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Understanding the Dark Net

dark-web-user-918x516British Prime Minister David Cameron announced a new police/intelligence agency on December 10, 2014, to monitor the “Dark Web,” as reported by The Independent. According to Cameron, “The dark net is the next side of the problem, where pedophiles and perverts are sharing images, not using the normal parts of the Internet we all use.”
 
Independent web consultant Mark Stockley concurs, claiming in Naked Security that the dark web “attracts people who want to engage in things like robbery, sex trafficking, arms trafficking, terrorism and distributing child pornography.” In the International Business Times, writers Charles Paladin and Jeff Stone claim electronic goods, contract killers, guns, passports, fake IDs, and hackers for hire are readily available on the dark web, in addition to illegal drugs and child pornography.
 
For most of the general public, the 2013 arrest of Ross Ulbright – known online as the “Dread Pirate Roberts” and the founder of a dark website, Silk Road – was the first evidence of a hidden, anonymous web. Silk Road was one of many websites outside the search capability of ordinary web browsers such as FireFox, Safari, and Internet Explorer. While the majority of products sold on Silk Road were illegal drugs, the success of the site led to other dark websites such as Sheep Marketplace and Black Market Reloaded with minimal restrictions on the products and services for sale.
 
As a consequence of the lack of regulation, David J. Hickton, United States Attorney for the Western District of Pennsylvania, called the dark web the “Wild West of the Internet” in a Rolling Stone interview. IBM’s Managed Security Services Threat Research group calls the hidden web a marketplace for drugs, weapons, stolen data and “anything else a criminal entrepreneur might need or want to sell,” and advises its customers that the dark web “is not a neighborhood you visit for any legitimate reason.”

Web Strata

While the terms “Internet” and “World Wide Web” are often used interchangeably, they are not the same. The former refers to a massive network of networks, linking millions of computers globally where any computer can communicate with another as long as each is connected to the Internet. The World Wide Web is an information sharing model built on top of the Internet that uses the HTTP protocol, browsers such as Chrome or Firefox, and webpages to share information. The web is a large part of the Internet, but not its only component – for example, email and instant messaging are not part of the web, but are part of the Internet.
 
To read more . . .

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6 Reasons to Invest in Exchange Traded Funds (ETFs) Over Index Mutual Funds

exchange-traded-funds-etf-918x516What does the American Dream mean to you? For many, it means having financial security, and having the ability to provide an education to children, take care of parents, retire comfortably, or remain independent while growing old.
 
But achieving financial security is not easy. A 2015 Pew Research Poll suggests that more than half of Americans are not financially prepared for the unexpected, or otherwise spend more than they make each month. 8 of 10 Americans worry about their lack of savings. At the same time, most Americans recognize that regularly saving and investing a portion of their income is the foundation of financial security. While savings accounts are a critical component in an investment plan with their low risk and high liquidity, most investors need the higher potential returns of equity ownership.

The Evolution of Equity Investment Vehicles

Portfolios of Individual Stocks

After World War II, Merrill, Lynch, Pierce, Fenner & Beane (the predecessor to Merrill, Lynch, Pierce, Fenner & Smith, Inc.) initiated a campaign to “bring Wall Street to Main Street” that included pamphlets and seminars teaching the public how to invest in the common stocks of America’s corporations. By 1947, the company was responsible for 10% of the transactions on the New York Stock Exchange; three years later, it had become the largest brokerage firm in the world. Wall Street firms encouraged investors to own stocks of individual companies, promoting investment clubs and Monthly Investment Plans. The public eagerly responded to the new investment, driving annual volume on the NYSE from 377.6 million shares in 1945 to over a billion shares by 1961, according to NYSE Market Data.
 
Despite the success, many potential investors had limited capital or lacked the time or expertise to successfully analyze or monitor the stock market. These deficiencies led to a demand for professionally managed portfolios that could be shared by hundreds of investors for reduced costs, investment risk, and volatility: the mutual fund.

Professionally-Managed Portfolios – Mutual Funds

In 1928, the Wellington Fund—the first mutual fund to include stocks and bonds—appeared. Within a year, there were 19 open-end funds and about 700 closed-end funds, the majority of which were wiped out in the Wall Street Crash of 1929. When America’s economy boomed in the 1950s, interest in pooled, professional management of stock portfolios – mutual funds – resurfaced. A mutual fund is often defined as a basket of stocks, bonds, or other assets. It’s managed by an investment company for investors who don’t otherwise have the resources to buy or manage a collection of individual securities themselves.
 
Demand for the new investment vehicle exploded. Gene Smith, writing for The New York Times on October 6, 1958, claimed, “The butcher, the baker, the candlestick maker, the cop on the beat, the housewife — all have one thing in common today: they’re pouring more and more dollars into mutual funds.”

