The mainstream view for the last 18 months has been that Fed rates cuts are always right around the corner. Markets are acting like the cutting cycle has already begun.
Apollo Global Management is a well-regarded alternative investment firm. (Disclosure: I own some APO stock). Their Chief Economist, Torsten Sløk, recently published his outlook, which differs sharply from the mainstream view. He notes that by various measures, the economy is heating up (or at least staying hot), and inflation has started to creep back up, not down. In his words:
The market came into 2023 expecting a recession.
The market went into 2024 expecting six Fed cuts.
The reality is that the US economy is simply not slowing down, and the Fed pivot has provided a strong tailwind to growth since December.
As a result, the Fed will not cut rates this year, and rates are going to stay higher for longer.
How do we come to this conclusion?
1) The economy is not slowing down, it is reaccelerating. Growth expectations for 2024 saw a big jump following the Fed pivot in December and the associated easing in financial conditions. Growth expectations for the US continue to be revised higher, see the first chart below.
2) Underlying measures of trend inflation are moving higher, see the second chart.
3) Supercore inflation, a measure of inflation preferred by Fed Chair Powell, is trending higher, see the third chart.
4) Following the Fed pivot in December, the labor market remains tight, jobless claims are very low, and wage inflation is sticky between 4% and 5%, see the fourth chart.
5) Surveys of small businesses show that more small businesses are planning to raise selling prices, see the fifth chart.
6) Manufacturing surveys show a higher trend in prices paid, another leading indicator of inflation, see the sixth chart.
7) ISM services prices paid is also trending higher, see the seventh chart.
8) Surveys of small businesses show that more small businesses are planning to raise worker compensation, see the eighth chart.
9) Asking rents are rising, and more cities are seeing rising rents, and home prices are rising, see the ninth, tenth, and eleventh charts.
10) Financial conditions continue to ease following the Fed pivot in December with record-high IG issuance, high HY issuance, IPO activity rising, M&A activity rising, and tight credit spreads and the stock market reaching new all-time highs. With financial conditions easing significantly, it is not surprising that we saw strong nonfarm payrolls and inflation in January, and we should expect the strength to continue, see the twelfth chart.
The bottom line is that the Fed will spend most of 2024 fighting inflation. As a result, yield levels in fixed income will stay high.
[END OF EXCERPT]
The big question, of course, is whether these recent signs of increased inflation are just blips of noise, or the start of a new trend. Time will tell if Sløk’s contrarian view is correct, but I have to respect his intestinal fortitude in putting it right out there, without any weaselly qualifications. He refers to many charts which are in his original article. I will reproduce four of these charts below:
Cold symptoms are personally unpleasant, and also have economic aspects. In 2011, Americans directly spent some $40 billion on cold medicines, and the societal costs of workers and students staying home are much greater.
Having dealt with one or two colds a year for quite a few decades, I have significant experience with cold remedies. Also, being a habitual researcher, I have nosed around the internet looking at various studies of the effectiveness of medications.
The biggest problem I have with colds is the nasal drippage at night. In the daytime, I can just blow my nose, but at night this can keep me from sleeping, and also leads to nasty coughing and even bronchial infection if the stuff goes down into my lungs.
There are various so-called first-generation antihistamines out there. They all have some sedative affects. Second-generation antihistamines (e.g. fexofenadine, loratadine, and cetirizine) have fewer sedating qualities, since they do less crossing of the blood-brain barrier, but they tend to be only effective for allergies and less effective for colds.
The best antihistamine for colds which I have found, which seems to be confirmed on the internet, is chlorpheniramine maleate. This was the key ingredient in classic Coricidin, and now appears in Coricidin HPB. HPB stands for high blood pressure. It seems to be always accompanied with some acetaminophen (Tylenol).
(Side comment: the internet seems to say that in general antihistamines are not a problem for people with high blood pressure. Decongestants are. I guess the manufacturer turned the lack of a decongestant in this formulation into a virtue, by calling it “safe for high blood pressure.”)
Coricidin HPB exists in many different incarnations on drugstore shelves. The one I go for is the Cold and Flu package, see below. It just has the chlorpheniramine maleate plus acetaminophen:
Most of the other variants have the word “cough” in the title, such as “Cough and Cold,” and contain dextromethorphan cough suppressant. I find the combination of the dextromethorphan plus the antihistamine to be extremely soporific. In my medicine cabinet I label them “zombie pills, since they leave me feeling torpid even 24 hours after taking them. The plain antihistamine version (Cold and Flu) also slows me down, but not nearly as much as the cough suppressant version.
I have also found generic versions (e.g. CVS brand) of chlorpheniramine maleate. However, less than half the pharmacies I check have this stuff on their shelves, for some reason. I guess it is not as heavily promoted as the Vicks NyQuil, which contains the heavily sedating doxylamine succinate (active ingredient in Unisom sleep aid) as the antihistamine component.
