Understanding and dealing with bubbles – a review of the state of the art


Take a close look around you. There seems to be today bubbles boiling up everywhere.

There are bubbly stock markets like India, Brazil, and the U.S. Lots of bond bubbles: U.S. Treasuries, U.S. corporate bonds, global bonds in general, subprime auto bonds.

There’s talk of a bubble in the international art market, solar energy, venture capital, lithium and U.S student loans. Another looming one is the bitcoin bubble too.

There’s also evidence of real estate bubbles around the world: Vancouver, Auckland, Sydney, Toronto, San Francisco and London, for starters. There’s a reported bubble in “nine-figure real estate listings.”

Chinese bubbles are a class of their own: Real estate, iron ore, cotton, garlic, eggs and soybean meal are some recent ones. Of course, China’s stock market bubble burst last summer.

Then there is discussion of “the mother of all bubbles” also known as “the everything bubble,” which infers that a global debt bubble feeds all the other bubbles. With so many bubbles, it’s hard to keep track.

Possibly a Bubble ETF is needed, composed of the many bubble markets, so that there’s an efficient way to track and trade the world of bubbles.

Yet, despite the fact that speculative bubbles are popping up everywhere, it can often be hard to tell you’re in a bubble until it pops. It would help to know how to tell a bubble is forming.

Luckily there are about four centuries’ worth of speculative bubbles to study for answers.

The first widely known and the most famous market bubble of all time was Tulip Mania, which occurred in Holland in the early 17th century. The Dutch became enamored with tulips that had flaming colors on their petals. They coveted the bulbs that grew into these unique tulips.

As demand for the bulbs increased, along with their value, a market in tulip bulbs developed. As word of profitable speculation spread, more people piled in. Prices moved continuously higher.

Then from December 1636 to February 1637, the price of premium tulips surged by 200 percent. At the height of the mania in 1637, the market price of a single prized bulb was sufficient to purchase one of the grandest homes on the most fashionable canal in Amsterdam – when that city’s homes were among the most expensive in the world.

Needless to say, these prices were not an accurate reflection of the true value of a tulip bulb. In February 1637, buying tipped over into selling, and a domino effect of cascading lower and lower prices took hold. Speculators saw that they had spent vast sums to buy plants that were little more than glorified onions, and liquidated their tulip bulb holdings without regard for price. As wealth evaporated, pandemonium engulfed Holland. A deep economic depression followed.

Tulip mania established a pattern that has since been repeated over and over in speculative bubbles ever since. Despite advances in economic theory and the increasing sophistication of markets, market bubbles, and human psychology, haven’t changed much since the 1630s.

In 2008, Jean-Paul Rodrigue, a Canadian transportation scholar, conducted a study of the history of bubbles, and published a model of bubble stages:

  1. Stealth Phase. The initial bubble stage is where a new market opportunity, or paradigm, is cautiously recognized by early smart money investors.
  2. Awareness Phase. As market prices rise, more investors are attracted to the new investment story. The media begins to cover the story, adding to the momentum, and investors become increasingly interested – and increasingly less sophisticated.
  3. Mania Phase. Now everyone notices the rising prices. The media is touting “the investment of a lifetime.” Price becomes detached from underlying economic reality. Euphoric, irrational investors project recent price gains into the future. Enthusiasm spreads like a contagion between investors. A feedback loop ensues – rising prices amplify stories that seem to justify high valuations, which attract an ever increasing number of buyers.Even cynical traders join the buying, expecting to sell to “greater fools.” Price gains become nearly parabolic. Paper fortunes are made. Greed rules. Meanwhile the smart money is selling to the dumb money.
  4. Blow-off Phase. At some point buying abates and a paradigm shift slowly – or sometimes quickly – unfolds, as market participants realize something has changed. Sellers now find few buyers and prices fall quickly. Leveraged speculators face margin calls and are forced to sell. The decline becomes a crash.

Everyone now views the market as “a house of cards,” and prices plummet at a rate much faster than when the bubble was inflated. Often, prices fall below pre-bubble levels. The market becomes universally hated. But eventually the smart money starts buying again, recognizing the  panic has created an opportunity to buy assets at bargain prices.

