• CYBERSECURITY IS NOW A MAJOR CHALLENGE for legal and professional service firms who still view it as an I.T. matter, the traditional paradigm, rather than an enterprise risk management function. But absence of effective security may encompass “policy, legal, compliance, human resources, client relationship management, public relations & branding, as well as financial and reputational success.” Changing cultural norm and operating strategy is exceptionally difficult for established firms, especially where leadership is not well-versed with modern technology, but “unless management adheres to cybersecurity policies & procedures, there is little chance that others will view it as a priority, and risk of cyberattacks will increase.” Technology strategies are critical, but only the first step in cyber-psychology. The start-point is “understanding that every employee is a possible target for attackers who want access to a firm’s most valuable resources… and that every personal device allowed connection to office networks is a potential entryway for malicious hackers… An effective training program should cover theft protection techniques, working with encryption, identifying phishing emails & social media entrapment, password security & authentication, keeping software & operating systems upgraded, and constant vigilance.” DCG can help. [LEGAL TECH NEWS – Apr 15]
  • MARKET ‘BUBBLES’ ARISE FROM MISALLOCATION OF CAPITAL RESOURCES – like cheap money which has funded the shale oil boom in recent years. The halting of the Fed’s ‘quantitative easing’ (money printing) strategy, along with lower oil prices, has now torpedoed that bubbled industry – where over a half trillion dollars in bonds were issued in the last five years and “a slew of shale companies no longer have cash flow to service this level of debt, so we can expect numerous bankruptcies.” Moreover, as energy companies have been responsible for nearly 15% of job growth and roughly a third of capital expenditures in the S&P 500, “the impacts will ripple like a stone thrown into a pond” with a good chance of becoming 2015’s ‘Black Swan’ event – “coming as a surprise to most people, having a large impact, and afterwards leading many to rationalize the outcome in the aftermath as on they should have foreseen.” [FINANCIAL INTELLIGENCE REPORT – Apr 15]
  • ‘RECOVERY’ SKEPTICS ARE GROWING as the “underlying fundamentals of the economy are deteriorating at a rate that now rivals” its 2008 curve, particularly reduction in loan loss reserves at the ‘too big to fail’ banks. “The Fed has no choice but to chase the stock market higher and keep interest rates at zero… as Central Banks and their sovereign wealth funds have become the major players dominating market activity.” One (albeit doomsday) analyst considers the situation dire enough that (1) “if the Fed were to let the stock market find its natural trading level, it would lose 50% value, quickly blowing up countless pension funds; and (2) if they let interest rates embark on true price discovery, the problem would be magnified by a factor 2 -3 times, with fixed income holdings plunging in value…and the entire financial system would collapse… The public is being set up for the scalping of a lifetime.” Has your entire asset allocation been independently reviewed lately? [INVESTMENT RESEARCH DYNAMICS – Apr 26,15]
  • WHEN ‘PRIVACY POLICIES’ GET WRITTEN, COMPANIES HARDLY CONTEMPLATE BANKRUPTCY. But Radio Shack has run into a snafu for that reason. With data on 117 million customers (1/3 of the U.S. population), the company planned to sell of ‘Customer Lists & Related Information’ along with other assets in the course of its bankruptcy petition. Since its online policy stated “We will not sell or rent your personally identifiable info to anyone at any time” and in-store signage confirmed that “We respect your privacy and do not sell our mailing list,” the Bankruptcy Court has so far denied their plan – considering whether it constitutes a “false, misleading and deceptive business practice.” [MANATTADVERTISING LAW – Apr 20, 15]
  • THOUGHTS FOR THE WEEK: Demographic statistics indicate that whites will become a minority group in America within the next three decades. An advance planner: http://www.huffingtonpost.com/entry/so-youre-about-to-become-a-minority_553011f0e4b04ebb92325daf

“Give a person a fish, and they eat for a day; Teach a person how to fish, and they can feed themself every day.”  Give a person    a welfare check, food stamps, section 8 housing, free cellphone and a debit card, and they’ll vote liberal the rest of their life.”