I recently ran across an article by Parkview Health which happens to come to the same conclusions I have. I will share their recommendations here in italics, with a little further commentary of my own. On antihistamines for runny nose:
In patients older than 12 years of age: Nyquil™ (doxylamine succinate), Tavist (clemastine fumarate), chlorpheniramine maleate or Benadryl® (diphenhydramine) may help relieve symptoms, although these may cause sleepiness. Chlorpheniramine maleate is the least sedating of the products listed above.
For Nasal Congestion:
The best oral medication would be Sudafed® (psudoephedrine) [sic], which is a medication behind the counter in the pharmacy. There is a medication that is similar and available over-the-counter, Sudafed PE® (phenylephrine), but it’s not nearly as effective as plain Sudafed®. These medications have precautions in some disease states so it is best to consult your physician before treating your nasal congestion.
The best nasal spray medication is Afrin® (oxymetazoline) and while this medication is very effective. It should only be used for 3 days due to the potential side effect of rebound congestion.
Nearly all the meds on the drugstore shelves for stuffy nose use phenylephrine, which is known to be essentially useless. Go figure. Anyway, go for the good stuff, the pseudoephedrine. I use the 12-hour slow-release formulation, keeps me going all day. This med does jazz up your nervous system, so some folks may find the racing brain to be unpleasant. Truck drivers use it to stay awake at night, but for the rest of us, don’t take this at bedtime. I take the antihistamine at night (half hour before bedtime, and typically once in the middle of the night, since it only lasts about four hours), and the decongestant in the morning.
If I can’t afford to be slow-brained the next day, or if I am at peak nasal congestion, I might use the nasal spray at night once or twice, but I know from experience that using it too much leads to permanent stuffiness.
Pseudoephedrine can be used in the manufacture of methamphetamine, so you can’t just load up your shopping cart with boxes of it. In the U.S., you typically have to go to the pharmacist’s counter, and they dole all out maybe two boxes at a time, noting your driver’s license, and entering it into some national database.
I’ll let the good folks at Parkview Health offer the closing wisdom here on cold and flu meds:
Cough:
The best way to address cough is to assess what kind of cough it is. When you cough is it dry and non-productive? Or is it wet and mucus exits with the cough?
If the cough is dry and non-productive:
Utilize Delsym® (dextromethorphan)
If the cough is wet and produces mucus:
Drink water to make the mucus thinner
Utilize Mucinex® (guaifenesin)
Fever/Sore throat: The best medication for fever and/or sore throat is plain Tylenol® (acetaminophen) or NSAIDs such as Motrin® (ibuprofen).
What medications are best to treat the symptoms of the common cold in children? Many medications that are used in the common cold for adults should not be used in children because there have been few trials supporting their use in infants and children. Therefore, the best treatment is Children’s Tylenol® (acetaminophen) or Children’s Motrin® (ibuprofen) for fever or uncomfortable symptoms due to the common cold.
Other than the medications listed, the best way to help your infant or child get rid of the common cold is drinking an adequate amount of fluids. If further help or direction is needed, contact your physician.
What medication(s) are best to treat the flu? Unfortunately, the flu is much harder to treat over-the-counter, as there aren’t medications to really treat this viral infection. The best measures to take are to get plenty of rest, drink enough fluids and utilize Tylenol® (acetaminophen) for fever.
There are medications that can be prescribed by your physician to help shorten the duration of the flu although studies have shown the medications shorten the flu by only a day.
The best way to prevent the flu by getting the flu shot
Other Types of Cold Remedies
The above discussion covered plain vanilla, non-prescription (over the counter) medications. There are other more exotic and expensive meds to be had by prescription, as well as a plethora of folk remedies. Here is a link to about a dozen such nostrums, such as garlic and cognac, vinegar and cayenne pepper, and sauerkraut.
In the first installment of this series on stock options, I focused on buying options, as a means to economically participate in the movement of a stock price up or down. If you guess correctly that say Apple stock will go up by 10% in the next two months, you can make much more money with less capital at risk by buying a call option than by buying Apple stock itself. Or if you guess correctly that Apple stock will go down by 10% in the next two months, you can make more money, with less risk, by buying a put option on Apple, then by selling the stock short.
In part two of the series, I discussed how options are priced, noting the difference between intrinsic value, and the time-dependent extrinsic value.
Here in part three, I will discuss the merits of selling, rather than buying options. This is the way I usually employ them, and this is what I would suggest to others who want to dip their toes in this pond.
Just to revisit a point made in the first article, I see two distinct approaches to trading options. Professional option traders typically make hundreds of smallish trades a year, with the expectation that most of them will lose some money, but that some will make big money. A key to success here is limiting the size of the losses on your losing trades. It helps to have nerves of steel. Some people have the temperament to enjoy this process, but I do not.
Selling Out of the Money Calls
Instead if spending my days hunched over a screen managing lots of trades, I would rather set up a few trades which may run over the course of 6 to 12 months, where I am fairly OK with any possible outcome from the trades. A typical example is if I bought a stock at say $100 a share, and it has gone up to $110 a share, and I will be OK with getting $120 a share for it; in this case I might sell a six-month call option on it for five dollars, at a strike price of $115. The strike price here is $5 “out of the money”, i.e., $5 above the current market price.