This classic bubble pattern is apparent in the most notorious bubbles of the modern era, including some very recent ones.   Another example is the Shanghai Composite index just last year. Starting in August 2014, the index gained 125 percent in 10 months. This was fueled in part by easier margin lending rules, which allowed Chinese investors to borrow more to invest.

This amplified the speculation and buying, so prices kept going higher. Thinking that buying stocks was an easy way to make money, less sophisticated investors entered the market and mania ensued.

But eventually the bubble popped. Investors realized stocks were way overvalued and the market collapsed and fell 32 percent in less than a month.

Over 400 years of market bubbles have shown a recurring pattern: A smart investment idea gains a following, and prices rise. The media discovers the story, ever more investors join in, becoming increasingly excited, and prices rise even more. Valuations lose connection with economic reality. Sooner or later the bubble bursts, prices crash, and many investors are ruined.

With potential bubbles in so many different markets across the globe, it’s a good time to study this historical pattern. Knowing what stage a market bubble is in can help you avoid taking a bath when the bubble pops. And bubbles always pop.

Learning to control the emotions that can cause us to get caught up in market bubbles is also important.

Next bubble?

I am afraid the next bubble will be due to cheap money…

Ever since the Fed (and other money printing entities throughout the world) started to print money at record pace after the 2008 crisis, there has been a lot more money in the economy.

What the central banks were trying to do (and it has worked a little) was stimulate economies by injecting money into industries that were hanging on by a thread.

Unfortunately, this has caused many assets to be inflated in price because of the larger volume of dollars (or whatever currency you use) in the market.

This large volume of money allowed people to pay higher prices for things like homes, businesses, cars, education, or really anything that can be bought with borrowed money.

As we continue down this road of more money printing, we are just like a drunk at the bar, who is drinking more and more. We think we are getting better and better at dancing all over the tables, and hey, maybe we are! But… the next morning we are going to have a mean hangover.

So, anything that is financed through borrowed money is at risk of being in a bubble. Real assets that cannot be financed are the few things that wealthy people will start transitioning into as this bubble gets larger. Things like metals, art, collectibles or foreign real estate.

Given the current state of our economy, the only thing worse than a new bubble would be its absence.

Now you know….


Turning around the US Economy:- My Top Recommendations for President elect Trump


The people have finally spoken. Donald J. Trump has won and will be our next President for the next four years … and if things are done right, maybe the next eight too.

It is not going to be easy given the mess he inherited from President Obama which basically sums up as below.

  1. Total US debt, including private and business debt, is today $67 trillion, or just under 400% of GDP.
  2. We have 95 million people not in the labor force; 15 million of them not employed. That’s twice the number officially unemployed.
  3. We have almost 2 million prison inmates, 43 million people living in poverty, 43 million receiving food stamps, 57 million Medicare enrollees, 73 million Medicaid recipients and 31 million still without health insurance.
  4. The US federal government debt will be slightly north of $20 trillion before Obama leaves office in January. Local and state debt is another $3 trillion. That is a total of more than $23 trillion of government debt and a debt-to-GDP ratio of somewhat over 121%. That debt has risen roughly $10 trillion under Obama, in just eight years. This US debt total does not even take into account the over $100 trillion of unfunded liabilities at local, state, and federal levels that are going to have to be paid for at some point.

Bottom Line:  We are still witnessing a disaster in the making. The more we increase our debt, the more difficult it is going to be to grow our way out of our problem with the debt.

Something like $5.5 trillion is “intergovernmental debt.” And even if we did dismiss this internal debt, the government’s debt-to-GDP ratio would still be almost 100% when you include state and local debt….And after eight years of the slowest economic recovery in history, we are growing our debt dramatically faster than we are growing our country—even when we include inflation. Go figure.

My recommendations for President elect Trump

Cutting corporate and individual taxes, effecting significant regulatory rollback and fixing the Affordable Care Act may help stimulate growth but will not be a sufficient condition to stimulate growth. Significant regulatory rollback will help. It is also necessary but not sufficient.

