Our Blog

DWM is committed to learning for its team, clients and friends. In this changing world, it’s extremely important to stay current in all areas impacting your financial future.

We encourage all of team members to “drill down” on current topics important to you and contribute to our weekly blogs.  Questions from our clients and their families are often featured in our blogs.  

Financial literacy for clients and their families is very important to us.  We generally hold an annual wealth management seminar for all of our clients.  We encourage regular, at least semi-annual, meetings in person with our clients to review family updates, progress on financial goals, asset allocation and performance of investments.  We’re happy to assist younger members of the family as part of our total wealth management program.

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Equifax's Big Payback: Should you File a Claim?

Written by Jake Rickord.

Equifax Credit File 

It was just two short years ago when Equifax went public with the realization that access to about 150 million users had been obtained by a third party still unknown to top security officials. Without knowing the perpetrators, motive behind this breach has yet to be concluded, generating worries about criminals using the identities stolen to cash in through the sale of said data or something more nefarious, including spy scandals.

While advanced cyber security and dark web professionals sift through to try and find the data, Equifax has been trying (and being forced to) make up for their mistake with the millions of Americans whose information was violated. On July 22nd, 2019, the Federal Trade Commission, in conjunction with several other agencies and all 50 states, agreed in court to a settlement of roughly $700MM to be paid out in reparations to those affected by the breach in accordance with allegations that the company did not provide and monitor security measures to protect against this attack. This is on record as the largest settlement ever dished out for a data breach in U. S. history.

Of that $700 million dollars, at least $300 million is to be used to offer the plaintiffs access to years of free credit monitoring service in order to ensure that any data stolen from Equifax during the breach was not used to steal individual’s identities, and also allows for free credit freezes as well for those who are more concerned. The other payout option they provided was $125 for anyone who files a claim for it. An extremely small payout on an individual level considering the fortunes that could be lost if a person’s identity was indeed stolen, but still a payment nonetheless. Should you file for one of these checks?

Well, unfortunately, Equifax has turned around and in the blink of an eye, stating that the amount of people filing for this $125 payment has surpassed the allocated funds for paybacks. According to the FTC, “because of high interest in the alternative cash payment under the settlement, consumers who choose this option might end up getting far less than $125”. Beyond the fact that this amount may be smaller in scope than originally planned on, the filing process isn’t as easy as filling out a form. Instead, those who file are required to gather documents related to the hack that show losses, and provide ancillary information and documents in the process of filing your claim. Many of those who have started the process are turned off by the fact that they need to proceed in presenting further information to the company that they already don’t trust to keep their information safe, and several scammers have set up websites to further deceive you into entering personal information. However, regardless of all these issues, millions have, and are continuing to file their claims which will remain open until January 22, 2020.

While the $125 (or likely much less) payment option may not be the best call, the alternative option for free credit reporting, monitoring, and freezing is catching on with some of those affected. Included in this package is free credit reporting, most importantly from all three major credit bureaus, which in theory is worth “hundreds of dollars a year” according to Robert Schoshinski, the assistant director for the FTC’s Division of Privacy and Identity Protection. To add to this value, included in the credit reporting is up to $1 million dollars in identity theft insurance and individualized identity restoration services. All in all, this secondary option may not be the source of direct money in your pocket, but rather can save you huge amounts of money in the case that something malicious were to occur as a result of this breach.

Here at DWM, we are always monitoring ways we can protect our clients, and we will continue to do so. While Equifax may not be giving out the $125 check anymore, free credit monitoring might be a very nice way to go if you’re willing to go through the process of filing a claim. This can essentially mean spending five to ten minutes of your time for 10 years’ worth of peace of mind, and roughly $2,400 worth of value ($20 per month of monitoring for 10 years). While it may seem like pocket change in comparison to the value of the data stolen from you, this can definitely serve as great protection in the case that any of this information is fraudulently used in the future.

