Spring 2005 Volume 16, Number 1 Insightful News and Views from Harry G. Kasanow, CFP Identity Theft...How To Protect Yourself Now! M ost of you are aware that identity theft is the fastest growing crime globally! The Federal Trade Commission (FTC) recently reported that there were 9.9 million victims of identity theft in 2002 (the most recent year for which figures are available), with a cost to businesses and consumers of almost $53 billion. The FTC also notes that on average it usually takes a full year before the victim realizes their identity has been stolen. The FBI confirms that identity theft is one of the fastest growing crimes on the criminal landscape. A recent study by the Identity Theft Resource Center ( ITRC ), a national nonprofit organization in San Diego, estimates that the average identity theft case costs the victim $16,000 in cash and causes them to miss more than 600 hours of work as they attempt to reestablish their identity. The ITRC website http://www.idtheftcenter.org breaks down identity theft into four types: • Financial Identity Theft – which usually involves using the victim’s name and Social Security number to apply for telephone service, credit cards and loans, or to lease cars or apartments. • Criminal Identity Theft – where the criminal will provide the victim’s personal information when stopped by law enforcement officers. Any penalties, and the eventual arrest warrant, will be in the name of the person named in the citation. • Identity Cloning – where an impostor uses the victim’s personal information and good credit history to establish a new life. • Business or Commercial Identity Theft – where a criminal opens checking accounts or credit cards in the name of a targeted business, which remains blissfully unaware until the collection notices start arriving. Unfortunately, identity theft has gone high tech. Just about anyone who has an e-mail account has probably been offered bait by some potential scam artist on a “phishing” expedition. These criminals use e-mail and the Internet to cast their nets far and wide. The bait might be an offer of anywhere from several hundred thousand to a few million dollars, for letting a citizen of another country transfer a huge sum of money he supposedly can’t get out of the country into your bank account. I have received Faxes in my office more than once with this exact scam! Lately, it’s more likely to be an email or pop-up message seemingly from a legitimate business or organization, such as this recently received e-mail supposedly sent from Citibank, with the subject “Identity Theft Solutions.” The message, with the official Citibank logo, reads: “Dear Citibank Customer: Recently there have been a large number of identity theft attempts targeting Citibank customers. In order to safeguard your account, we require that you confirm your banking details. This process is mandatory, if not completed within the nearest time, your account may be subject to temporary suspension.” When I was in California in February, one of my clients showed me this exact email in her in-box. This scam used Citibank as the front, but SunTrust, eBay, and various Internet service providers have also been victimized. People who take the bait are usually directed to a website that looks legitimate, but is actually used to steal personal and financial data. Even though cyber attacks are the latest weapon in the identity thief ’s arsenal, even in the 21st century, triedand-true con games and outright stealing continue to work pretty well. Resourceful identity thieves can get your personal information in a number of ways: • Dumpster diving entails going through dumpsters and trash cans to collect personal information. It is among the simplest and most effective methods. • Credit card numbers are sometimes copied or memorized by sales clerks and waiters, or even captured by electronic “skimmers,” which can be installed on legitimate terminals by unscrupulous employees for later downloading. • Anyone watching you punch your code numbers into an ATM or public phone. • Other problems can arise when tax notices, financial account statements, and other bills are stolen right from your mailbox. To keep peace of mind, the final component is a tracking report for credit bureau requests. Under one of the (continued on page 3) On the Inside... Global Market Update............... 2 Fast Facts.................................. 2 Waterhouse Conference........... 3 Milestones ............................... 3 IONA’s Paint by Numbers......... 4 GLOBAL MARKET UPDATE Warren Buffet’s Berkshire Hathaway ☞ A Shares sold for $19 in 1967. They are “The essence of investment management is the management of risks, not the management of returns.” – Benjamin Graham (father of Value Investing and mentor to Warren Buffet) he Bears began to roam Wall Street once again in 2005 and the debate as to the direction of the financial markets for the remainder of the year continued throughout the first quarter. During the quarter, Federal Reserve Chairman Alan Greenspan raised interest rates twice by a total of 0.50%, oil prices surpassed a 22 year record high at $56.72 per barrel in March, the dollar continued to weaken against foreign currencies, and inflation began to rise to an annualized rate of more than 3.5%. Consumer confidence continued to slip during March with new car sales almost halted, and retail sales slowed even though new home sales continued to soar. Overall, investors’ sentiment weakened throughout the quarter as the war in Iraq continued. There was lots of nervousness and discussion about the ballooning Federal deficit and a definitive shift from buying US equities to buying foreign equities. The rising interest rate environment also placed lots of pressure