Some more serious actions should include but not limited to:

  1. Reinstituting first and foremost the Glass-Steagall Act because Wall Street cannot be trusted to manage their risk properly. This would separate true banking activities from the high risk gambling that brought the economic system to its knees. Privatizing the profits and socializing the losses is unacceptable.
  2. Appointing the right next four people out of the seven governors to the Board of Governors of the Federal Reserve. People coming from the business world; neither economists nor academics please. Also having a Federal Reserve that is more neutral in its policy making and that realizes that the role of the Fed should be to provide liquidity in times of major crisis not to fine tune the economy, will do much to balance out the future.
  3. Putting the value of the dollar relative to the currencies of other countries under the purview of the Treasury Department, not the Fed. Too much power to the Fed already.
  4. Having the currency of the US backed by hard assets. A basket of gold, silver, platinum, uranium, and some other limited hard commodities would back the USD. If politicians attempted to spend too much, the price of this basket would reflect their inflationary schemes immediately.
  5. Directing to have the FASB to make all banks and financial corporations value their assets at their true market value. An orderly bankruptcy of all insolvent financial firms involving the sell-off of their legitimate assets to well-run risk adverse banks that didn’t screw up should ensue. Bondholders and stockholders would realize their losses for awful investment decisions. The economic system would be purged of its bad debt.
  6. Having the Social Security System completely overhauled. Anyone 50 or older would get exactly what they were promised. The age for collecting Social Security would be gradually raised to 72 over the next 15 years. Those between 25 and 50 would be given the option to opt out of Social Security. They would be given their contributions to invest as they see fit if they opt out. Anyone entering the workforce today would not pay in or receive any benefits. The wage limit for Social Security would be eliminated and the tax rate would be reduced from 6.2% to 3%.
  7. Dismantling Obamacare in its entirety and converting it from a government program to a private market based program. The Federal mandates, rules and regulations would be eliminated. Senior citizens would be given healthcare vouchers which they would be free to use with any insurance company or doctor based on price and quality. Insurance companies would compete for business on a national basis. Doctors would compete for business. The GAO would have their budget doubled and they would audit Medicare fraud & Medicaid fraud and prosecute the criminals without impunity.
  8. Repealing the healthcare bill. Insurance companies would be allowed to compete with each other on a national basis. Tort reform would be implemented so that doctors could do their jobs without fear of being destroyed by slimy personal injury lawyers. Doctors would need to post their costs for various procedures. Here again, price and quality would drive the healthcare market.
  9. Dismantling completely the entitlement state.  The criteria for collecting welfare, SSDI, food stamps and unemployment benefits would be made much stricter. Unemployed people collecting government payments would be required to clean up parks, volunteer at community charity organizations, pick up trash along highways, fix and paint houses in their neighborhoods and generally keep busy in a productive manner for society.
  10. We must make a serious effort to have a balanced budget and to fund healthcare and Social Security. I would propose some form of a value-added tax (VAT) that would specifically pay for Social Security and healthcare. I would also propose that we eliminate Social Security funding from both the individual and business side of the equation and take those costs from the VAT.
  11. We also need to get rid of the shackles on growth and get the incentive structure right with the proper tax mix. Then American entrepreneurs can probably get us out of the hole we’re in without it getting too much deeper. With the amazing new technologies that are coming along, we can probably get to a point where we can in fact grow our way out of our debt problem over the next 10 to 15 years.
  12. It is one thing to talk about unfair trade agreements—and we have certainly signed a few. But we also need to recognize that some 11.5 million jobs in the US are dependent upon exports (about 40% of which are services). If we drop our corporate tax to 15% and work on reducing the regulatory burden, I think we will be pleasantly surprised by how many jobs are created just by those steps alone.

