Friday, July 31, 2015

Greece is the Word

Jim Parker
Outside the Flags
Vice President

In recent weeks, the world’s markets and media financial pages have focused intensely on the standoff between debt-laden Greece and its international lenders over the conditions of any further bailout.

For investors everywhere, both of the large, institutional kind and individual participants, the story has been fast-paced and difficult to keep up with. More importantly, the speculation about possible outcomes has been intense.

Of course, no one knows the eventual outcome or whether there will even be a definitive conclusion. After all, this is a story that has been percolating now for six years—since Greece’s credit rating was downgraded by three leading agencies amid fears the government would default on its debt.

Since then, the Greek situation has faded in and out of public attention as rescue packages came and went and as widespread social and political unrest gripped a nation known as the birthplace of democracy.

But there are a few points to keep in mind. Despite the blanket media coverage of Greece, this is a tiny economy, ranking 51st in the world by GDP in purchasing power parity terms (which takes into account the relative cost of local goods).1

On this measure, Greece is a smaller economy than Qatar, Peru, or Kazakhstan, none of which currently feature prominently in world news pages. Its economy is about half the size of Ohio in the US or New South Wales in Australia and about a tenth of the size of the UK. Even within Europe, it is tiny, representing only about 2% of the GDP of the 19-nation euro zone.

As a proportion of global share markets, Greece is also a minnow. As of early July 2015, it represented about 0.32% of the MSCI Emerging Markets Index and just 0.03% of the MSCI All Country World Index.

And while its total debt is large in nominal terms and relative to its GDP at about 180%, this still represents only about a quarter of 1% of world debt markets.

Of course, what worries investors is not so much Greece itself but the wider ramifications of the debt crisis for its European bank lenders, the future of the single European currency, and the global financial system.

Yet many of these concerns are already reflected in market prices, such as Greek government bonds, the spreads of peripheral euro zone bonds, regional equity markets, and the single European currency itself.

While no one knows what will happen next, we can look at measures of market volatility as a rough guide to collective expectations. A commonly cited measure is the Chicago Board Options Exchange’s Volatility Index, sometimes known as the “fear” index. This has recently spiked to around 18, up from 12 in mid-June. But keep in mind the index was up around 80 during the peak of the financial crisis in 2008.

Of course, the human misery and dislocation suffered by the Greek people during this crisis should not be downplayed. Neither should the financial risks. But from an investment perspective, there is still little that individual investors can do beyond the usual prescription.

That prescription is to remain disciplined and broadly diversified across countries and asset classes and be mindful that markets accommodate new information instantaneously. So the risk in changing one’s portfolio in response to fast-breaking news is that you end up acting on events that are already built into security prices.

In summary, the events in Greece are clearly worrisome, but Greece is a very small economy and a tiny segment of the global markets. Events are moving quickly, and prices are adjusting as news breaks and investor expectations adjust.

For the individual investor, we believe the best approach remains diversifying across many countries and asset classes, remaining focused on your own goals, and, most of all, listening to your chosen advisor, who understands your situation best.

1. Source: World Bank rankings, July 1, 2015.

Past performance is not a guarantee of future results. Indices are not available for direct investment. Diversification does not eliminate the risk of market loss. There is no guarantee investment strategies will be successful. 

All expressions of opinion are subject to change. This article is distributed for informational purposes, and it is not to be construed as an offer, solicitation, recommendation, or endorsement of any particular security, products, or services.

Dimensional Fund Advisors LP is an investment advisor registered with the Securities and Exchange Commission.

Friday, July 10, 2015

10 Steps to Protect Your Identity

Pathways Advisory Group, Inc.
Leslie Dermon, Paraplanner

Nervous about Identity Theft? You are not alone. After the reported mega-data breaches such as Anthem/Blue Cross or the IRS breach, an increasing number of clients have asked for help with Cyber Security and Credit protection.

Here are 10 steps you could take to improve your Identity protection:

1. Check your credit reports once per year. It’s often the first indicator that you are an identity theft victim. You are entitled to a free copy of your credit report from each of the 3 credit reporting companies once every 12 months. You may request the reports online or by phone. If you find names you don’t recognize, Social Security numbers that don’t belong to you, or accounts that aren’t yours, you might be a fraud victim. Please see:

2. Place a fraud alert on your credit reports. If you're concerned about identity theft, but haven't yet become a victim, this fraud alert will protect your credit from unverified access for at least 90 days. Ask 1 of the 3 credit reporting companies to put a fraud alert on your credit report. They must tell the other 2 companies. An initial fraud alert can make it harder for an identity thief to open more accounts in your name. The alert lasts 90 days but you can renew it. It is free. See:

3. Place a credit freeze on your credit reports. This tool lets you restrict access to your credit report, which in turn makes it more difficult for identity thieves to open new accounts in your name.  Most creditors need to see your credit report before they approve a new account. If they can’t see your file, they may not extend the credit. No new credit can be opened in your name without the use of a PIN number (issued when you initiate the freeze). Creditors cannot access your credit report unless you temporarily lift the freeze. See:

4. Credit monitoring services. Some companies, including consumer reporting companies, offer subscriptions to credit monitoring services. These services track your credit report, and generally send you an email about recent activity, such as an inquiry or new account. The more frequent or more detailed the report, the more expensive the service.

5. Email alerts on Bank accounts. Most banks offer account alerts to inform you about activity in your account. It is usually customizable through your online banking website.

6. Create strong passwords.  Weak passwords are words that can be found in a dictionary, a series of letters or numbers (1234 or abcd for example), and your personal information such as birthday or graduation date. To create stronger passwords, spell a word backwards, use special characters, or substitute numbers for certain letters. Do not use the same password on different websites. This may allow someone who gains access to one of your accounts access to many of your accounts.

7. Don’t give personal information over the phone.
If you get a call from someone you don’t know who is trying to sell you something you hadn’t planned to buy, you should decline. And, if they pressure you about giving up personal information (your credit card, or Social Security number, etc.) it’s likely a scam. You can report it to the Federal Trade Commission. For more information:

8. Review your social media privacy settings.
Make sure to adjust your privacy settings on social media websites (such as Facebook, Twitter, etc.) to share your content solely with the intended people.

9. Remove your Social Security card, PIN number and blank checks from your wallet. To protect yourself, make sure that what you are carrying in your wallet does not pose a security risk if it were to end up in the wrong hands.

10. Protect your information when using Public Wi-Fi.
Wi-Fi hotspots in coffee shops, airports, hotels, universities, and other public places are convenient, but often are not secure. If you connect to a Wi-Fi network, and send information through websites or mobile apps, it could be accessed by someone else. To protect your information, send information only to sites that are fully encrypted, and avoid using mobile apps that require personal or financial information. To determine if a website is encrypted, look for https at the start of the web address (the “s” is for secure). Some websites use encryption only on the sign-in page, but if any part of your session isn’t encrypted, your entire account could be vulnerable. For more information:

Sources: Experian - and the Federal Trade Commission -

Find Leslie on