 

If you would like to file a claim, please visit Equifax's claim website: https://www.equifaxbreachsettlement.com/file-a-claim 

 

https://www.dwmgmt.com

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Did You Ever Dream That You Forgot Your Pants? No Problem.

Written by Lester Detterbeck.

 

dream_not_wearing_pants.jpg

Have you ever dreamed that you are walking into a college final exam and you have done no studying for it?   Better yet, in the dream, have you walked into the exam and forgotten your pants? I can tell you from personal experience, I have had dreams where both events occur. Fortunately, I’m pleased to report, this has never happened in real life and likely and hopefully never will. More importantly, though, I now know that my dreams have served an all-important psychological function-working out my anxieties in a low-risk environment and preparing for the future.

Most of the emotions we feel in dreams are negative; including fear, helplessness, anxiety and guilt. Yet, this night-time unpleasantness may, in fact, provide an advantage during the day.

All sleep is not the same. Dreams typically occur in REM (rapid eye movement) sleep, when our brains are more active. You cycle between REM and non-REM sleep. First, comes non-REM sleep followed by REM sleep and then the cycle starts over again. Babies spend 50% of their sleep in the REM stage, compared to only 20% for adults. Deep sleep which is non-REM is known for the changes in your body, not your brain; when your body repairs and regrows tissues, builds bone and muscle and strengthens the immune system.

REM sleep is crucial for mental and physical health, yet we generally slough off the dreams as being silly, juvenile, and self-indulgent and simply get on with our day. Because dreams seldom make literal sense, it can be easier to discard them than to try to interpret them. In fact, according to Alice Robb, author of “Why We Dream,” dreams can help us “consolidate new memories and prune extraneous pieces of information.” Further, they may provide a time for the brain to experiment with a wider array of associations of the facts and outcomes and sometimes help solve problems.

Finnish evolutionary psychologist Dr. Antti Revonsuo studied the perplexing question of why our minds subject us to something so unpleasant. He reasoned that if our ancestors could practice dealing with dangerous situations, perhaps battling a mastodon, as they slept, they might have an advantage when they had to confront them in the next day. Research on animals fits into this theory. REM deprived rats struggle with survival-related tasks such as navigating a maze, while rats with REM sleep apparently dream about this upcoming challenge and perform better.

In 2014 researchers at the Sorbonne interviewed a group of aspiring doctors about to take their medical school entrance exam. Nearly all of the 719 students who replied had dreamt about the exam at least once beforehand and, understandably, almost all of those dreams were nightmares. They had dreamed that they got lost on the way to the exam facility, that they couldn’t understand the questions and that they had written their answers with invisible ink. Ouch. But, when the researchers compared the results of the exam with dreaming patterns, they found that students who dreamed more often performed better in real life.

Ms. Robb suggests that, while we tend to focus on and discuss dreams that are strange, most dreams are less bizarre than we think. A study in the 60s by psychologist Frederick Snyder of 600 dream reports showed that “dreaming consciousness” was, in fact, “a remarkably faithful replica of waking life.” He found that 9 out of 10 dreams “would have been considered credible descriptions of everyday experience.”

In another study, Dr. Revonsuo and Dr. Christina Salmivalli, analyzed hundreds of dreams from a group of their students and discovered that the emotions in the dream were usually appropriate to the situation, even if the situation itself was unusual. “The dreamer’s own self was ‘well preserved.’” Effectively, even in dreams, we know who we are.

So, go ahead and get a good night’s sleep tonight and look forward to the REM dreaming phase. It may feel negative and not be all that comfortable. However, it just might give your brain some time to work through some important matters and find solutions.

https://www.dwmgmt.com

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Economy Celebrates 10 Years of Growth: Is it Time to Party?

Written by Les Detterbeck.

 

Economy celebration

Next week will mark the 121st month of the current bull market- the longest business cycle since records began in 1854. Based on history, a recession should be starting soon. Bond rates now form an “inverse yield curve” with shorter term rates above longer term, which typically signals a downturn. Business confidence is down. However, 224,000 American jobs were created in June and equities continue to soar, rising 16-20% year to date. Is it time to party or not?