There are basically two possible outcomes here. If the price of the stock goes above $115, the person who bought the call option will likely exercise it and force me to sell him or her the stock for a price of $115. Between that, and the five dollars I got for selling the option period, I will have my total take of $120.
On the other hand, if the stock price languishes below $115, I will get to keep the stock, plus the five dollars I got for selling the option. That is not a ton of money, but it is 4.3% of $115. If at the end of the first six-month period I turned around and sold another, similar six-month call option which had the same outcome, now I have squeezed an 8.6% income out of holding the stock. If the stock itself pays say a 4% dividend, now I am making 12.6% a year. Considering the broader stock market only goes up an average of around 10% a year, this is pretty good money.
At this point, you should be asking yourself, if making money selling options is so easy, I have I heard of this before? What’s the catch?
The big catch is that by selling this call, I have forfeited the chance to participate in any further upside of the stock price, beyond my $120 ($155 + $5). If at the end of six months, the stock has soared to $140 a share, but I must sell it for a net take of $120, I am relatively worse off by selling the call. I have still made some money ($20) versus my original purchase price. However, if I had simply held the stock without selling a call option, I would have been ahead by $40 instead of $20. And now if I want to stay in the game with this stock, I have to turn around and buy it back for $140. This decision can involve irksome soul-searching and regrets.
There are two techniques are used to reduce these potential regrets. One is to only sell calls on say half of my holdings of a particular stock. That way, if the stock rockets up, I have the consolation of making the full profit on half my shares.
The other technique is to try to identify stocks that trade in a range. For instance, the price of oil tends to load up and down between about seven day and $90 a barrel, barring some geopolitical upset. and the price of major oil companies, like Chevron or ExxonMobil, likewise trade up and down within a certain range. If you sell calls on these companies when they are near the top of their range, it is less likely that the share price will exceed the strike price of your option. Or, if it does, and you have to sell your shares, there is a good chance that if you just wait a few months, you will be able to buy them back cheaper. On the other hand, a stock like Microsoft tends to just go up and up and up, so it would not be a good target for selling calls.
Some Personal Examples
From memory, I will recount two cases from my own trading, with the two different outcomes noted above. ExxonMobil stock has been largely priced between $95 and $115 per share, depending mainly on the price of oil. In early 2024, with the price of XOM around 117, I sold a call contract with a strike price of 120 and an expiration date in January, 2024. I think I got around $9 per share for selling this option. The next twelve months went by, and the price of XOM never got above 120, so nobody exercised this call contract against me, and so I simply kept the $9, and kept my XOM shares. Since each contract covers 100 shares, I pocketed $9 x 100= $900 from this exercise, covering 100 shares (approx. $12,000 worth) of XOM stock.
That was the good, here is a not so good: I bought some ARES (Ares Management Corporation) around February 2023 for (I think) around $80/share. For the next few months, the price wobbled between $75 and $90, while the broader S&P 500 stock index (lead by the big tech stocks) was rising smartly. I lost faith in ARES as a growth stock, but decided to at least squeeze some income out of it by selling a call option for about $10 at a strike price of $110 and a distant expiration of Dec 2024.
What then happened is ARES has taken off like a rocket, sitting today at $132/share. If it keeps up like this, it may be well over $150 by December, 2024. I will likely have to sell my 100 shares for $110 (the strike price), so I will get a total of $110 + $10 = $120 for my shares. That is far less than the current market value of these shares. I am not crying, though, since I have some more ARES shares that I did not sell calls on. Also, getting $120 for the shares I bought for $80 is OK with me. There is a saying on Wall Street about being too greedy, “Bulls make money, bears make money, pigs get slaughtered.”
Selling Puts
Briefly, selling out-of-the money puts is like selling calls, on the buy-side instead of the sell-side. It is a way to generate a little income, while garnering an advantageous purchase price, if things go as hoped. In my ARES example above, suppose my 100 shares get called away from me, when the market price is $150. I have various choices at that point. I could simply by a fresh 100 shares at $150, or I could get onto other investments. Or, if I were not happy about paying $150, I might sell a $140 put for say $6 per share. I would have to be OK with either of two outcomes: (1) either the price drops below $140 and the buyer of my put option forces me to buy it at $140 (in which case I need to have $140 x 100= $14,000 in cash available) , though net the stock will only cost me $140 – $6 = $134 ; or (2) the price stays above $140 and I simply pocket the $6 option premium. And I have to be willing to live with the regret if ARES goes on to $180, in which case it would have been better to have simply bought shares at $150 instead of dinking around with options.
So, there is no one-size-fits-all approach. Again, I prefer to sell puts on companies that more trade in a range. For instance, gold tends to meander up and down – I have thought about it, but never got around to selling puts on gold companies at lows, and calls when they are high.
In Summary
I find judicious selling of calls and puts is a fairly tame way to make a little extra income on stocks. Also, it forces me to set some price targets for buying and selling. I have horrible selling discipline otherwise – I have a hard time making up my mind to buy a stock, but once I do, and once it goes up, I fall in love with it and don’t want to sell it (partly because lazy me doesn’t want to do the work to find a substitute). Selling calls is one way to force myself to set “OK” price targets for letting a stock go.
