dynamic wealth management: Dynamic Wealth Management Headlines: Sony’s Liabil...

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Dynamic Wealth Management Headlines: Sony’s Liability Policy May Not Cover Breach

http://dynamicwealthmanagementreports.com/2011/07/dynamic-wealth-management-headlines-sonys-liability-policy-may-not-cover-breach/

Insurance company Zurich American refuses to pay damages for Sony’s massive data breach, as the yet-unregulated world of cyber-insurance collides with the reality of persistent hacks.

Zurich said it never signed up to pay for the 55 class action lawsuits now arrayed against Sony, which could cost the company around $178 million in damages. To plead its case, Zurich filed papers in a New York court denying responsibility for the bill.

The insurance firm insists Sony’s policy did not cover “bodily injury, property damage, or personal and advertising injury,” and therefore argues it should not have to cover the class action lawsuits.

Sony feels differently about the matter, filing a claim requesting Zurich pay for breach-related expenses.

This type of dispute may soon become common if hacks continue and cyber-attacks become a likely liability to insure against, giving momentum to the cyber-insurance industry.

Insurance companies like Travelers Companies and Chubb are taking advantage of new opportunities, now that hackers steal the spotlight with exploits against corporations and even governments. Groups like Anonymous and LulzSec have targeted everything from Rupert Murdoch’s “The Sun” tabloid and Fox News to the Turkish government and the C.I.A.

The reality of online vulnerability is a relatively new concept for businesses, as is the related idea of cyber-insurance, a young field that remains largely unregulated.

But while the cyber-insurance business has thus far enjoyed large profit margins and few expenses for insuring databases and servers, this may change as hacked companies try to cash in on their policies. If cyber-insurance firms want to attract more customers, they may need to start covering breaches or at least clear up the fine print to indicate exactly when they don’t intend to do so, updating their policies to include the latest technology.

In Sony’s case, the New York court’s interpretation of Zurich’s fine print will make a big difference to its coffers.

Plaintiffs allege Sony failed to adequately protect their personal data for months after hackers first ravaged the company and exposed millions of customer accounts from April 16 to 19. Sony, they claim, stored passwords in an unencrypted format that presented hackers with an easy target.

If they win, Sony may be stuck with a $178 million or higher bill unless Zurich comes to the rescue. But in this high-stakes game, neither party is likely to grudge such a big payment without a big fight.

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Dynamic Wealth Management Headlines: With default looming, use financial caution

http://dynamicwealthmanagementreports.com/2011/08/dynamic-wealth-management-headlines-with-default-looming-use-financial-caution/

Chicago - How do you prepare for a financial cataclysm that may not happen?

That’s the question facing investors as an Aug. 2 deadline approaches for Washington to raise the government’s borrowing limit or risk a U.S. default on its debt.

Economists say a default could create a credit crisis similar to what happened after Lehman Brothers went bankrupt in 2008, causing interest rates to rise and harming the economy. But the reaction in the stock and bond markets has been muted.

In theory, Treasury bonds should have a higher yield when investors think there’s a greater risk they won’t get their money back, such as in the event of a U.S. government default.

So Wall Street appears to think a deal will be struck in time. But the alarming headlines are causing investors anxiety.

“We’re seeing clients growing nervous as they keep hearing about the deadline,” says Oliver Pursche, president of Gary Goldberg Financial Services in Suffern, N.Y. He says investors are asking him whether they need to change to their portfolios.

So what should you do if you’re worried about a default? Here are five things to keep in mind.

1. Don’t abandon your long-term plan.

Most investors who had diversified portfolios in 2008 and stuck with them have made up their losses, despite a 57 percent drop in the Standard & Poor’s 500 from its peak in October 2007 to the market bottom in March 2009.

Investors who panicked and withdrew their money from the stock market have found it tougher to recover.

“Don’t get waffled around emotionally by all of this short-term noise,” says Michael Farr, chief investment officer of Farr, Miller & Washington, an investment firm in Washington, D.C.

2. Be wary of bonds.

Conservative investors who sought to avoid the volatility of the stock market and flocked into bonds could get burned.

A default could drive up the cost of government borrowing for years and lead to higher interest rates for everyone else. If that happens, bonds would lose value because their prices move in the opposite direction of interest rates.

Even a brief default could be enough to hurt the credit rating of U.S. debt and usher in an era of higher interest rates, cautions Greg McBride, senior financial analyst for Bankrate.com.

If you want to position yourself for an impasse on the debt ceiling, consider Treasury bills with a maturity of six months or less. Look for those maturing sometime after August. Their short-term nature means their prices are less affected by an increase in interest rates. That’s because investors will receive their principal investment before there are larger changes in the economy. Investors also should steer clear of Treasury notes with a maturity of 10 years or longer because their prices may face steep price declines as interest rates climb. Bank CDs are another option, although the yields are minuscule.