on the Bond market which caused spikes in the yield, driving bond values down. Further concern about real estate prices continuing to soar worldwide and a debate as to whether the US is nearing a “bubble” that is about to burst in certain parts of the country put tremendous pressure on interest sensitive equities, including Real Estate Investment Trusts (REITs). We in fact have shed this assets class for the time being as rising rates caused this area of the market to be the weakest, only second to technology. The Global Financial Markets struggled, turning in their worst quarter of losses in over two years. Only commodities continued their rally as demand for raw materials for building both domestic and abroad continued while any energyrelated issue soared. The results for the first quarter were as follows: The strongest performance T came from the Bond Market as the Lehman Brothers Composite Bond Index closed at 1132.76, shedding - 0.73%. The international markets measured by the MSCI EAFE fell slightly after being up most of the quarter, closing at 1503.85, posting a loss of - 0.75%. The S&P 500 finished the quarter at 1180.59, down - 2.59%, and the DJIA lost - 2.59% and closed at 10503.76. I have decided to no longer report the NASDAQ performance as it is irrelevant to our portfolio composition. Overall the performance of our Lower Volatility Portfolios was strong in comparison to the overall market returns. Simply stated, your portfolios are structured to take dramatically less risk than the overall financial markets. Hence many of our managers who are using alternative strategies to minimize downside potential scored big during the quarter by betting against the market, utilizing long/short defensive positions, and we added back to the portfolio a dedicated short fund. Look for the market to continue to move moderately during the next quarter as we head into the warmer spring months where fuel prices in New England should drop, but talk of $3.00 per gallon for gasoline this summer has consumers rattled. valued at $87,000+/- today! Oscars that were especially important this year went to Jamie Fox for Ray, Morgan Freeman and Hillary Swank for Million Dollar Baby and to The Sea Inside for Best Foreign Film. New England fans can really boast now, as they have both the Super Bowl and World Series Champions in the same year! I officially began my career as an SEC Registered Investment Advisor on April 25, 1985! Mahalo Nui Loa for a wonderful 20 years and still going strong! ☞ ☞ ☞ MARKET BOXSCORES INDEX 3/31/05 CLOSE % CHANGE from 12/31/04 DJIA S&P 500 Lehman Bros. Russell 2000 MSCI EAFE (prelim) 10,503.76 1,180.59 1,132.76 615.07 1,503.85 - 2.59% - 2.59% - 0.73% - 5.60% - 0.76% 3/ 31/05 % CHANGE from 3/31/04 1.40% 4.83% 1.15% 4.19% 13.45% CURRENC¥ Volume 16, Number 5 Spring 2005 is published by Kasanow & Associates Wealth Management Harry G. Kasanow, CFP ® Independent Investment Counsel Certified Financial Planner 3268 A Paty Drive Honolulu, HI 96822 Phone: (808) 988-1311/ 988-1511 Fax: (808) 988-1711 (1-800) 988- 4469 (TM) Off-Island Clients e-mail: [email protected] My mission: to lead responsible adults to fiscal fitness through planning, implementing and coaching their financial decision-making. Art Direction & Production: Craig Okino printed on recycled paper Please recycle this newsletter! “Daddy says this is our last date until he’s had a chance to review your investment portfolio.” The information contained in this newsletter has been gathered from sources believed to be reliable and accurate, but it is not necessarily complete and cannot be guaranteed. The information is intended for general use only and should not be construed as specific or comprehensive advice. It is important to note that individual situations can vary; as such, the information should be relied upon only when coordinated with individual professional advice. Please note: on all charts and graphs in this newsletter, remember that past performance is no guarantee of future results. This issue was printed on April 1, 2005. TD Waterhouse Institutional Conference and Client Visits T he annual TD Waterhouse Institutional Conference was held February 2nd – 5th in San Diego. It was an outstanding conference with brilliant presentations made by Attorney General of New York Eliot Spitzer, Ambassador L. Paul Bremer III, former Presidential Envoy to Iraq and David Gergen, Professor of Public Service at Harvard University’s John F. Kennedy School of Government, Director of its Center for Public Leadership and editor-at-large for U. S. News & World Report. Besides attending this conference, I made time to visit with friends/clients to conduct annual reviews. In San Diego, I met with Greg Bolian and assisted him with the purchase of a new Greg Bolian Scion car. I then traveled down to Newport Beach where I met with Ron and Vickie Nakagawa. Finally, I spent sometime visiting with Vernon Bud Mikacs in San Juan Capistrano. Identity Theft Protection (continued from page 1) provisions of the Fair and Accurate Credit Transactions Act of 2003, signed into law by President Bush last year, as of December 1, 2004, everyone is entitled to a free credit report from each of the three major credit bureaus every year. Go here to get started: https://www. annualcreditreport.com/cra/index.jsp What can you do? Do not give out your personal information to anyone on the phone who you do not positively know – no credit card numbers, no social security numbers, no bank account numbers or any driver’s license numbers. Do not e-mail things like mortgage balances, credit card balances, or beneficiary Social Security numbers. You can leave it on voicemail or fax. Be aware of “spyware” on your computer that can be trained to cull your private