As a conclusion, let me be very clear. If we don’t get the debt and deficit under control—and by that I mean that at a minimum we bring the annual increase in the national debt to below the level of nominal GDP growth—we will simply postpone an inevitable crisis. We have $100 trillion of unfunded liabilities that are going to come due in the next few decades. We have to get the entitlement problem figured out and we must do it without blowing out the debt. If we don’t, I am afraid we will have a financial crisis that will rival the Great Depression and maybe worse.

We’re in a world where most major economies are also in trouble. If the US starts printing again money merely to service its debt because people don’t buy its debt, then I foresee total global debt in the $500 trillion range and global GDP topping $100 trillion. A total global economic disaster.

I have tremendous faith in President elect Trump and his team and just hope all those prescriptions will not go unheeded although they certainly go far, long-term, in fixing a system which is quite dysfunctional and broken.

“Draining the swamp” of our present economic morass will certainly require drastic action tantamount to a real revolution in both thought and practice.

The Old Order has gotten us into this mess, and cannot, or is unwilling, to get us out. It is past time for them to go.

Nothing much in a positive, productive sense can be accomplished under our government, as presently constituted, as it has devolved into a Fascistic, crony-corporatist construct.

Until those who govern are forced to experience outcomes consistent with those experienced by the governed, I am afraid the Republic will drift ever further away from the establishment principles envisioned by those rebellious Founding Fathers, who were intoxicated upon the fumes of liberty, fraternity, and equality of opportunity.

God bless our new President elect Trump and the United States of America…. Time to roll up our sleeves and start making America great again.


To all those wide-eyed millennials looking for a break


It breaks my heart to see millions of millennials still chasing rainbows and hoping that the US government or a cartoon character such as Berne Sanders or crooked Hillary Clinton were ever going to change their lives.

Maybe it is time to grow up folks and grow some too and realize that no one is going to take care of you other than yourself if you want to build anything meaningful in your life….whether nailing a big corporate job or creating your own empire. NO ONE. So get used to it, life is not fair and this will never change.

Ever since the paleolithic era we’ve been fighting over scarce resources. Whether this was food, shelter or trendy sabretooth skirts.

Times have changed – but the essence remains the same; it’s resources we’re after.

Money mainly.

In the old days, we used to have a trading system where hunters would trade their catch with fishers for example. This is an equal exchange of value of differently skilled people.

The same concept still applies today. Money simply has made trading your entire life easier.

This system allows us to tap into the expertise of others. The more difficult the task, the more money they get.

Being able to do what others cannot is what makes you “valuable”.

Anyone can sell shoes, anyone can run behind a dumpster truck, anyone can sell fast-food. But not everyone knows how to build a house, lay electrical wiring or perform an open-heart-surgery. The more difficult and in-demand your skills are – the higher your value will rise.

If you want more income – You have to deserve it first.


By building up difficult skills that are high in demand based on your strengths….Nothing else will do it

This means that the barrier of entry for competitors will be high (less competition) and you work in a field where your skills are highly valued.

Additionally, building on strength gives you an “edge” on others….Sounds sweet right?

So what are strengths? Have you ever asked yourselves this question?

Strengths are the things we naturally excel at – the things that come “naturally” to us.

How Do I Find My Strengths?

You find strength through self-analysis

The best way I’ve found to do this is by keeping a journal of my life in which I’m able to spot different trends. Over time you’ll be able to hone down on what you’re really good at.

Here are three ways to discover your strengths:

1. Self-Assessment

Here are some questions you should ask yourself when looking for your personal strengths:

  • In what did I grow up around? Competence can arise from early practice, what types of activities were you involved in as a child?
  • What do strangers compliment me on? You/your direct surroundings often notice your natural strengths faster than you do. Just ask around.
  • What did I want to become as a child? What were the underlying trends?
  • What have I been doing the last 10 years? Competence comes from doing a certain thing for a long period of time.
  • What can I effortlessly talk about without losing drive? An interesting topic is most likely something you’re highly skilled at or highly interested in.
  • What are the things I effortlessly excel at? What activities come easy for you?
  • In what areas do I learn quickly? Some skills are perfectly suited to our temperament and therefore we’re able to pick these up much faster than others.
  • Who do I envy/admire? Jealousy is a nasty but beautiful emotion as it shows us what we truly want. The same goes for admiration.