The business cycle appears to be lengthening. The current expansion, coming after the worst financial crisis since the Great Depression, has been unusually long and sluggish. Average GDP growth has been 2.3% per year, as compared to the 3.6% annual growth in the past three expansions. The workforce is aging. Big firms invest less. Productivity has slipped. And, Northwestern Economics Professor Robert Gordon continues to assert that American’s developments in information and communication technology just don’t measure up to past achievements including electricity, chemicals and pharmaceuticals, and the internal combustion engine.

However, the changing economy may now be less volatile for a number of reasons. 1/3 of American’s 20th century recessions were caused by industrial declines or oil-price plunges. Today, manufacturing is only 11% of GDP and its output requires 25% less energy than in 1999. Services are now 70% of our GDP. Furthermore, the value of the housing market is now 143% of GDP, as compared to a peak of 188%. Banks have lots of capital.

Finally, inflation has been very low, averaging 1.6% in the U.S. (and 1.1% in the euro zone) per year during the current expansion. In earlier business cycles, the economy would surge ahead, the jobs market would overheat, causing inflation to rise and leading the Federal Reserve to put on the brakes by raising interest rates. Today, it’s different. Even though the unemployment rate is at a 50 year low of 3.7%, wage growth is only 3%. As the Economist pointed out last week in “Riding High,” American workers have less bargaining power in the globalized economy and are getting a smaller percentage of company profits, keeping inflation down. The Fed recently announced that it is less concerned about rising prices and more concerned about growth slowing and, therefore, will lower interest rates at its meeting next week.

Changes in the economy to slower growth, more reliance on services and lower inflation all contribute to longer business cycles. Yet, the changing economy, particularly globalization and technology, has also produced new risks.

Manufacturing that was formerly done in the U.S. is now outsourced to global producers. These chains can be severely disrupted by a trade war. This could produce a major shock- imagine if Apple was cut-off from its suppliers in China. Also, take a look at the impact that the prolonged grounding of Boeing’s 737 MAX is having on the U.S. economy. It’s hurting suppliers, airlines, and tens of thousands of workers, while $30 billion of the MAX sit grounded. Global supply chains are extremely interconnected these days.

IT is significantly linked as well. Many businesses outsource their IT services via cloud-computing to a few giants, including Alphabet (GOOGL).  85% of Alphabet’s $100 billion annual sales comes from advertising, which in the past has been closely correlated to the business cycle. GOOGL invested $45 billion last year, 5 times more than Ford. In fact, the S&P 500 companies invested $318 billion last year, of which $220 billion was spent by ten tech companies. The big IT companies are now facing regulatory issues worldwide. What would be the worldwide impact if GOOGL, Facebook or others get their “wings” clipped?

Also, finance issues could disrupt the expansion. Although housing and banks are in decent shape, private debts remain high by historical standards, at 250% of GDP, or $50 trillion. And, if the prime lending rate continues to decline, banks’ profits and balance sheets will likely weaken.

Lastly, politics is a big risk. There are the threats of trade wars with China and physical war with Iran. The big tax cut that pushed markets up in 2017 could now produce lower year over year earnings for companies. On Monday, July 22nd, Congressional leaders and White House negotiators reached a deal to increase federal spending and raise the government’s borrowing limit. This would raise spending by $320 billion, at a time when the annual deficit is already nearing $1 trillion, despite the continuing expansion.

Conclusion: Changes in the economy have produced reasons why business cycles are longer, yet more sluggish. Those changes have also added new risks for a continuing expansion and bull market. No one can predict the future. Focus on what you can control: Make sure your risk level is appropriate for your risk profile. Make sure your portfolio is prepared for the next downturn. And, yes, stay invested.

 

https://www.dwmgmt.com

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