeing negative flows.
We are still, so to me we still don’t have the people participating by buying calls and puts are positioning themselves for higher prices, and that can be a worrisome thing, because they’ve already bought. But the sentiment overall has been fairly negative, as we’ve been saying, and that’s a good thing. We need more people being converted from doubters and not believing the rally to come over to the side of believing it. I still think that can happen over time, but there’s no question in the last few days we’ve seen a little bit of a a pause, saw a little … nothing major. Again, take this with a grain of salt, but things are a little stretched to the upside here, so it would not surprise me to see a little bit of a pause, but again, take a look at interest rates. Interest rates are really important. Breaking above 1.9, and then 2% may be coming up in short order.
Now, when I was at the Schwab Conference, I got to listen to some of the best speakers out there in terms of being insiders in Washington DC, insiders into cybersecurity, all of that. The general consensus is that the House may move forward with impeachment, but the Senate probably can’t do. It doesn’t have enough people to flip. So, that’s why I don’t think you’re seeing the market really react to that. The biggest concern from some of these Washington insiders, and this isn’t a political statement, this is just truth, is Elizabeth Warren, because she has such radical beliefs against things that are going on right now, that that could cause some turbulence. So, if you see her poll numbers rise, and you see President Trump’s fall, and you see Joe Biden’s fall, that could lead to some 2020 volatility, and that would not surprise me in one bit.
Now, this particular gentleman did believe that we probably will see a Biden versus Trump, and you’ll probably see Biden go after a minority female on his ticket, which kind of reminds me of what John McCain did with Sarah Palin. If you recall, it’s kind of like I’m an old dude. I’m going to go get a young dudette. And that’s Biden. People believe you he looks like a grandpa. Therefore, he’ll balance it out by going to get a minority woman. We’ll see if that’s the case.
That may not affect anything, but this gentleman still believes that Biden will get the Democratic nomination, but if Warren spikes up in the polls, that could cause some turbulence. Now, if she did get into the White House, he believes she’d have to move to the center. So, a lot of the stuff people are worried about would never really happen, but that fear could cause some turbulence, and especially if we do get some type of blow off top, inn other words, if the market just keeps running through the end of the year, it’s quite possible it sets us up for a potential, you know, more volatile period in 2020.
Let’s move over to the cybersecurity. A couple of things going on with this, and this is extremely important you understand some of this. Some of the top things we’re seeing are fake financial websites and emails coming in. So, for example, Schwab said they do something like 100 fake Schwab accounts. They thwart them, like a hundred a week or some kind of crazy number. So, what’s happening is you get an email from a financial institution, doesn’t have to be a Charles Schwab. It could be a fidelity. It could be a Wells Fargo, any place. You get it. It looks legit, and it’s a sense of urgency. You must do something now because your account’s been compromised. So, you are going, “Oh my gosh. This is scary.”
So, it has a link, and you click on it, and it asks you to fill things out. Now, the things it’s asking you to put in there are things like your name, your social security number, but then they ask things like your phone password. Well, who …? Institutions don’t do that. Who would want your phone password? Again, I just looked at the number. It is. It’s 100 a week that … fake Schwab websites. So, all these institutions are dealing with the same thing. It’s not just Charles Schwab. Every financial institution is subject to this. So, you get an email. Here’s the key to these institutional emails that are from financial institutions. There’s usually a misspelling. If you hover over the link, it will tell you the actual URL, and a lot of them will end with RA, .RA, which is Russia. So, if you simply saw that, you would know it’s fake.
But even if you click on it, asking you to put all that information in is generally not what these companies do. So, that’s one area is in the the financial aspect, that’s one big area that they’re seeing a lot of fraud. Also IRS, government agencies emailing you, telling you to do stuff or calling you. The IRS doesn’t call people, that I know of, and they usually send letters. So, you’re seeing a lot of government … Again, when you hear these things, you’re scared, so you tend to act. That is the flaw. So, they’re seeing it with IRS. They’re seeing it with romance, so online dating sites. Of course, many of these profiles are fake. They actually showed some pictures, which was fascinating, of fake people that are being used in profile pictures. They’re computer generated, and they look real.
What happens is you get in an online relationship with somebody, and it goes literally months, if not years, building trust. Then after the trust is gained, there is an emergency, a medical emergency, and they ask for gift cards. What’s crazy about this is the numbers that are reported of these are artificially low, because a lot of people that get caught up in a romance scam, once they realize they’re scammed, they don’t report it, so these are only the ones we know about. There’s a tremendous number out there of ones that are not reported, because people are too embarrassed.
Then the third one that they’re seeing is the technical support. So, victims get a pop-up on their computer, your computer has been compromised. Click on here to essentially fix it. There’s a phone number. You get on the phone. They say, “Yes. There’s a serious problem.” They give you a link, and guess what? They have gained access into the computer. “We’ll fix it for you. Pay us some money. We’ll fix it,” and now they’re in your computer. That happens a lot. So, financial institutions and government agencies, romance, and technical support, those are the three big ones.
There’s also things like phishing emails, not fishing with an F, phishing with a PH. They’re, again, these emails that can be coming from the institution. So, we talked about the Schwab ones or any other financial institute. Look at all your emails and always be suspicious first, right? Be suspicious first. Don’t open attachments. That’s kind of obvious. If you do have an attachment, call the person that emailed you and say, “Did you send me an attachment?” That’s good practice. But these always have a sense of urgency. There’s something wrong, you know, with with your account, what have you, and they’re there getting you to do something. They’re creating that sense of urgency.