2. Reading

Furthermore, a great book that will help you find more strengths is Managing Oneself by Peter F. Drucker

Read the summary and define for yourself:

  • Am I a reader or a listener?
  • How do I learn best?
  • Do I work well with others or do I perform better alone?
  • Do I produce results as decision maker or as an adviser?
  • Do I perform well under stress or do I need a structured environment?

Alright – what’s next?

3. Personality Tests

A great way to explore further is by doing some personality tests (although they are often too general – it’s quite likely that they’ll give you some more career-indicators)

Here are the ones I recommend:

  • MBTI-test
  • DISC-assessment
  • Enneagram

Learn more about each type by simply Googling the results you’ve gotten.

Put all of these answers in a separate word-sheet and try to determine for yourself the answer to this question;

How can I combine my skills (based on strength) and my interests to solve a need for other people?

Going Deeper

In our current information society it might be not enough to be simply highly skilled in only one particular field. The combination of different, highly valued skills is also often what elevates your value.

Here’s some other tips to prepare for the future:

Enjoy the power and beauty of your youth. Oh, never mind. You will not understand the power and beauty of your youth until they’ve faded. But trust me, in 20 years, you’ll look back at photos of yourself and recall in a way you can’t grasp now how much possibility lay before you and how fabulous you really looked.

Don’t worry about the future. Or worry, but know that worrying is as effective as trying to solve an algebra equation by chewing bubble gum. The real troubles in your life are apt to be things that never crossed your worried mind, the kind that blindside you at 4 p.m. on some idle Tuesday.

Be Impeccable With Your Word. Speak with integrity. Say only what you mean. Avoid using the word to speak against yourself or to gossip about others. Use the power of your word in the direction of truth and love.

Don’t Take Anything Personally. Nothing others do is because of you. What others say and do is a projection of their own reality, their own dream. When you are immune to the opinions and actions of others, you won’t be the victim of needless suffering.

Don’t Make Assumptions. Find the courage to ask questions and to express what you really want. Communicate with others as clearly as you can to avoid misunderstandings, sadness and drama. With just this one agreement, you can completely transform your life.

Always Do Your Best. Your best is going to change from moment to moment; it will be different when you are healthy as opposed to sick. Under any circumstance, simply do your best, and you will avoid self-judgment, self-abuse and regret.

Keep track of global trends. Where is the world going and how can I prepare for this? Especially the technological boom is very prominent – stay ahead of the robots!

Work for yourself. Everyone will need to become an entrepreneur in the future

The world is your oyster …. Just because the past didn’t turn out like you wanted it to, doesn’t mean the future can’t be better than you ever imagined.


The world is an inherently competitive place. You’ll need an edge to become indispensable & the only way to become indispensable is to excel at things others cannot do.

Of course competence at a skill will lead to enjoying the activity more – enjoying it more means you’ll be doing it more which in turn makes you more competent.

It’s an endless loop.

Eventually you’ll start to LOVE it and it’ll become your “passion”. So don’t go searching for something until it “feels just right” but create it by building on strengths. Don’t waste time and energy on an endless passion-chase.

Note: Strengths are solely performance indicators (not unchangeable truths). So don’t obsess about them. You can still “be whoever you want to be”, but you won’t perform optimally if you build your life on weakness. It can be stretched – just not indefinitely.

So tell me; what are your strengths?

I hope this personal analysis is timely for you. There’s so much wasted time & energy (and frustration) in fields where we just don’t have a natural advantage in. And the world is simply too much of a competitive place not to use this.

Now that you know the basics, go for the kill and never look back.

The BEST revenge is “OBSCENE WEALTH”.


Making a Difference in Our Short Lives


As we proceed through life, many of us struggle with endless clashes between the tactical and strategic aspects of human existence.

The tactical problems begin with food, water, shelter and education.

The strategic begin with where one wants to live and what job to take, whom to marry, how many children to have.