All that said, selling calls does forfeit participation in the full upside of a stock, and is probably not a good approach in general for growth-oriented tech stocks. Likewise, selling puts, instead of outright buying a stock, may lead to regrets if the stock price goes way up and gets away from you.
As usual, this discussion does not constitute advice to buy or sell any security.
got my attention. I happen to know many people who have been helped by Dave Ramsey‘s sensible courses and books on managing personal finances. But I don’t know a single person who has gotten rich by following Kiyosaki’s advice. So, I decided to do a little fact checking here.
Richard Kiyosaki published his financial self-help book Rich Dad Poor Dad in 1997. The book purports to be non-fiction, and dispenses financial advice through a supposed autobiographical narrative which contrasts his well-educated, hard-working but not-rich father (“poor dad”) with the father of his next-door neighbor Mike. Mike’s father (“rich dad”) was an eight-grade dropout who owned “convenient stores, restaurants, and a construction company. “
According to the narrative, Kiyosaki learned financial business secrets from this rich dad, which Kiyosaki applied to quickly build a vast real estate empire, using the magic of borrowed money. Rich Dad Poor Dad became a runaway success, selling over 32 million copies, and remaining on the New York Times best seller list for over six years. Kiyosaki has parlayed its success into a series of further books and related products. Kiyosaki’s narrative has fired the imaginations of millions, and made him rich through the sales of his books and other products.
I read his book back around 2000, and came away with mixed impressions. On the one hand, there was sensible advice to put your resources into money-generating assets rather than frittering it away on consumer goods. The narrative of how easy it is to make big money in rental real estate was alluring, and motivated me to delve further into the subject. On the other hand, the book was pretty short on specifics of how to actually do this, beyond recommending expensive courses offered by Mr. Kiyosaki. It seemed too good to be true, but hey, how could I argue with such apparent success?
It turns out that that skeptical intuition of mine was justified: the promises offered in Rich Dad Poor Dad are too good to be true, and in fact the whole narrative of the book appears to have been made up in order to appeal to gullible readers.
As best anybody can tell, there never was this “rich dad” character as described by Kiyosaki. Also, there’s no evidence that Kiyosaki actually made significant money by real estate dealings, prior to making millions of dollars with his book sales (and presumably putting some of that into real estate.)
As a person who values personal integrity, I tend to be peeved when authors or screenwriters present a book or a movie as fact, when key parts of it are actually fictional. The usual “Based on a true story“ disclaimer doesn’t cut it, since readers/viewers can’t help coming away with the impression that this is what happened, when really it didn’t (Think: Roots, A Beautiful Mind, etc., etc.).
So the dishonesty at the core of Rich Dad Poor Dad annoys me. What is more significant is that much of the advice is actually counterproductive, harmful, or even illegal. For instance, Kiyosaki recommends trading stocks based on private tips from friends in corporations; this is called “insider trading”, and people like Martha Stewart have gone to jail in connection with it. He also tells of how he can back out of contracts by inserting a clause “subject to the approval of my partner”, where said partner was actually his cat. That is called “fraud”.
Richard Emert at The Motley Fool opines, “Kiyosaki’s material is almost completely devoid of specific financial advice. Further, his material on making money in real estate appears to be little more than repackaged hype from the “no money down” real estate hucksters of the late ’80s.” In deference to his exhaustive investigation, I’ll give John Reed the last words here (tell us how you really feel, John):
Rich Dad, Poor Dad is one of the dumbest financial advice books I have ever read. It contains many factual errors and numerous extremely unlikely accounts of events that supposedly occurred.
Kiyosaki is a salesman and a motivational speaker. He has no financial expertise and won’t disclose his supposed real estate or other investment success.
Rich Dad, Poor Dad contains much wrong advice, much bad advice, some dangerous advice, and virtually no good advice.
[emphases in the original]
…the book goes on to deliver a pack of lies that make getting rich seem much easier than it really is and make education sound much less valuable than it really is. Basically, people want to get rich quick without effort or risk. Kiyosaki is just the latest in a long line of con men who pander to that fantasy.
… [But] to members of Kiyosaki’s cult, it matters not how many false or probably-false statements I find in Kiyosaki’s writings. They just like the guy. Personality is an appropriate criterion for selecting someone to hang around with. But it is a highly inappropriate criterion for evaluating Kiyosaki’s advice, because he’s not going to let you hang around with him and your family’s finances are serious business.
In the true definition of a worst-case scenario, an unnamed California bride-to-be is reported to have called off her entire non-refundable wedding reception worth $15,000, after learning something about her fiance.
But…she took the disaster and turned it on its head, donating the reception party complete with dinner, dessert, drinks, DJ, dancing, and photo booth to a non-profit called Parents Helping Parents which provides community support to parents with children who have special needs.
