Elusive Wealth

Of course scammers will stop at nothing to try to separate you from your hard earned money. Today I received an e-mail that made it through my spam filters that tried to get me to click into their site — who knows what it does once it gets there. The e-mail had a number of clues on it though that helped identify it as a scam.

Below is an image of portions of the e-mail:

Paypal Scam E-Mail

One clue is that the To: field had nothing in it. So while the e-mail was sent to me, they didn’t directly identify my account in the to field.  Most people don’t display the to field in their e-mail program, so that is not a dead giveway. Next, take a look at the product number. Usually PayPal e-mails identify the source of the transaction, which in this case it did not explicitly, although later in the e-mail it displayed someone’s eBay user ID. Since the product number looks a lot like an eBay number, I checked that out and of course found no product listed there.

Another clue is in the following section:

PayPal Scam E-mail Section 2

Here the name of the eBay seller supposedly is John Deprimo, but shortly after that there is an important note indicating that Cheryl Blake has an unconfirmed address.

But the full giveaway is really the links — and usually that is the case. For example, there are three links in the e-mail. One is to an e-mail address. One actually goes to PayPal. And then there is the Dispute Transaction link (see the first image in the post). If you hover over this link in Outlook (and in most e-mail web clients worth their salt) the actual target of the link is show.  In this case it is not PayPal, but some URL to “sytes.net.”  And even though it says encrypted link, it is not — instead it all goes across http unencrypted.

So for many this may be old news to you. But it happens every day when someone gets taken by something like this. Use caution and review all of the material in an e-mail. Go to the site directly instead of through the e-mail if you are suspicious. And for PayPal in particular, consider using the electronic security keys that require that you type in a number in addition to your password for logging into your account.

Sometimes the seemingly most complex problems can be analyzed fairly simply by applying some simple statistics and a little guesswork.  Since this blog is about personal finance I’ll use a financial example, but the process can be applied to many everyday decisions. (I recently decided the most cost effective periodontal treatment I should choose based on this kind of analysis – really!)

Preparing to Jump

So, let’s take a look at purchasing stock in a company you’re familiar with for which you can make some educated guesses about its future.  The trick is to identify as accurately as possible the areas of risk the company might encounter.  Examples could include market risk, political risk, management risk and capitalization risk.  You can choose as many areas of risk as you like, but 4 or 5 will typically get the answers you’re looking for.

In our hypothetical example, you live next door to Fuzzy Fungus, Inc (FFI) and know some of the management.  FFI has been around for 25 years, growing slowly, but you hear they’re about to introduce a brand new product. You want in.

Let’s look at some risk factors.

• Senior management are in their mid-50’s and have been running the show for about 10 years – risk is very low, say 5% chance of failure in the next two years.
• FFI is able to raise capital fairly easily, but with the tough lending environment risk of not being to raise money is a little higher than usual, but still only 10%
• They’re depending on a new product to bump revenues, but if it tanks, the revenues could go the other way.  This may be the biggest risk, so we’ll guess it’s around 25%.
• And lastly, this isn’t about guns, cars, oil or healthcare, so the current political climate “shouldn’t” have too much impact, but still let’s say it’s still around 5%.

Now, how do we calculate overall risk and what does it mean?  The answer we get will be a pretty general one, but essentially, we will know if the new product introduction will have a large positive effect on the stock price, given this risk factors we’ve considered.  The calculation is easy.  Simply multiple the chances of success for all of the risk factors to get an overall chance of success. (The chance of success is 1- % chance of failure, expressed as a decimal.)  And the answer –

Management X Capital X Market X Political     = Overall Chance of Success

(1-.05)    X (1-.10) X (1 – .25) X (1 – .05) = 61%

Based on this answer, I would probably continue my research into the company.  If the answer was 40% or less, I would almost certainly pass.

Of course, there are a myriad of other factors you should consider before investing in stocks, but this is a quick way of deciding whether it’s worth a further investment of time, effort. and, most importantly, money.

I found a site recently that I find interesting, called AcademicEarth. It has a number of recorded college lectures on a variety of subjects.  For example, here is a sampling of the 17 subjects available:

• Astronomy
• Biology
• Chemistry
• Computer Science
• Economics
• Engineering
• Entrepreneurship
• History
• Mathematics
• Physics
• Political Science

What I find fascinating about the site is that it provides free access to educational material that generally would cost thousands of dollars to obtain. Of course, generally when attending these courses people are looking for a degree, which you certainly can’t get by watching these lectures. Lectures from Yale, MIT, Princeton, Stanford and others are available.

It has been awhile since I have been out of college, and I do not envision myself going back for a graduate degree.  But I still think it is important to grow in both the more practical career related ways, and even in more academic ways.  This site offers that ability to learn new topics from an academic perspective.  It also provides a refresher on some of the classes I took in college and have a passing interest in now.

Possibly the most beneficial feature of the site is that there are 871 lectures in the Entrepreneurship section covering many different subtopics. If you are looking for a new career, or considering starting your own business, this seems like a great resource to get started. Want to learn about some effective communication? Michael Dell has a Stanford talk on the subject.  Need to learn about negotiation?  There are 15 lectures on the subject. There is even a lecture on whether or not to get an MBA — maybe it would change my mind on going back for a graduate degree.