Most people rarely distinguish between strategic and tactical perspectives in utilizing their time and focusing their energy. Consequently, the general human life process is to move forward one step at a time, adjusting, if at all, as best one can going along. That is frequently accompanied by the often mistaken instinct to favor the urgent over what may be more important.

What is the measure of a life well spent? How do you know whether you are wasting your life or investing it in the things that really matter?

In America we have several yardsticks by which we measure a life. One is usefulness. We are pragmatists at heart. We feel that if a person does something useful for society, whether it is a profession or a trade, he or she spends his or her life well.

Another yardstick we use is busyness or sheer activity. Our lifestyles reflect our values here—we’re all extremely busy people. Our weekly calendars are full to the brim. We have the notion that if you just sit around, you’re wasting your life.

We also gauge our lives by adventure and excitement. If we can’t get it firsthand, we pick it up vicariously on TV or at sporting events. Our heroes lead exciting lives, either through romance or life-and-death risk taking. We read magazines like People that tell us about the rich and famous, secretly wishing that our lives could be like theirs. We generally think that a person who dies rich and famous has achieved success.

Personally, I believe the more people ultimately know about their options, the more likely they are to choose and make the effort to take advantage of their lives’ vast opportunities.

I wonder how many people ever have a five-year plan, much less a 20-year plan. If they never think about the arc of their lives, they inevitably forego opportunities to bend that arc to seek their dreams.

How many people make pros and cons lists as they encounter crossroads in their lives? When they get to the fork in the road, they simply take it.

Some people spend two weeks researching prices and customer satisfaction and performance data about a possible new car. But rarely, or never, do people spend even a minute thinking about what their neighbors might say about their life when they are gone, because they have been taught to believe it is nobody’s business.

There is indeed a growing base of research out there which shows that choosing to spend time engaging in activities that facilitate a strong sense of purpose; that provide opportunities to contribute to the well-being of future generations (especially outside our own families); and that allow you to feel like you really matter have a profoundly beneficial impact on your mental and physical health….BUT although we tend to be more drawn to jobs, volunteering, or care giving opportunities that benefit future generations as we get older, we can and should consider how we are living our lives NOW, and how we matter to others well before we reach old age or experience a life-threatening condition.

I offer you one – How will you spend your years, however many are left, mattering to others?

I chose the path of empowering millions of people financially through the Financial Policy Council and the dozens of other charities I have embraced throughout my life.

Money and Education for me are not only about “freedom” but are also the “glue” cementing all if used properly.

What have you chosen to do?

Share your thoughts


Investors Can Boost Their Cybersecurity: Back to the Basics


Security Essential for Financial Transactions Online

Now that the Cyberworld is upon us, most of us do most, if not all, of our financial transactions online. Long gone is the day when most of us paid our bills by check or delivered a check to our brokers to invest for us. Now we pay our bills online, either on the biller’s Website, or on our bank’s Website. We don’t write checks – we transfer funds. We rely on the security of the Web site with which we are dealing to protect the security of the transaction. Most of us make sure that the “HTTPS” designation is at the beginning of the address for every Website on which we conduct transactions or share sensitive information. We maintain security and privacy settings on Facebook, LinkedIn, Twitter, and other social Websites where we publish. We have firewalls for our computer systems, our personal computers, and our home networks. We have anti-virus software and run it rigorously. We have our Outlook set for appropriate levels of security and use spam settings to segregate anything that looks like spam, knowing that in the spam box we can see the REAL addresses behind the links in emails. We know enough not to click on any link in any email, instead copying and pasting the address into our browsers. We have our browsers set for appropriate levels of security and privacy, and use a secure browser like Firefox or Tor. We have our networks set for security against invaders. We understand that the weakest link is usually the employee sitting at his keyboard, and have established suitable policies, procedures and penalties regarding cybersecurity for our employees. We use, and require our employees to use, “strong passwords” and change them often.