…Organizers at PHP sent out invitations for the “Ball for All” and had all the seats reserved 48 hours before the event. … “Nearly everyone [there] was a young adult with special needs, their parent or a member of the care team,” Daane said. “Their joy and delight really told the story about how special and unique this event was—the moment the ballroom was opened, and we all filed into a beautiful candlelit room with tables draped in white linen.”
Yay!
This cheering item is on the “Good News Network”, which I had never heard of before. Other headlines on this site include:
Irishman Whips Out Fiddle to Entertain Passengers in Flight–and People Dance a Jig in the Aisle (WATCH)
Singing or Playing Music Throughout Life is Linked with Better Brain Health While You Age
and
She’s a Pet Detective Who’s Tracked Down and Reunited 330 Lost Dogs with Owners for Free–Using Thermal Imaging.
I think it is great to publicize such civic acts. Let’s make this the new normal.
I recently got a new PC. Windows 11 Media Player will play music CDs, and certain kinds of video files, but does not do much in the way of editing, and it will not play commercial movie DVDs. I planned to download the free, widely used, widely loved, highly capable VLC media program for my audio and video needs.
But first, as a cautionary measure, I did a quick Internet search on the safety of this program. I was mainly concerned about malware being bundled in with the installation. This does not seem to be a problem if you get it from the source, VideoLAN. This is a benevolent, non-profit enterprise led by volunteers trying to make the world a better place. However, it turns out the notorious China-based Cicada hacking group has utilized VLC to infiltrate computers and suck out sensitive information. This sounded really bad for VLC. Digging a little deeper, though, the story was a more nuanced. The actual hacks occurred when incautious users used VLC to open a contaminated video file that the hackers had sown on the Internet, which then started to do all the bad stuff on the computer.
But what really caught my attention, and has become the subject of this blog post, was VLC‘s response to all the criticisms of it being a vector for hackers. In so many words, they said, “Hey, if users would use a little common sense and not run as Administrators all the time, this would not be an issue. It’s only when they run as administrators and use our program to open infected files that the malware can get a foothold and to do anything really bad to the computer. Lots and lots of other programs out there have the same vulnerabilities that our program does towards opening infected files. If users are going to be stupid enough to run as administrators all the time, don’t blame us.” Or something like that.
That got me concerned about looking into the hazards of routinely running as an administrator. This is something nobody really warned me about. When you get your shiny new PC, and open up your first user account to operate your computer with, it is always an administrator account. That allows you to install and uninstall programs, which of course you need to do. Most of us, dumb and happy, just keep using that same account.
But when I dug into it, it does seem like that is a bad idea. It opens your computer to hacking in a serious way. Two quotes to make that point:
A recent study from security vendor Avecto found that 94% of critical vulnerabilities announced by Microsoft could be mitigated by simply removing administrative rights. These vulnerabilities range from phishing attacks that can hijack the system via applications like Microsoft Word to packets that are specially crafted to hit Windows Server. In most cases, they can be leveraged to remotely execute code and take control of the PC, potentially accessing sensitive data and applications deeper within the network. ( Joe Kozlowicz at Lunavi blog)
And:
The principle of least privileges is why we do not do our day-to-day computing from an Administrators account. If you are a Standard user, and your account gets hacked, the most an attacker can do is to rifle through your personal files, which is not a worthwhile use of an attacker’s time. If attackers are looking for bank account numbers, credit card information, Social Security Numbers, and the like, they can easily and cheaply find thousands of people’s records on the dark web. They are unlikely to waste their time on your user account.
But if you’re using an Administrators account that gets hacked … now that’s the grand prize. Now they’ve got an entire computer to work with, and with that computer they can do tremendous damage, not only to your computer – for example, by using it to mine bitcoin, or torrent stolen content – but to other computers too, by using your computer to attack other computers. (per “A. User” on Microsoft forum).
(My jaw dropped a little at the off-hand remark that “…If attackers are looking for bank account numbers, credit card information, Social Security Numbers, and the like, they can easily and cheaply find thousands of people’s records on the dark web. They are unlikely to waste their time on your user account…,” but we will pass over that for now.)
Interestingly, on that same Microsoft forum there were other complacent users pooh-poohing the notion that running with an Administrator account was hazardous. As I said, dumb and happy.
So, I realized (hangs head in shame) I was one of that innumerable company of stupid users who routinely run their PCs from an Administrator account. Well, what is the alternative? Besides an Administrator account, the other type of account on a PC is a Standard account. With a Standard account, you can run all your programs and save all your data and do pretty much everything you normally do.
Oh, but you ask, what if I want to install a new program or uninstall an unwanted program? It turns out that is straightforward to do using a Standard account, as long as you know your administrator account password (never lose that password!!). If you do a software installation as a standard user, at some point in the process it will simply ask you for an administrator password, which you can enter to make that one action, and then the process just proceeds along.
If are working as a Standard user, but then you know you’re going to make some unusual system alterations, it is easy enough to don your Superman cape and open up a second, administrator, account on your PC, leaving your working files and programs live in your standard account. Just do the venerable simultaneous CNTL-ALT-DEL, and click on Switch User. You can then click on an Administrator account and do what you need to do, then switch back to the Standard account to keep on going there.
