Monthly Archives: January 2015
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More Money Lessons from “Downton Abbey”

downton-abbeyWe’re big fans of “Downton Abbey”, the television show that follows an aristocratic British family in the early decades of the 20th century.

Over the five seasons that the show has graced PBS’ “Masterpiece”, a number of money lessons have been showcased — mostly what NOT to do!

For example, don’t bet the family fortune on a railroad thousands of miles away (i.e., massive lack of diversification). A professional advisor working in concert with the Earl of Grantham probably would have prevented him from concentrating so much capital in a Canadian railway!

Downton’s money lessons include financial and estate-planning disasters, bad investments, messy trusts, and inadequate business succession plans.

Here are some key takeaways and tie-ins:

  • Spell out control and ownership when passing the baton of a family company
    (the generational transfer of Downton Abbey from Robert to Matthew)
  • Use trusts to protect the family fortune
    (to protect Robert Crawley’s from his own poor decisions)
  • Make a will before giving birth
    (think of Matthew Crawley’s untimely demise)
  • Set up a medical directive
    (the terrible struggle of how to handle Sybil in childbirth)

We can’t wait for more Dowton Abbey and money lessons as season 5 continues!

 

Best Illustration of Bull & Bear Markets

bull-bear-chartThis is the best illustration we’ve ever seen of history’s bull and bear markets.  Blue illustrates past bull markets’ durations and returns (total and annualized).  Red illustrates the bear markets.  This was published in May 2014 so the current bull market is actually pushing 69 months.

Some key takeaways:

  1. There’s a lot more blue than red meaning stocks tend to spend more time going up in value than going down.
  2. The current bull market might feel long but by historical standards, the length and strength of this bull is not exceptional

Source: BI

Investing Priorities

keep-calm-and-set-your-prioritiesThe general rule of thumb for investing priorities is:

  1. Invest in your company 401(k) plan up to the match
  2. Pay off short-term, non-tax-deductible debt (e.g., credit card, car loan)
  3. Establish an emergency fund; 6-12 months of living expenses is a good guidepost
  4. Put the maximum allowable amount in a Roth IRA (if eligible)
  5. Put the maximum allowable amount in your company 401(k)
  6. Invest the remainder in taxable accounts
  7. Pay down tax-deductible debt (e.g., home mortgage)

 

Source: Vanguard

Morgan Stanley Advisor Leaks Data for 350,000 Clients

Security concept: Lock on digital screenMorgan Stanley financial advisor Galen Marsh downloaded personal and sensitive account data for 350,000 clients of the firm.  Essentially none of these clients were his own. A few weeks ago in December 2014, these data started showing up on Pastebin, a website popular with data thieves and other illegal operators.  The anonymous data leaker offered to trade more data in exchange for a payoff in virtual currency.  Morgan Stanley detected the breach, subsequently fired the 30-year-old advisor and the FBI has opened an investigation.

One startling aspect of this data breach is the seemingly weak information security at Morgan Stanley.  One of the basic tenets of this space is “access control” — each employee’s access should be restricted to the data he or she needs to operate.  In this case, Mr. Marsh should have had access to only the handful of clients that he supported, not 350,000!

Marsh admitted to downloading data for 350,000 clients but denies posting it online.  Morgan Stanley is trying to understand how Marsh transferred the data offsite.

In response to this breach, Morgan Stanley reportedly tightened security to its client database, hired an outside call center to handle the surge of inbound calls from clients concerned about the breach, and is offering credit and identify theft services to impacted parties.

Source: WSJ

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