Do You Know about the Syrian Electronic Army?

Published: Fri, 08/30/13

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In This Issue:
The Kings of Real Estate By E.J. Smith
The 150 Healthiest Foods on Earth #9 By Richard C. Young
Barron’s Top 100 Independent Wealth Advisors in America By Richard C. Young
Activist Investor By E.J. Smith
Do You Know about the Syrian Electronic Army? By Richard C. Young

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NEW AUGUST CLIENT LETTER: U.S. Economy Not on Sound Footing
It is our view that the U.S. economy is far from being on sound footing, with potential bubble conditions existing in the stock and bond markets. Considerable blame lies at the feet of the U.S. government and the Federal Reserve. As time passes, economic conditions as measured by GDP continue to look weak, and yet the government continues to borrow from abroad a big portion of what it spends. The debt burden on Americans increases as the Fed continues to debase the currency with its money-printing excess.—Read more by clicking here!

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The Kings of Real Estate

Ben Bernanke’s low interest rates haven’t made life any easier for first-time home buyers. It’s almost impossible for this group to get a mortgage, never mind trying to compete with the well healed private equity guys. Cash is king in bidding wars and Wall Street has plenty of cash thanks to Bernanke & Co.’s free money truck.

The impact of rising rates has hurt first-time buyers the most, many economists and analysts say, because they are more sensitive to increases in monthly mortgage payments than are more established buyers looking to purchase their second- or third-generation home. The rate for a 30-year, fixed-rate mortgage stands at 4.58%, up from 3.59% two months ago.

The sour news pushed housing stocks lower yet again, a pattern on display since Fed Chairman Ben Bernanke in May acknowledged a change in policy could happen later this year. The iShares US Home Construction ETF fell 2.5% on Friday and is down 19% since May. Homebuilders KB Home, DR Horton and PulteGroup are down more than 30% apiece since May, while Lennar Corp. is off 25%.

Read more here.

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The 150 Healthiest Foods on Earth #9

Jonny Bowden, Ph.D., C.N.S., has created one of the most vital books on the health of your family you will ever find, The 150 Healthiest Food on Earth . The lavishly illustrated, 358-page weighty tome gives you more vital information on foods that can keep your family healthy than any other publication I have ever come across. And I am always on the look out. I have given the book to family members and often advise it for others. I have now selected a “Great 10” list of food choices to share with you. My goal here is pass on ideas that perhaps you did not previously know about.

Cinnamon: According to Jonny, cinnamon has an uncanny ability to moderate blood sugar. Cinnamon contains photochemicals called chaconne polymers that increase glucose metabolism in the cells twenty-fold or more and contains anthocayanins, which improve capillary function; and contains anti-inflammatory compounds that may be helpful in affecting the pain and stiffness of muscles and joints. Jonny writes that one of the best parts of the cinnamon story is that you can get the best results with the cheapest stuff. In fact, you are better off getting the really cheap stuff from the supermarket instead of any esoteric and expensive oil extracts, which may have some components that could be toxic if taken internally. I am increasingly reading that the way to go with your supplements is to stick with the inexpensive branded products sold by CVS and Walgreen. These giants have much to lose in bad PR by allowing inferior products on their shelves. And given a choice, I would always go with CVS first.

I am pleased to announce that for the second straight year our conservative family investment management firm has been named in Barron’s prestigious top investment managers list. Our firm’s inclusion is especially significant due to the bubble nature of the financial markets. We are undoubtedly one of a small handful of top advisors who do not benefit in such an environment. We make no attempt to time the markets. Rather we stay balanced at all times, with a mix of blue-chip, short-duration, fixed-income, high-barrier-to-entry dividend-paying stocks. Our typical client is a conservative, retired (or soon to be) investor seeking conservation of principal and a steady flow of cash. We do not deviate from our core strategy by chasing hot segments of the market, and we do not invest in stocks that do not pay dividends. As a result, bubble markets will almost always find us out of phase, where we shall remain. Our clients prefer to avoid the casino. Instead, they sleep well at night relying on a time proven and prudent strategy of balance, quality and cash flow.

Richard C. Young
Chairman, Richard C. Young & Co., Ltd.
Newport, RI and Naples, FL

World-Class Stock Market Performance Does Not Happen by Chance

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Activist Investor

Where’s the fiduciary responsibility to taxpayers? Susan Combs eviscerates activist investor behavior by public pension funds in today’s Wall Street Journal.

It seems we’re living in the era of the “activist” investor. Not long ago, people who used their few shares to push a point at shareholder meetings may have been marginalized as oddballs. Today, hedge funds and other major players are using their clout to lobby for—and get—big changes in corporate governance.

Investor activism aimed at increasing shareholder value is appropriate. But a growing amount of it is intended to further social policies rather than returns. Eliot Spitzer, for instance, campaigning to become New York City’s comptroller, has promised to use the city’s five pension funds’ investments in public companies to pursue a “responsible” governance agenda.

And she continues:

When officials with fiduciary responsibilities for public funds shift their focus to non-financial “values” such as the environment or gun control, at best it is at the expense of these responsibilities; at worst it is a clear conflict of interest. It is a particularly risky lapse given the dismal state of many public pension funds. The Government Accounting Standards Board is changing its reporting requirements in 2014 to require increased disclosure of the financial strength of these funds. These requirements make it even more incumbent on public managers to focus on the financial needs of workers’ retirements.

The Employee Retirement Income Security Act known as Erisa specifically requires private pension funds to focus on the economic value of their investments. There’s no similar requirement for public pensions—and that may explain some of their problems. Nine states, for instance, have less than 60% of the funds they need to honor their current pension commitments, according to a recent report from CNBC.

The economic-focus requirement for the public dollar should reflect an even more stringent standard. There’s little or no credible evidence that activist investing improves shareholder financial return, and some research—such as a 2002 study in the Journal of Financial Economics—suggests that an activist orientation reduces valuations for public pension funds.

Here, NPR tells readers that the group brought down The New York Times, took out The Washington Post and took control of npr.org.

In the latest hacking that brought down The New York Times on Tuesday, evidence points to the activist group of hackers known as the Syrian Electronic Army. This group also took out The Washington Post briefly last week and has used phishing attacks to take control of NPR.org and other national news organizations in previous months. The Washington Post notes:

“Several news Web sites, including The Washington Post, were affected by a breach at the third-party content provider Outbrain, which redirected some visitors to sites promoting the online activist group, the Syrian Electronic Army.”

You may recall The Times just suffered a two-hour outage earlier this month, but a spokeswoman blamed that on an internal error and not a “malicious external attack,” which is how she described today’s incident.

So What Is The Syrian Electronic Army?

The SEA is a group of anonymous computer hackers who support embattled Syrian President Bashar Assad. The group seems to have emerged during the rise of anti-regime protests in Syria in the spring of 2011. While Assad has a background in computing, “the group’s formal ties to the administration are unclear,” The Post reports.

Infosecurity Magazine did note, however, that the group’s official website was registered by the Syrian Computer Society, and Reuters reported that the Syrian Computer Society is “a group now widely believed to have been something of a precursor to the ‘Syrian Electronic Army.’ “