And so, on my new PC, I have set up a second, Standard account, and plan to run routinely from that. I invite others to do likewise. A brief tutorial is below.
APPENDIX: How To Set Up Another, Standard Account on Your PC
This whole process may take about 30 minutes, depending. In Windows 11, go to:
At this point the system will ask you for the new user’s email address or Microsoft account, which you can give if you want, or you can say you don’t know and keep going. Assign this account a new name and password (this will become the normal password you sign into your PC with, going forward).
It’s similar in Windows 10:
Settings — Accounts – – Family and Other Users – – Add Someone Else to this PC – – I don’t have [Microsoft account] sign-in information – – Add User Without Microsoft Account
At this point you are done. You are ready to use this new account as your normal user log-in, and only unleash the Administrator account on rare occasions.
That was quick. But what I found took more time was re-customizing the settings and bookmarks on my apps like browser (I use Brave for privacy) and Word (I tweak the settings to prevent Word from sending all my keystrokes back to Microsoft), for use within the new account. Apparently, these apps treat each new user as a new user, and come in with the standard settings. Also, I took my working files/documents from my Admin account, copied them to a thumb drive, and then pasted them into the Documents folder of my new Standard account. (There is probably a more clever way to do this, using Public folders on your C: drive).
There seems to be something of a generational divide as to how important is your personal privacy. Folks under, say, age 40, have lived such a large fraction of their lives with Facebook and Amazon and Google and Twitter logging and analyzing and reselling information on what they view and listen to and say and buy, that they seem rather numb to the issue of internet privacy. Install an Alexa that ships out every sound in your home and a smart doorbell that transmits every coming and going to some corporate server, fine, what could possibly be the objection? So what if your automobile, in addition to tracking and reporting your location, feeds all your personal phone text messages to the vehicle manufacturer?
For us older folks whose brain pathways were largely shaped in a time when communication meant talking in person or on a (presumably untapped) phone, this seems just creepy. Polls show that a majority of Americans are uneasy about the amount of data on them being collected, but “do not think it is possible to go about daily life without corporate and government entities collecting data about them.”
There are substantive concerns that can be raised about the uses to which all this information may be put, and about its security. Per VPNOverview:
Over 1,800 data leaks took place last year in the US alone, according to Statista. These breaches compromised the records of over 420 million people.” . With smartwatches having access to so much sensitive information, here’s what kind of data can fall into the wrong hands in case of a data leak:
Your personal information, including name, address, and sometimes even Social Security Number
Sensitive health information collected by the smartwatch
Login credentials to all the online platforms connected to your smartwatch
Several times a year now, I get notices from a doctor’s office or finance company or on-line business noting blandly that their computer systems have been hacked and bad guys now have my name, address, birthdate, social security number, medical records, etc., etc. (They generously offer me a year of free ID fraud monitoring. )
The Internet of Things (IoT) promises to ramp up the snooping to a whole new level. I took note four years ago when Google acquired Fitbit. At one gulp, the internet giant gained access to a whole world of activity and health data on, well, you. The use of medical and other sensors, routed through the internet, keeps growing. One family member uses a CPAP machine for breathing (avoid sleep apnea) at night; the company wanted the machine to be connected on the internet for them to monitor and presumably profit from tracking your sleep habits and your very breath. And of course when you don a smart watch, your every movement, as well as your heartbeat, are being sent off into the ether. (I wonder if the next sensor to be put into a smart watch will be galvanic skin response, so Big Tech can log when you are lying).
According to a senior systems architect: “The IoT is inevitable, like getting to the Pacific Ocean was inevitable. It’s manifest destiny. Ninety eight percent of the things in the world are not connected. So we’re gonna connect them. It could be a moisture sensor that sits in the ground. It could be your liver. That’s your IoT. The next step is what we do with the data. We’ll visualize it, make sense of it, and monetize it. That’s our IoT.”
When my kids were little, we let them use cassette tape players to play Winnie the Pooh stories. With my grandkids, the comparable device is a Yoto player. This also plays stories (which is good, better than screens), but it only operates in connection with the internet. The default is that the Yoto makers collect and sell personal information on usage by you and your child (which would include time of day as well as choice of stories). You can opt out, if you are willing to take the trouble to write to their legal team (thanks, guys).
There are cities in the world, in China but also some European cities, where there are monitoring cameras (IoT) everywhere. Individuals can be recognized by facial features and even by the way they walk; governmental authorities compile and track this information. These surveillance systems are being sold to the public with the promise of increased “security.” Whether it really makes we the people more secure is heavily dependent on the benevolence and impartiality of the state powers. Supposing a department of the federal government with access to surveillance data became politicized and then harassed members of the opposing party?
I’ll conclude with several slides from Timothy Wallace’s 2023 presentation on the Internet of things:
The dystopian novel 1984 by George Orwell was published in 1949. It describes a repressive totalitarian state, headed by Big Brother, which was characterized by pervasive surveillance. Ubiquitous posters reminded citizens, “Big Brother is watching you.” Presumably the various cameras and microphones used in the mass surveillance there were paid for and installed by the eavesdropping authorities. It is perhaps ironic that so many Americans now purchase and install devices that allow some corporate or governmental entity to snoop them more intimately than Orwell could have imagined.
