In 2013, the FBI arrested a ring of identity thieves responsible for more than $13 million in losses over a two-year period, from 2007 to 2008. Tobechi Onwuhara, a Nigerian national, impersonated victims across the country to scam their credit card companies into transferring millions of dollars from their customers’ home equity line of credit (HELOC) accounts, and the information he and his confederates used to identify victims was primarily collected through public sources. In other words, any efforts by the individual victims to foil the perpetrators would likely have been futile.
How Identity Thieves Access Your Information
Onwuhara’s expertise was his ability to Collect and combine disparate pieces of personal and financial information available free or for a fee to anyone from legitimate sources of private information. His skill allowed him to impersonate credit card holders to have open credit lines monetized to his benefit.
While there are a variety of investment options available to everyone, an astute investor must practice good fundamentals to control risks and optimize potential returns, including taking the time to be informed. As stated by Peter Lynch, renowned manager of the Fidelity Magellan Fund from 1977 to 1990 who beat the S&P 500 index 11 of 13 years, “Investing without research is like playing stud poker without looking at the cards.”
As you build your portfolio for retirement, it is crucial to keep several principles in mind:
1. Manage Your Risks
Warren Buffett, the “Sage of Omaha” often credited as the “Greatest Investor of All Time,” supposedly had two rules: “Rule number one: Never lose money. Rule number two: Never forget rule number one.”
It has been generally accepted that investments with higher returns generally involve the assumption of greater risk. Logically, you want to balance risk and reward. Unless you are a diehard gambler, you probably do not want a portfolio that is all or nothing (all assets in the high-risk, high-reward category) or, even worse, assets that have high risk, but low potential reward.
Fortunately, stock market analysts and theorists have conducted numerous studies to better understand the correlation between risk and reward in attempts to minimize risks and maximize returns within portfolios. As you select your investments, be aware of the beta and R-squared values, two measures that compare the investment to a commonly accepted market index (T-bills for bonds; S&P 500 for equities) and can help you better balance risk.
The price-to-earnings ratio, commonly known as the P/E ratio, is one of the most widely used valuation metrics. It is a basic measure used to compare different investments or the same investment over different periods of time, and it’s simple to calculate.
The P/E ratio is most commonly used for a quick comparison between two securities to see how Wall Street values them, with a higher P/E suggesting that future earnings are more likely. Dividing the common stock market share price (numerator) by earnings per share (denominator) produces the ratio. For example, a stock with a market price of $15.00 and earnings of $1.00 per share would have a P/E ratio of 15 (15/1=15).
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P/E ratios can be calculated on past or realized earnings, projected earnings, or a combination of each. Earnings are sometimes adjusted to exclude extraordinary events, since they are unlikely to repeat. When considering P/E ratios, it is important to understand if and how earnings have been adjusted and whether they are actuals or projections.
Examples of different P/E types include:
Trailing or Current P/E
Analysts use earnings for the most recent 12-month period. As each quarter is completed, the oldest quarter’s earnings per share is dropped and the most recent quarter is added to the total.
Projected or Forward P/E
The divisor is the projected or estimated earnings per share over the next 12 months. The estimate may be that of a single analyst or the consensus estimate from a group of analysts. It is important to know the identity and qualifications of the analysts providing an estimate to determine whether it is realistic.
Combined or Mixed P/E
Some analysts use a combination of the two last quarters of actual earnings plus the first two quarters of projected earnings as the divisor.
Regardless of which type of P/E you use, it’s important to be consistent when comparing period to period or one company’s stock with that of another. Since analysts have broad discretion in choosing what numbers they use to calculate P/E ratios, you should not be surprised that the ratios commonly vary from analyst to analyst or firm to firm. Be careful that you don’t compare apples to oranges.
According to government statistics, there were more than 4.2 million divorces between the years of 2006 and 2011, about half the rate of marriages in the same period. Statistically, about 40% of first marriages end in divorce, while almost three-quarters of third marriages fail.
Divorce is often costly, and can be devastating for all parties involved – partners, children, parents, and grandparents. According to the Holmes-Rahe Social Readjustment Rating Scale, only the death of a spouse is a more traumatic, stress-causing event; divorce is more stressful than separation, a jail term, the death of a close family member, or a personal injury or serious illness. Fortunately, time does heal all wounds, and understanding the healing process can help speed the path to recovery.
Going Through the Grief of Divorce
Many counselors believe that divorcees go through the five stages of grief that are also experienced after a loved one dies. The stages, first enumerated by Elisabeth Kübler-Ross in her book “On Death and Dying,” include:
Denial
. This may start while your marriage is still intact. It’s a defense mechanism to cope with pain, usually because you can’t believe divorce is happening to you.
Anger
. It’s natural to feel furious with yourself for being a fool, or your spouse for rejecting you, but uncontrolled anger can make a bad situation worse, especially if there are children involved. Unfortunately, many attorneys capitalize on this anger to extend divorce proceedings, or gain a negotiating advantage. While it’s natural to want to punish your spouse, it’s ultimately counter-productive to a satisfactory conclusion that allows you to move on and rebuild your life.
Bargaining
. This is the stage where you try to “fix what happened,” to go back and try again without the prior mistakes. It’s rarely logical, and inevitably unsuccessful. Divorces are the culmination of dissatisfaction over many issues and many months, the likelihood of resolving them quickly or fixing what happened is not high.
Depression
. The reality of divorce is that there are significant losses experienced by everyone involved: the presumed-happy future, financial security, affection, and love. As a consequence, it’s natural to feel sad and abandoned, to even withdraw from day-to-day life. When depression becomes significant, or begins to affect your children, it’s time to seek outside help.
Acceptance
. The last stage of grief occurs when you finally accept that your marriage is over, and you put the hopes and dreams you shared with your former spouse behind you. While you may still feel anger, guilt, or depression from time to time, the episodes wane in intensity and frequency, signaling that you’re ready to pick up the pieces and move on. This is also when you recognize your own strength to set a new path to happiness. You gain a level of indifference about your former spouse, having separated your personal lives. Even when you have children together, you learn to co-parent without rehashing old hurts or using the children as a weapon against one another.
To progress through the stages of grief, eventually achieving acceptance and even forgiveness, you must reconcile certain feelings before moving forward and rebuilding your life. Dr. Phil McGraw, the widely respected psychiatrist who gained fame as Oprah Winfrey’s adviser, details the variety of emotions that most people feel during and after a divorce in his bestselling book “Real Life: Preparing for the 7 Most Challenging Days of Your Life.”
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In 2013, the FBI arrested a ring of identity thieves responsible for more than $13 million in losses over a two-year period, from 2007 to 2008. Tobechi Onwuhara, a Nigerian national, impersonated victims across the country to scam their credit card companies into transferring millions of dollars from their customers’ home equity line of credit (HELOC) accounts, and the information he and his confederates used to identify victims was primarily collected through public sources. In other words, any efforts by the individual victims to foil the perpetrators would likely have been futile.