3. Remember that rebalancing can be risky.

Adjusting your 401(k) retirement plan to shift money out of the stock market and into cash is always an option for nervous investors. But you should weigh the repercussions first.

If you pull money out of stocks now, you could miss a “relief rally” if the market climbs after a last-minute debt deal. Even if you’re correct and move your money before a decline in the market, you’ll need to get the timing right a second time when you shift back into stocks. Otherwise, there’s a good chance you’ll find yourself on the sidelines when market momentum shifts.

If you have only a year until retirement or you find yourself fretting over your potential losses, playing it cautious may make sense.

“Pull back a little for peace of mind if you’re really worried,” says Tom Root, associate professor of finance and business at Drake University. “But if you have a long-term plan, stay with it.”

4. Check your emergency preparedness.

In a period of uncertainty, it’s important to make sure you have access to cash in case of an emergency. Investors should set aside money for emergencies in an easily accessible account, like a money-market savings account. It’s important not to have this money in an investment account because market volatility could leave you unprotected.

Ideally, a single-earner family should have enough cash set aside to cover six months or more of living expenses. A two-income family should have at least three to six months’ worth, says Justin Sinnott, a financial consultant for Charles Schwab Corp. in Seattle.

5. Watch for buying and selling opportunities.

This is a good time to remember Warren Buffett’s famous advice: “Be fearful when others are greedy, and be greedy when others are fearful.” As more fear creeps into the market with the deadline approaching, it may be a prime time to snap up bargain stocks.

And if steep cuts to government spending are part of an agreement on the debt ceiling, keep in mind the specific industries that could be hurt the most.

Goldman Sachs issued a note to investors last week listing companies that generate at least 20 percent of their revenue from government. Many are in the health care sector, both providers and equipment suppliers, plus defense contractors.

The turbulent market in the last three years has caused many investors to be overly cautious, says Erik Davidson, deputy chief investment officer for Wells Fargo Private Bank.

During the debt standoff, he says, investors should look for higher yields. In particular, the stocks of large companies are paying investors an average of 2 percent annually, and high-yield corporate bonds are paying an average of 7.26 percent.

dynamic wealth management: Dynamic Wealth Management Headlines: HTC files ano...

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Dynamic Wealth Management Headlines: HTC files another lawsuit against Apple

http://dynamicwealthmanagementreports.com/2011/08/dynamic-wealth-management-headlines-htc-files-another-lawsuit-against-apple/

The patent row between HTC Corp (???) and Apple Inc has escalated as the Taiwanese firm filed a new lawsuit against its archrival on claims that it violated HTC’s patents with iPhones, iPads, iPods and Mac computers.

HTC is seeking unspecified damages and a ban on the use of three patented technologies by Apple.

The Taiwanese firm, the world’s No. 5 smartphone brand, filed a complaint with the US International Trade Commission (ITC) and the US District Court of Delaware for patent infringements, the company said in a statement yesterday.

“We are taking this action against Apple to protect our intellectual property, our industry partners, and most importantly our customers that use HTC phones,” HTC general counsel Grace Lei (???) said in the statement. “This is the third case before the ITC in which Apple is infringing our intellectual property. Apple needs to stop its infringement of our patented inventions in its products.”

The patents at dispute cover a range of functionality in Apple’s Mac computers and mobile devices that are essential to the user experience, the statement said.

These include Wi-Fi capability that allows users to wirelessly network multiple devices at home, at work or in public; and processor communication technology that enables the seamless integration of a personal digital assistant and a cellular phone into a single device providing users with a true smartphone experience, it said.

HTC and Apple have tangled in a spate of lawsuits going back to March last year.

Apple filed its latest complaint against HTC with the ITC and District Court in Delaware last month in connection with five cases linked to the technology used in iPads and iPhones.

A few days later, the ITC gave an initial ruling on March last year’s case, finding that HTC had infringed upon two patents belonging to Apple — a verdict that HTC has said covered “two minor patents.”

The ITC will make a final ruling in December and HTC is expected to reach a settlement with Apple by then, or in the worse case face a ban to stop selling its smartphones in the US.

Apple has sued many rivals, including HTC and Samsung Electronics Co, over patent infringements in several countries. It has also been countersued by rivals.

HTC chief financial officer Winston Yung (???) said on Monday that the company has provisions set aside for the lawsuits.

He also reiterated CEO Peter Chou’s (???) views that the litigation was merely a “disturbance” on the company’s road to greater success, and that investors could be assured that HTC would not be put in a “dangerous situation.”

“We are fully prepared for any scenario,” Yung said.

Separately, HTC launched its first 3D smartphone in Taiwan yesterday.

The Evo 3D, which is already on sale in the US, carries a 4.3-inch touch screen and allows users to capture and play images that come across as being three-dimensional without the need for specially designed glasses.

The cellphone, which costs NT$21,900 (US$760), uses Google Inc’s Android 2.3 platform and enables users to browse 3D images or play games in 3D.