For my birthday this year, someone gave me a “smart” plug-in power socket. You plug it into the wall, and then can plug in something, say a lamp, into the smart socket, which you can then control via the internet. Yay, I am now a part of the Internet of Things (IoT). What could possibly go wrong?
However, my Spidey-sense started to tingle, and I chose to give this device away. At that point, I was thinking mainly of the potential for such devices to get hacked and then recruited to be part of a vast bot-net which can then (under the control of bad actors) conduct massive attacks on crucial internet components. For instance,
Mirai [way back in 2016] infected IoT devices from routers to video cameras and video recorders by successfully attempting to log in using a table of 61 common hard-coded default usernames and passwords.
The malware created a vast botnet. It “enslaved” a string of 400,000 connected devices. In September 2016, Mirai-infected devices (who became “zombies”) were used to launch the world’s first 1Tbps Distributed Denial-of-Service (DDoS) attack on servers at the heart of internet services. It took down parts of Amazon Web Services and its clients, including GitHub, Netflix, Twitter, and Airbnb.
But it turns out the hazards with smart devices are widespread indeed. IoT devices are so useful for bad guys that that they are attacked more than either mobile devices or computers. One layer of hazard is the hacking of specific, poorly-secured devices in a home or institution, with subsequent control of devices and infiltration of broader computing systems. This will be the focus of today’s blog post. Another layer of hazard is the use to which masses of (sometimes private and personal) data snooped from “unhacked” smart devices are put by large corporations and state actors; that will be considered in a part 2 post.
Here are results from one study from nearly three years ago:
A study published in July 2020 analyzed over 5 million IoT, IoMT (Internet of Medical Things), and unmanaged connected devices in healthcare, retail, manufacturing, and life sciences. It reveals an astonishing number of vulnerabilities and risks across a stunningly diverse set of connected objects….
The report brings to light disturbing facts and trends:
Up to 15% of devices were unknown or unauthorized.
5 to 19% were using unsupported legacy operating systems.
49% of IT teams were guessing or had tinkered with their existing IT solutions to get visibility.
51% of them were unaware of what types of smart objects were active in their network.
75% of deployments had VLAN violations
86% of healthcare deployments included more than ten FDA-recalled devices.
95% of healthcare networks integrated Amazon Alexa and Echo devices alongside hospital surveillance equipment.
…Ransomware gangs specifically target healthcare more than any other domain in the United States. It’s now, by far, the #1 healthcare breach root cause in the country. …The mix of old legacy systems and connected devices like patient monitors, ventilators, infusion pumps, lights, and thermostats with very poor security features are sometimes especially prone to attacks.
So, these criminals understand that stopping critical applications and holding patient data can put lives at risk and that these organizations are more likely to pay a ransom.
I know people in organizations which have been brought to their knees by ransomware attacks. And I have read of the dilemma of the guy who was on vacation in the Caribbean or whatever, and got a text from a hacker instructing him to deposit several hundred dollars in a Bitcoin account, or else his “smart” refrigerator/freezer would be turned off and he would come home to a spoiled, moldy mess.
What brought all this IoT stuff to my attention this week was a talk I ran across from retired MIT researcher Timothy Wallace, titled “Effects, Side Effects and Risks of the Internet of Things”, presented at the 2023 American Scientific Affiliation meeting. The slides for his talk are here. I will paste in a few snipped excerpts from his talk, that are fairly self-explanatory:
(My comment: 10 billion is a really, really big number…)
(My comment: this type of catastrophic compromise of computer systems being enabled by hacking some piddling little IoT device that happens to be in the home or institution local network is not uncommon. Which is why I am reluctant to put IoT devices, especially from no-name foreign manufacturers, on my home wireless network).
Many of these vulnerabilities could in theory be addressed by better practices like always resetting factory passwords on your smart devices, but it is easy for forget to do that.
And just to end on a light note (this cartoon also lifted from Wallace’s slides):
Is it the best of times or the worst of times? This question I asked myself as I saw the following three headlines juxtaposed last week:
“US consumers are in the best shape ever” is sandwiched between two downers. The American consumer’s ongoing spending has staved off the long-predicted recession, quarter after quarter after quarter. Can we keep those plates spinning?
We noted earlier that the huge windfall of pandemic benefits (direct stimulus plus enhanced unemployment benefits) put trillions of dollars into our bank accounts, and the spending down of that surplus seems to have powered the overall economy and hence employment (and inflation). How the economy does going forward is still largely determined by that ongoing spend-down. Thus, the size of the remaining hoard is critically important.