Really? Surveys by security analysts show that most people, even tech-savvy people, use passwords they can remember easily, and seldom, if ever, change them. We are our own weakest link. We rely too heavily on all of these measures, but are lazy in our own computer habits. We open Firefox, but forget to go to “New Private Window” for each jump. We click on links in emails that come from friends and trusted associates. Our own lapses can only be remedied by imposing discipline on ourselves. A new report on ways the government can mitigate persistent cybersecurity challenges contains a crowdsourced list of best practices. According to the report, “Much of what is required, expected, or even possible in cybersecurity management is known to cybersecurity professionals, but not fully or properly implemented across the government.” The same is true of industry, even the financial industry.

Communist countries are famous for establishing “five year plans.” China has a five-year plan for cybersecurity targets. Security vendor CrowdStrike has produced a report on China’s next fire-year plan. “They’re focusing on getting Western technology out – they don’t trust it,” said Adam Meyers, vice president of intelligence at CrowdStrike. “They want to use their own technology.” Chinese hackers appear to be looking for information to use in restructuring China’s healthcare sector. This may have contributed to the spike in healthcare breaches in 2015. “Targeting the western healthcare sector may be as much about logistics and know-how for running national level health insurance schemes as it is about siphoning data,” said the CrowdStrike report. The data they took, however, could also be used to build profiles of federal employees for intelligence purposes and spear-phishing campaigns. China seems focused on collecting intelligence that supports its economic system, and not just on military and defense targets. Therefore, financial firms of all types and sizes are potential targets, as well as high-profile individual investors. Hacking investors’ personal computers could provide access to the financial systems in which they work and invest.

There are other measures that savvy investors can take to protect their financial lives and those of their firms. The purpose of this article is to look at them. After you read this, you might say, “I have heard all of that, already.” Perhaps you have, but have you implemented it all? If not, read it again and again until it becomes second nature.

Security Begins at Home: Ten Commandments

Security begins at home. Financial Executives’ home networks are often insecure and are logical targets for hackers seeking entry into financial system networks. Many executives access their office networks from home. There is nothing wrong with that, per se, but if their home network is not secure, their connection to the office is not secure. So, let’s start with the home network and home computer. Make sure that when you are not at home, no one else can gain access to your home and access your computer.

  1. Use a reasonably new Internet router. If the one you have is over a year old, destroy it and buy a new one. The security of routers is steadily increasing as the technology develops, and an old router will be full of holes hackers can exploit. Set the new router up as a “non-broadcasting network.” That means other computers cannot see it. A computer must send a signal with the appropriate router name in order to be able to see it. You can provide the key to visiting friends or family who need to use your Wi-Fi.
  2. Set the router up as a secure network requiring a complex key to access it.
  3. Consider buying a firewall router to place between the Internet router and the rest of your network.
  4. Encrypt the contents of your computer’s hard drive and any other hard drives connected to the network. Windows 10 has encryption available, but not activated by default. There are also third-party encryption programs available. Here is a site that reviews them and posts ratings for the top ten: http://encryption-software-review.toptenreviews.com/
  5. To access your office network, use a strong password with at least 8 characters that are a random mix of numbers, lower-case and upper-case letters, and symbols. Example: kyG@2bK&. If you can remember it easily, it is no good. Norton has a good password generator online: https://identitysafe.norton.com/password-generator/#. Use it, or any of the other good programs out there.
  6. Because you can’t remember your passwords, use an encrypted password keeper to keep track of them. There are several available. There are a number of methods, including software vaults you can put on your computer, and also separate devices. Some allow access only by fingerprint identification. DO NOT write the passwords down where someone other than you can access them. Here is one of the many good separate devices available: https://keepersecurity.com/
  7. In your security software, turn on the feature that flags dangerous Websites and prevents access to them. Even good websites can get hacked and then infect computers accessing them. Porn sites are notorious for this, especially the free ones that show up in free catalogs of porn sites. Beware of foreign sites, especially in Africa, the Middle East, Russia, and East Asia.
  8. Know the source of software you load, including security software. A consultant with whom I have worked values security, and has on his server an anti-virus package he considers very good and very reliable, and he recommended it to me. I googled it, and found that it came from a Chinese software firm. Given the publicity recently about Chinese hacking attempts, I would beware of using security software from China.
  9. On your computers (all of them) activate the feature that loads the screen saver after a period of inactivity and requires a password to allow access again to the computer. Use a different password for each computer, of course
  10. Do not use outside data CD/DVDs or thumb drives on your computer until they have been separately tested and scanned for spyware and viruses.

