From time to time, I like to clean out the “blog ideas” folder on my desk and share any topics that may not justify a full blog, but still feel like they’re worth passing along. Below are a few of those topics along with some thoughts, links to articles and other information I hope you find useful.
New Medicare Cards (and the corresponding inevitable related scams)
You may have heard that the government is in the process of issuing new Medicare cards to all Medicare participants. These cards include a new unique identifying number known as your Medicare number. The idea is to detach a person’s Medicare ID from their Social Security number as an added measure of identity protection. That said, it is recommended that participants protect this new Medicare number as they would their social security number.
Distribution of the new cards started in April and will continue through April 2019. Medicare’s website has additional information, including a feature where you can enter your e-mail address and state to receive an e-mail when your card is mailed. In the states where most of our clients are located, Medicare currently reports that cards have not yet been mailed to participants in Ohio, Kentucky, Tennessee, Florida & North Carolina while cards in Indiana & New York are in the process of being mailed now.
With anything done to this scale, the opportunity for scams is very high. Below are links to articles that detail the known scams, but most common are phone scams attempting to gather payment or bank information. It’s important to spread the word that nothing is required of Medicare participants to receive their card, no information needs to be shared and there is no cost whatsoever. Anyone asking for financial data or for money to receive your new card is a scammer. Hang up, walk away or throw away whatever communication you’ve received.
If you suspect anything, take it directly from Medicare.gov, “Medicare will never call you uninvited and ask you to give us personal or private information to get your new Medicare Number and card. Scam artists may try to get personal information (like your current Medicare Number) by contacting you about your new card. If someone asks you for your information, for money, or threatens to cancel your health benefits if you don’t share your personal information, hang up and call us at 1-800-MEDICARE (1-800-633-4227).”
New Frontiers in Hacking
This month, two of the better known conferences on cyber security, Black Hat and DEF CON, are scheduled to take place. The conferences are known to be a kind of annual announcement of the latest trends in hacking and other cybersecurity threats. This article from Yahoo! Finance covers some of those emerging trends as our devices, networks and lives become ever more interconnected. I don’t claim to be anything close to an expert in this field, but the article is a good reminder that two-factor authentication is still our friend (at least for now) and that all devices – smart phones, smart speakers, connected appliances, etc. – not just your computers and tablets, are vulnerable. As with much in life, vigilance and self-education on where your greatest exposure lies are key to mitigating the risks.
Stretch for Higher Yield Could Snap Back
As clients of TAAG and regular readers of this blog know, our investment philosophy includes the belief that risk is best taken on the equity side of the stock & bond equation and that bonds are best kept relatively short term and high quality as a way of protecting the profits made over a lifetime of investing. This had been a difficult position over the last decade or so as interest rates have remained extraordinarily (and many would argue artificially) low. Many investors have been tempted to go further down the duration or credit quality trail in search for yield. One such tool to accomplish this has been junk-rated corporate loans which differ from bonds somewhat as there aren’t as many restrictions to how the loan is structured and different rates and terms can be offered to different lenders based on any number of factors.
As these tools were sold in record numbers in recent years, the Wall Street Journal reported last week that the perceived stability in the returns of these loans versus a high-yield bond may be overblown. While loan holders do stand in line ahead of most bondholders, the sheer volume and variation of terms for many of these corporate loans might very well find loan holders in much poorer recovery position that in the past in the case of default.
That doesn’t make these investments inherently bad, it’s just another case of buyer beware and the importance of truly understanding what it is you’re investing in and why before breaking from your core investment philosophy.