information from your hard drive. Consider a personal paper shredder for your home and shred every piece of personal and financial data that you normally throw away, including credit card receipts. Go here to the FTC website: http://www.ftc.gov/bcp/conline/ edcams/credit/ycr_free_reports.htm Vickie, Brooke, Ron and Courtney Nakagawa Michael, Mary and Caitlin Callahan with Bud Mikacs Once again I want to thank everyone for taking the time to visit with me and to welcome me into their homes! Special thanks to Mary Callahan (Bud s daughter) and her children Michael and Caitlin for sharing their beautiful home with me and taking me with them to enjoy Superbowl Sunday! Milestones... • Congratulations to new Grandparents Sandra Valle & Ossian Or and parents Henry & Racquel Franklin on the birth of “our beautiful princess,” Marianna Franklin, who was born in Minneapolis/ St. Paul on Friday January 21, 2005 at 8:30 am! She weighed 8 pounds, 7 ounces and measured Chaz and Marianna Franklin 191/2 inches with Ossian Or long. Robo TuTu Dra (aka Sandra) attended the birth. Lucky Mother Racquel is blessed with a sweet baby girl who sleeps all the time, and Chaz, who is now age 4. • Congratulations on their engagement! Maile Baran is marrying her lifelong soulmate Patrick Primacio on August 20th! Similarly, in regards to your physical health, identity theft is an area where an ounce of prevention is much more important than a pound of cure! Oahu Piano Quartet (OPQ) Shines T here are so many talented clients that I have gotten to see perform over the years but none gives such pleasure as seeing OPQ (Thelma Diercks, Jeannette Chun, Lillian Ito and Eleanor Lum), who have been playing together for over 20 years. After each piece, the members of the Quartet rotate their piano playing positions so everyone gets to perform with one another in numerous combinations. Thelma Diercks has been a friend and client since 1990! The performance was at Orvis Auditorium on March 23rd and featured pieces by J. S. Bach, Brahms, Rachmaninoff, Debussy and Gounod. Watch for announcements of their next performance...not to be missed! Maile Baran and Patrick Primacio Annual Offer for Revised ADVs Annual Offer for Revised ADVs mandated by the Securities and Exchange Commission (SEC), Kasanow & Associates: Wealth Management is offering our most recently revised copy of ADV Part II. If you would like to receive a copy, please call (808) 988-1311 or 988-1511 or email Maile at [email protected] IONA’s Paint by Numbers is a Huge Success! hen Cheryl Flaharty, Artistic Director and the IONA Contemporary Dance Theatre stage a performance, it is not to be missed! Anyone who attended their two sold out performances of IONA Salon Series: Paint by Numbers on March 18th and 19th at Niketown will strongly agree. W year and get your tickets early! Another exciting announcement for Maile is that she is marrying her lifelong soul mate Patrick Primacio on August 20th! Patrick, who is a school teacher and coach, will be moving to Oahu from Kona to teach for the DOE this summer. Congratulations!! Laura Brucia. Maile surrounded by color. Local jazz-fusion musicians Quadraphonix provided cool fluid music making it the first time the IONA Dancers ever performed to live music. As you know, my personal assistant Maile L. Baran is a dancer with IONA and shined in this amazing piece. Watch for announcements of other IONA performances throughout the rest of this Africa: Wandering the Serengeti Plains T he University of Hawaii at Manoa Colleges of Arts & Sciences has a wonderful program you should all become aware of. The Osher Lifelong Learning Institute (OLLI) was founded in 1997 by a group of retired professors and community elders. OLLI provides members of the Oahu community opportunities to attend classes, workshops, and special events at minimal costs and is brilliantly run by Rebecca Goodman. Thanks to my dear friend and client of 20 years, Dr. Donald Matsumori, I have become a member of and teacher for OLLI. During this last semester, I taught a two day course, taking my students to Africa to experience via slides and discussion the amazing Masai people of Kenya and Tanzania and the bountiful wildlife of one of my favorite places on earth. The opportunities to share my photographs and stories of my life experiences traveling throughout Africa was a thrill to me and also to the 25 students who attended. You can learn more about OLLI by visiting their website at http://www.all.hawaii.edu, by calling the Director Rebecca Goodman at 956-8224, or by visiting their offices on campus, Krauss Hall 113 near the John Young Museum. Watch for my new classes soon entitled Asia on my mind and Digital Photography...it’s a Snap. Maile peeks back. Humpback Whales...a Thrill to Watch! I n what has become almost an annual ritual, my good friend and client Pat Bolian and I hit the high seas via the Navatek II on March 20th to go whale watching. You probably already know that most of the Humpback Whales from Alaska make an incredible journey every year from the Pacific Northwest to Hawaii to bear their young calves. Last year, more than 800 Humpbacks were counted during the annual return of the whales to both here and in Maui. If you have never been aboard a ship to see these gentle giants, it is a must do! Best viewing times here in Hawaii is from late December to early April. This year, Pat and I were fortunate to see two pods of whales on our journey. There weren’t any full breaches from the water but lots of amazing flukes, a cool beautiful day to be on the water and just two old friends hanging out and having a great time. Want to join us next year ? Drop me an email or a note and we’ll make it a group outing in 2006! Oh by the way, we have Saved the Whales!!