Unfortunately, it seems to be difficult to come up with an agreed-on answer here. The San Francisco Fed maintains a web page dedicated to tracking “Pandemic-Era Excess Savings.” Here is a key chart, tracking the ups and downs of “Aggregate Personal Savings”:
This is compared to a linear projection of pre-pandemic savings, which is the dotted line. (Which dotted line you choose is crucial, see below) . The next chart plots the cumulative savings relative to that line, showing a steady spend-down, and that this excess savings is just about exhausted:
If this represents reality, then we might expect an imminent slowdown in consumer spending and in GDP growth, and presumably a lessening in inflationary pressures, which may in turn justify more rate cuts by the Fed.
The following chart shows two versions of the first plot shown above, with (on the left) a linear, increasing projection of 2018-2019 savings trends, versus a flat savings rate baseline:
Two significant differences between these plots and the San Francisco Fed plot shown above are that these plots only run through the end of 2022, and that they display per cent savings rate rather than dollar amounts. However, they demonstrate the difference that the baseline makes. Using an increasing savings rate baseline (2018-2019 trend projection), the surplus was nearly exhausted at the end of 2022. Using a flat rate average of 2016-2019 for the baseline, the surplus was barely dented.
We will see how this plays out. My guess is that at the first whiff of actual recession and job losses, the administration will gush out the maximum amount of largesse; while we may have ongoing inflation and high interest rates due to the deficit spending, we will not have a hard landing. I think.
This continues our occasional series on stock options for amateurs.
I find options to be a nice tool in my investing arsenal. The previous post in this series was Stock Options Tutorial 1. Options Fundamentals. That post dealt with buying options, to provide simple examples. For reasons to explained in a future post, I usually prefer to sell options. Anyway, here we will look briefly at how options are priced. It is important to get an intuitive understanding of this, in order to be comfortable actually using options in your account.
The current price of an option, if you wanted to buy or sell it, is called the premium. There are two components that go into the premium, the intrinsic value and the extrinsic (or “time”) value:
The intrinsic value is easy to figure out, once you understand it. It is simply how much you would profit if you owned the option, and decided to exercise it right now. For instance, if you owned a call with a strike price of $50, but the stock price is $55, you could exercise the call and force whoever sold you the call to sell you the stock at a price of $50/share; you could turn around and immediately sell that share for $55, pocketing $5/share. We say that the option in this case is $5 in the money, and the intrinsic value is $5.
If the stock price were $60, it would be $10 in the money; you could pocket $10/share for exercising it. If the stock price were say $90, the option would be $40 in the money, and so on.
However, if the stock price were $50 (the $50 option is “at the money”) or lower (option is “out of the money”), you would get no benefit from being able to purchase this stock for $50, and so the intrinsic value of the option would be zero.
With a put (which is an option to sell a stock at a particular price), this is all reversed. If the stock is $5 lower than the option strike price, the option is $5 in the money and has a $5 intrinsic value, since if you own it, you could say buy the stock at $45, and force the put option seller to buy it from you at $50/share:
Suppose the current price of a stock is $50. And suppose you suspect its price may be above $50, say $60 sometime in the next month, so you would like to have the option of buying it at $50 sometime in the future, and then selling it into the market at (say) $60, for a quick, guaranteed profit of $10. Sounds great, yes?
Since a $50 call is right at the money (since the stock price is also $50), the intrinsic value of a $50 call is zero. Does this mean you could go out and buy a $50 call option for nothing? No, because the seller of the option is taking a risk by providing you that option. If the stock really does go to $60, he could be out the $10. Therefore, he will demand a higher price than the intrinsic price, to make it worth his while. This extra premium over the intrinsic premium is the extrinsic premium, which varies greatly with the time till expiration of the option.
If you wanted the option of buying the stock at $50 sometime in the next week, the option seller would charge only a small amount; after all, what are the odds that the stock will rise a lot in one week? However, if you wanted to extend that option period out to one year, he will charge you a high extrinsic premium, since there is a bigger chance that the stock could soar will over $50 sometime in that long timeframe.
Another way of framing this is, if you buy a $50 call option today with an expiration date a year from now, you will pay a high extrinsic value. But as the months roll by, and it gets closer to the expiration date, this extrinsic value or time premium will shrink down ever more quickly towards zero:
Now, computing the actual amount of the extrinsic value is really gnarly. The Black-Scholes model provides a theoretical value under idealized conditions, but for us amateurs, we pretty much have to just take what the market gives us. In deciding whether to buy or sell an option, I look at what the current market pricing is for it.
It turns out that an option which is priced at the money has the highest extrinsic value. As you get further into or out of the money, the extrinsic component of the total premium for the option diminishes. Below is one final graphic which pulls all this together:
The call option strike price is $25. The blue line shows the intrinsic value (labeled as “payoff at expiration”) at each stock price – this is zero at or below $25, and increases 1:1 as the stock price climbs above $25. The red curve shows the full market price of the option, including the extrinsic (time) premium. The spacing between the red and the blue lines shows the amount of the extrinsic premium. That spacing is greatest when the stock price is equal to the $25 strike price. The shaded areas specify the intrinsic and extrinsic values at a stock price of $27.
And (not shown here) as time passed and the option got closer to expiry, the extrinsic value would shrink (decay), and the red curve would creep closer and closer to the blue curve.
Economist Writing Every Day 