OT Bank relaxes security. Acceptable?

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In alt.home.repair, on Wed, 29 Jul 2015 01:23:14 -0700 (PDT), trader_4

Neither hacking nor simple stealilng is fraud.
Fraud: a substantial misrepresentation of fact on which a person is intended to rely and does rely to his detriment. Something like that -- it's been 40 years.

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On Wednesday, July 29, 2015 at 11:26:48 PM UTC-4, micky wrote:

I don't know why you're focused on fraud. Stealing would be covered by SIPC if the stealing lead to the failure of the brokerage firm and your assets were involved. An example would be if some employee of the firm stole customer funds and it was so extensive that the firm could not cover it, so the firm goes bust. It's not clear to me that SIPC would cover fraud either, unless it again lead to the failure of the firm. If you have a beef over alleged fraud and can prove it, then the firm has to pay it, not SIPC.
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In alt.home.repair, on Thu, 30 Jul 2015 00:29:23 -0700 (PDT), trader_4

You would know if you hadn't snipped and forgotten the lines where you yourself said

-- end quote --
These 4 lines were just above the line of mine that you quoted.

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Usually lawyer talk makes a certain amount of sense once parsed - but that one just doesn't make it.
To my (possibly overly-literal) mind it even implies that the user somehow has access to the universe of Vanguard IDs and PWs so they can check themselves....
I've got every dime I own in Vanguard funds and make a point of not using their online access. OTOH, I probably do when I download their version of Quicken at tax time.
--
Pete Cresswell

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Even if you know my Vanguard user name and password you can't access my account unless you have my phone in your possession. If you don't already take advantage of their 2 step verification, you should.
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In alt.home.repair, on Wed, 29 Jul 2015 09:03:41 -0400,

Any financial advisor, except maybe one who works for Vanguard, wil tell you that that is a mistake. You shoudl have a balanced portfolio with not too much money invested in any one thing or any one company.

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He may already have a balanced portfolio (FUND). My Vanguard fund actually has "balanced" in its name because of its diversity of many stocks and bonds.

And if Vanguard fails he and I have $500K protection (right Trader?).
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On Thursday, July 30, 2015 at 3:05:43 AM UTC-4, J0HNS0N wrote:

Yes. It's not exactly the picture M paints, ie balance and too much money in one thing. But there is some additional risk in having it all with one mutual fund company. It's theoretically possible that someone could go rogue at Vanguard, run off with all the money, etc. You're right, that if Vanguard could not cover it, failed, etc, then SIPC would cover you up to $500K. But....., while that all sorts out, which could take an undetermined amount of time, you wouldn't be able to access your money, liquidate positions, etc. If you need the money, the market goes south while you're waiting, etc, that could have consequences. With a large player like V, it's extremely unlikely and if they did fail, SIPC, the FED, govt, etc would almost certainly expedite the process, get people at least some liquidity, etc.
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Or the market could reverse and go north. Because you were unable to sell during the panic you might actually have made money when you again got access to your account.

No argument there. Investing itself can have consequences. Even holding cash in a bank can have consequences.
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In alt.home.repair, on Thu, 30 Jul 2015 00:05:41 -0700, J0HNS0N

Some would say you should have some real estate too. Pete said every penny (oops, every dime. That leaves open the possibilty he has 9 cents invested elsewhere.) he had was in funds. I didn't mention this before because I think real estate is a pain, even my own home. (He may own a home too.)
Also, I'm told as one gets close to retirement, the fraction in stocks should go down and the fraction in bonds should go up.

Although there are often stories of banks that fail and the FDIC or some organization shows up on Friday afternoon and they work all weekend and the bank reopens under another name on Monday morning, I'm certain there are also times when functioning is held up for months. Even if he gets every penny plus interest or dividends in the long run, he could spend many months with no access to savings, no vacation trip, no plastic surgery, no travel to a doctor who specializes in exactly what he, his wife, or child needs a doctor for, no house purchase when he finds the house he wants but hasn't sold his old one.
It was the 80s so I don't know if one can find much about Old Court Savings and Loan on the web, but people waited years to get their money. People had to keep working when they would have retired if they had their saving available. Some died before they or their children got their money. If they had no spouse or heirs, the state got it. Even before it failed, the governor had put a limit on withdrawals, just like Greek ATMs, 1000 a month I think.
And I think the whole Federal Savings and Loan Insurance corporatoin failed. I'm not saying those organizations shouldn't exist. They are a good thing. But you shouldn't have all your money in one place counting on them to insure your money and pay you this afternoon when you need the money. You might wait for months.
And although embezzlement was involved in the case above, I don't think it requires fraud or a rogue for a given fund or the whole company to fail. (I was sleeping in 2008 or I'd know more about this.)
NO financial advisor except one who works for the company will tell tell you it's okay to have all your money invested with one company.
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This was a state chartered bank and part of the problem was that it brought down the Maryland state equivalent.

Just the state run one.