Then, again, hover over the link, as I mentioned. Now, remember some of the from names can always be changed to whatever, so it may say from Wells Fargo, from fidelity, from TD Ameritrade, from Fifth Third Bank. The name is irrelevant. Anybody can put any name in there. It’s the URL address. Again, that tells you, when you hover over it, where it’s from. Then, again, look for unusual words, bad grammar, et cetera, and use spam filters. A lot of those won’t even make it into your inbox if you have proper spam filters set up.
Now, I’ve kind of compiled five steps for safeguarding your accounts. This is a different subject. We were talking about phishing. There’s also vishing which is voice phishing, so where institutions call you, blah blah, blah. Some folks use a combination of this. “Hey, we’ve been trying to get ahold of you. We’ll email you.” But think about this. This is five steps that I’ve come up with for safeguarding your financial accounts.
Number one is pretty obvious. Change your login credentials pretty frequently, especially your password. I would probably do that at least once a quarter. Yeah. Don’t use password123. In fact, get a password manager. I’ve mentioned this in the past. I use one. Highly, highly effective to use a password manager, because it’s going to generate long, complicated passwords that nobody would be able to guess, but they may guess your dog’s name. They may guess your birthdate. So, a password manager, you have one password. It can sync on your computer, your phone, and it generates these passwords that are very complicated. Great thing to have. Great investment.
Two factor authentication. Most of you probably know what this is. You can enable it on almost any financial website. Two factor authentication is where once you put your password in, it doesn’t just let you in your account. It sends you a text. You may have a key fob, which generates a random number that lasts for 30 seconds. You have to punch in something else, in addition to your password, two factors, the password and the number it’s going to text you, or the phrase, or what have you. That solves a lot of issues, a lot of issues, and you can turn it on. If you go into the settings on your financial institution for your mortgage, auto loans, brokerage accounts, usually it’ll say, “Do you want us to enable this?” It’s a little bit of a pain, but say yes. Again, say yes. It’s very important to do that.
Another thing is add activity alerts. I know on my credit card, they send me a text every time. It’s not a text. It’s really at the app sending it to me every time my credit cards you used, where it’s used and how much, every single time. There’s been occasion where I go, “What is that?”, and I have to question it. Then the fifth thing I would say is freeze your credit. This is a really interesting one. Especially if you’re retired and you’re not going out and borrowing more money, you can call the credit agencies and freeze your credit, because that’s one of the ways that people obviously take your identity is using credit, and you can freeze it. If you ever need to get a loan in the future, you can unfreeze it. So, that’s something you definitely should do.
The other thing I want to mention with emails, I talked about emails a few minutes ago, one of the things that this gentleman that used to work for the FBI recommended was, “How many of you,” and he asked us this, “are changing or, excuse me, deleting your emails right from your inbox?” Most of you would say, “I do that.” “How many of you are deleting the deleted? Do you go into your trash and delete those as well?” Probably half of you. Here’s where he got most of the audience. “How many of you are going into your sent box and deleting that?” Why is that important? Your sent box is where you’re doing your documents for your closing on your property, right, for when you bought your house or an investment property. You may have emailed documents, your travel plans, account information, personal information, stored passwords, work documents, pay stubs, calendar events, your 1099s nines, your copies of your IDs. I mean, all this stuff is in our emails. If somebody gets into your email, man, they can really put a lot of puzzle pieces together and steal your identity. So, it’s important to do that.
Also, if you are sending information, usually if you’re doing a mortgage or something like that, they’re going to require you to do a secure site. That’s something we do at Covenant. If we send documents, we will always send them securely, and we always send a link out to people when we know we’re receiving documents. Now, we don’t always get them securely, because folks send them to us. We can’t control. We try to do that. We send them a link. Use it., You basically deposit your documents into this secure vault, and then we have a link to go get it. Many CPAs do that, kind of standard practice, and I would suggest you do the same, but emails where a lot of rich information is stored that bad guys and gals can get.
Those are some of the big things going on. Those are some of the safeguards in terms of accounts, and I kind of jumped around a little bit, but I wanted you to know what things are out there right now. Some of this you may know, but it’s always a good reminder, because, I mean, just the two factor authentication, changing your passwords regularly, not clicking on links, and then be very cautious and curious when you get an email from an institution. If you have a question, just go straight to their site, right? Go to their site. More than likely, what you got emailed about, if it was valid, it would be on there somewhere/ You can call them. You can dig into it without clicking on the link.
So, I hope that was helpful. I know it’s not something fun to talk about, but very, very important, because I tell you what, if you’re dealing with all of that, you’re not listening to the podcast, right? You’re having to get your identity back and all that. A lot of this is just preventable. In fact, they said something that was really fascinating. You may be on a list. If you’ve been scammed before, you may be on a list where they know you are a vulnerable person, and they sell your name and information to somebody else that can use it again and again in different forms and fashions. With technology changing as fast as it is and people being trustworthy, there’s a lot of elderly abuse, but it’s across the board. There’s no age discrimination on this.
So, I hope that was helpful. Hey. Just a reminder. CreatingRicherLives.com. If you need our help, (210) 526-0057 is our telephone number. We would love to help you out. Feel free to share the show. I’m going to go get me another cup of coffee. All right. Have a good weekend, everybody. Take care.
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