Security at the Office: Ten Commandments

  1. Retain an outside cybersecurity expert to advise your IT department. Explain to your IT department that it is not that you don’t trust them, but a second opinion is always better than a first opinion alone. Before hiring the consultant, run a background check. Some real hackers work as cybersecurity experts, and could leave backdoors for themselves.
  2. Make sure your facility is physically secure. Most successful “hacks” consist of a “hacker” walking into someone’s office when he or she is out, sitting down at that person’s desk, and using his or her computer to access the network to extract intelligence, install spy software, or open a back door.
  3. Make sure your IT department has a robust policy for protecting and policing the network.
  4. Retain an outside consultant to attempt penetration of the network. There are “honest hackers” who specialize in this service. Many IT security firms provide that as a service. If you know where the back doors are, you can close them and lock them. If you know where the open windows are, you can do the same with them.
  5. Ask your IT department to set up a computer to test flash/thumb drives and data disks brought in from outside the office before they are inserted into any computer. It should be a stand-alone computer with strong anti-virus software. Do not allow any thumb/flash drives or outside CDs or DVDs to be used on an office computer until they have been scanned.
  6. Make sure your office network is isolated from the Internet with a secure firewall appliance. If you allow employees to bring into the office their own devices capable of connecting to the system, make sure they are screened first by your IT department and equipped with the necessary security software. If they come in and connect, your system firewall has just been bypassed. Establish a robust BYOD (Bring Your Own Device) policy
  7. Make sure every server, file server and computer workstation is protected with robust firewall, anti-virus, anti-spyware and anti-malware software. Windows 10 has a good suite built in. Use it. Make sure that every computer is running Windows 7 or 10, and make sure that any operating system older than Windows 7 is banished from the office. Yes, I really like Windows XP, but it is no longer secure.
  8. If you are an Apple or Linux person, don’t relax. Apple and Linux computers and devices are also subject to viruses, spyware, and other malware, as well as to hack attacks. Make sure your Apple devices are protected by robust firewall, anti-software, anti-spyware and anti-malware software.
  9. Make sure your CIO and IT departments keep up to date with the latest information and technology on cybersecurity. Send them to conferences and continuing education on the subject, and make sure they are on mailing lists for the appropriate newsletters. Equally important, make sure they actually read the material and implement best practices.
  10. UPDATE. Make sure all software on your system and in your computers is updated with regularity. For operating systems and software like Microsoft Office, make sure auto-update is implemented. For an office system, have the IT department download all updates and install them on all computers, if you don’t implement auto-update.

OK, Now What?

Now, go practice safe surfing, but warily and carefully at all times. “Come into my parlor, said the spider to the fly.” Her parlor is the Web. You are the fly. Whether you are online or offline, if your computer does something unexpected and irritating, power it down immediately using the power switch. Start it up using a start-up CD/DVD with an anti-virus program on it, and use it to scan the computer.

An attack will generally come when you are relaxed or sleeping. Many will come online when your computer freezes on a website for no apparent reason. Often, that is because the website has been contaminated. Vigilance is the key to security. BE YOUR OWN BEST WATCHDOG! (Sorry, I didn’t mean to shout).


Php secure login

Sophos is one of the best providers of computer security software for computers and networks. Their blog is worth reading.

Sophos whitepaper

Naked security You can read their newsfeed online, or subscribe to their newsletter.

“Industry Ideas for Boosting Government Cybersecurity: Go Back to the Basics”, www.NextGov.com (01/20/16) Moore, Jack.

“China’s Next Five-Year Plan Offers Preview of Cybersecurity Targets”, CIO, (02/03/16) Korolov, Maria.

NextGov Link

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