I subscribe to a news letter and know of at least two others that have a portfolio (in the case of the one I subscribe it is called the Gone Fishin' Portfolio) in which they suggest all Vanguard Funds. My newsletter suggests a specific allocation among 11 different funds, but all are Vanguard.
--
"Statistics are like bikinis. What they reveal is suggestive,
but what they conceal is vital."
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In alt.home.repair, on Thu, 30 Jul 2015 10:05:12 -0400, Kurt Ullman

Hindsight is 20:20. There are always things that can go wrong.

No, I just checked
https://en.wikipedia.org/wiki/Federal_Savings_and_Loan_Insurance_Corporation "In the 1980s, during the savings and loan crisis, the FSLIC became insolvent. It was recapitalized with taxpayer money several times, with $15 billion in 1986 and $10.75 billion in 1987; however, by 1989 it was too insolvent to save. Pursuant to the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), the FSLIC was abolished along with the FHLBB, and the FSLIC savings and loan deposit insurance responsibility was transferred to the FDIC. The FSLIC Resolution Fund was created to assume all the assets and liabilities of the FSLIC, which was to be funded by the Financing Corporation (FICO)."

I'll get back to you. At least I plan to.
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This particular bank brought down just the state one. That was the reason it took so long to get the money.

It was recapitalized immediately so that the money from the Federally guaranteed funds continued. More or less unabated.

The one-company standard is only if you are talking about a single business (be it Facebook or Enron). A single provider of mutual funds (assuming they offer enough different types of fund is not as bad. Mutual funds (at least in theory) give you a lot of diversity within a specific type of stock (they might own Ford, GE, Apple, and other similar companies in the Big Cap fund for instance) and owning different types of MF (a little big cap, a smidgen of small cap, a touch of foreign and a bit of bund funds) covers that kind of diversity.
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but what they conceal is vital."
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In alt.home.repair, on Thu, 30 Jul 2015 11:03:52 -0400, Kurt Ullman

Nonetheless. There's always a reason. If you have your money in two places, when one fails the other will probably still be running.
Or if the IRS freezes your account for some reason, they'll only freeze enough accounts to pay what they think you owe. If that one account contains everything you own, you'll be stuck until you work things out with the IRS.

It still failed which is what I said. If it were to have failed this year, it might take months for such a law to get passed. Look at the Import Export bank, etc.

Of course the funds can be diverse. That wasn't what I was objecting to. I was objecting to it being the same company handling the funds. See my point about the IRS, and as I said, I plan to get back to you, but it's only been an hour.
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Per micky:

That's what I was told too - by the professional investment advisor that my-neighbor-the-lawyer relies on.
I think the rationale is that as one gets older, liquidity becomes more important and there is less chance that one can ride out negative market fluctuations.
But my reaction was that, with interest rates effectively zero, there is only one direction that bond values can go: down as the hopefully-inevitable rise in interest rates occurs.
So it seems like replacing the short-term uncertainty of stocks with the medium-term certainty that bonds will lose value is not such a clear-cut decision.
I worked as the second-longest-running contractor in Vanguard's history for something like 7-8 years and the reason I stick with them financially is that I know firsthand that they *own* the concept of integrity.
Frankly, they have become something of a PITA to deal with. They don't really want to see you face-to-face, although they will if you insist, but I can live with that because I do not make very many changes.
I also buy into Bogle's spiel about the effect of commissions/fees on one's return - although I guess there are plenty of no-fee funds out there besides Vanguards...
--
Pete Cresswell

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In alt.home.repair, on Thu, 30 Jul 2015 10:16:22 -0400,

Good point iiuc. This makes me feel better since I've done nothing to reapportion my savings!

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Bond funds are especially tricky since they are priced according to the current price of the bonds. So, when interest rates uptick, the price goes down and the bond itself pays less than current rates. If you hold the bonds yourself, this is less of a concern because you are most likely to keep it until it matures so the loss of price is largely theoretical. Both of the newsletters I subscribe to (FWIW) are saying still own inidividual bonds, but keep them 5-7 durations as the hit on prices will be less and you will lose less to inflation should it rear its ugly head again.
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Per Kurt Ullman:

That's another prevailing fact that I have a problem with.
Pundit-after-pundit says that we have been and continue to be in a period with no inflation above-and-beyond the "Normal" values.
Each time I hear that I wonder if the guy actually shops for food and/or pays his own bills.
My own experience is that people on fixed incomes are and have been for some years being slowly inflated into poverty. I base that on local tax amounts, local service fees (like sewer), food prices at the local supermarkets, and devices that I have purchased for the second or third time and know the price for each purchase.
Something is missing here. The first thing that comes to mind is that the people citing low inflation are citing numbers that are not related to the real-world costs of daily life. And the cynic in me says that it tends to be in the interest of The Powers That Be to minimize the "inflation" numbers - whatever they may be. For instance the CPI not including fuel or food.....
--
Pete Cresswell

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I remember when inflation was 10+ percent/year. These are GOOD times.
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Per J0HNS0N:

Relative to 10%, yes - total agreement.
But I question the idea that we are not already experiencing significant "inflation" - quotes because I am not sure what the technical definition is.
In fact I do not even know if there is a number that purports to reflect real-world living expenses for us common people. Certainly CPI does not because it does not include fuel or food.
--
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