According to the Investment Company Fact Book, the net purchases by households of mutual fund shares exceeded the purchase of corporate stock shares for the first time in 1954. And by the end of 2014, households held almost $12.5 trillion of mutual funds of different types (equity, bond, and balanced).

Index Tracking Mutual Funds

However, even as investment in mutual funds increased, some began to question whether the performance justified the high fees of management. Read more . . .

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Should You Use a Financial Planner or an Investment Adviser?

couple-meeting-financial-advisor-916x516From 1998 to 2013, the number of Fortune 500 companies offering pensions to their employees fell from 60% to 24%, according to The Washington Post. With the decline of unionism and loss of employee bargaining power, corporate managements have aggressively replaced pensions with profit-sharing plans, essentially transferring the risk of retirement planning and investment management to their employees. It is possible that the Social Security program will be similarly transformed, making retirees responsible for investing funds through private accounts. However, the truth is that few people are prepared to manage their own retirement funds – as Howard Gold writes in MarketWatch, “Most investors have no idea of what they’re doing.”
 
In the last half-century, the financial markets have become increasingly complex with new products, new markets, and changing tax laws. Technology makes it possible for investors to remain informed 24-7 about events that may affect their stock positions and to enter trades from the comfort of their home. At the same time, they must compete with robo-trading programs that react to news and market activity faster than any human can. As a consequence, according to Rosalind Resnick writing in Entrepreneur, even people capable of managing their own capital should carefully consider whether a go-it-alone approach to investing makes sense.
 
Whether due to a lack of training, interest, or time, many individuals are turning to professional advisors to help them navigate the perilous waters of personal finance. In some cases, advice covers the entire spectrum of financial services, ranging from budgeting, to creating specialized trusts and estate plans. In others, the consultant’s primary responsibility is limited to a specific need, such as managing a portfolio of investments or developing effective tax strategies.
 
Seeking and finding the perfect advisor is not always easy, especially in an industry filled with confusing acronyms. According to the Financial Industry Regulatory Authority (FINRA), there were more than 160 different professional designations. In addition, terms such as financial analyst, financial advisor, financial consultant, and wealth manager are generic titles and can be used by anyone without registering with securities regulators or meeting educational or experience qualifications. To add further confusion, many consultants add multiple titles and designations to their resumes, making it difficult to determine which services they actually provide.

Do You Need Financial Planning Advice or Portfolio Management Services?

While the terms “financial planning” and “investment advice” are often used interchangeably, they refer to different skill sets. As a consequence, two of the more popular designations – certified financial planner (CFP) and registered investment advisor (RIA) – are regulated under different authorities.
 
Read more . . .

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Is an Extended Warranty the Cost?

extended-warranty-918x516
“Would you like the AppleCare Protection Plan for your computer?” asked the salesman. I had just purchased a new 27-inch iMac at my local Apple store. The plan, available for $169, would extend the manufacturer’s warranty from one to three years and would include technical support, as needed. The cost seemed reasonable, especially since I was spending more than $2,000 for the iMac. I had to ask myself, “Will I need the extra protection?”

How Extended Warranties Work

An extended warranty is an agreement or contract to repair, replace, or maintain an identified vehicle, residential or other property due to operational or structural failure from a defect in materials, workmanship, and, in some cases, normal wear and tear. It is generally sold as an add-on product, and covers a specific duration of time in return for the premium paid. Extended warranties sometimes offer additional service options or more flexible terms than the manufacturer’s original warranty.
 
While appearing to be a type of insurance, the National Association of Insurance Commissioners ruled in 1995 that extended warranties were not insurance, but extended service contracts. While the extended warranty industry has been regulated by various state insurance boards, the Consumer Financial Protection Bureau (established under the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010) is expected by many in the industry to replace the various state regulators for a more consistent approach.

Parties to an Extended Warranty Contract

The sale and administration of an extended warranty or service contract requires a combination of separate functions, although a single entity may perform several in some cases. Parties include:

  • Purchaser/Owner. The person or entity who purchases the extended warranty and is entitled to its benefits, subject to contractual conditions.
  • Principal/Obligor. The entity that assumes the risk in the contract and is financially responsible for the costs of repair, replacement, or maintenance. Some principals self-insure (keep the risk), while others purchase third-party insurance to reduce a portion (or all) of the risk.

    • <;i>Service Contract Provider. The entity that actually delivers the warranty services – i.e., repair or replacement of the damaged product – to the purchaser of the extended warranty. This can be an unrelated third-party, manufacturer, distributor, or retailer of the product.

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