Month: November 2018


Sentiment is defined within the investment community as investor attitude toward a broad market or asset class.  Following sentiment can be a useful endeavor as a component of risk assessment.  Growing bullishness can help investments rise but overly optimistic attitudes often occur near market peaks.  On the opposite side, bearish attitudes can pressure markets lower, but overly pessimistic or fearful actions can wash out those sellers to set the stage for a recovery.

Sentiment can be measured a number of ways, but most fall under the categories of investor perception surveys or detection of their actual actions.  Surveys can be verbal or online and generally reflect what responders think of the market in an upcoming time frame.  Responders may or may not have acted on their beliefs.

Above is an example of a survey by the American Association of Individual Investors (AAII).  The scale to the right of the survey (lower pane), displays the percentage of the responders with a bullish outlook for the S&P 500 Index over the subsequent six months.   Notice the survey number tends to track the movements of the stock market.  Human nature is such that what is happening now tends to heavily influence perceptions of the future – if it’s bad now, then it will be bad or worse in the future.

Herd mentality can provide the fuel to a rally or sell-off as people’s actions are a natural by-product of their thoughts.

At extremes, the intensity tends to mark turning zones.  Therefore, assessing sentiment can be useful as a contrary indicator but only after determining what qualifies as an extreme.  In the chart above, zones of Excessive Optimism and Excessive Pessimism have been marked.  Excessive optimism has been a worthwhile warning prior to major and minor peaks or at least stagnation.  Excessive pessimism tends to be seen near lows.  Not all market peaks and bottoms are accompanied by sentiment extremes using the AAII survey but when extremes show up, this information may play a role in portfolio adjustment.

As noted, surveys convey investor perceptions but as the saying goes, “actions speak louder than words”.  There are numerous ways to detect sentiment derived from actions taken by investors.  The options market often attracts speculators looking to leverage their ideas of bullish outlooks by way of buying call options or bearish outlooks with buying put options.

Created with TradeStation. © TradeStation Technologies, Inc. All rights reserved.

Put/Call ratios display the number of puts versus the number of calls traded.  A ratio of 1.0 means an equal number of puts and calls are being purchased but that sort of balance is not the norm.  The stock market and investor perception generally have a positive longer-term leaning which tends to have average Put/Call readings around 0.9 or nine puts purchased for every ten calls.  In the chart above, the raw Put/Call is displayed but the zig-zagging raw readings can be too short-term to be useful for most investors.  In the middle pane, a 10-day moving average has been applied to better illustrate the ebb and flow of sentiment.

Sentiment analysis can come from various sources and deal with multiple time frames.  Surveys tend to be longer term while option related sentiment measures tend to be shorter-term.  In mid to late October, weakness in the stock market had survey readings decline but without excessively pessimistic readings.  Fearful or bearish speculators rushed to put options with more intensity than bullish buyers of call options.  That set up overly bearish extremes prior to the early to mid-November rebound.  Keeping tabs on sentiment can assist in keeping emotions in check.  If opinions of market match overly optimistic or pessimistic sentiment readings, then re-evaluation may be in order.  Investors would be wise to not use this information in a vacuum but as a part of a more comprehensive plan.

When you’re away, do your apps play?

Would it make you uncomfortable if your children or your neighbor grabbed your smart phone and started looking around?  Probably not, but what about a complete stranger?  This is often what happens when you download an app from app stores without doing some due diligence.  Many apps ask for you to open doors they have no business accessing.  This can open up your phone to more then just an app you thought you could trust.

Official app Stores vs. third party app stores

Apple® AppStore and Google Play™ are the two biggest official app stores. You can go there to download mobile applications for your iPhone or Android device.

Are they safe?  Apps in the official app stores usually follow strict development criteria. The official stores also test the applications for malware.  This is the safest place to get apps.

Third-party app stores may not use the same level of scrutiny toward the apps they allow to be listed in their app stores. Third-party app stores might offer plenty of safe applications. But there’s also a higher chance they might offer dangerous ones.  Third-party app stores should be avoided as much as possible.

Certain categories of applications were also more likely to contain malware.  Arranged by likelihood:

  1. Lifestyle apps
  2. Music and Audio
  3. Books and Reference
  4. Entertainment
  5. Tools

Grayware apps

Many apps contain grayware.  This is a term used to classify apps that behave in an undesirable manner, but not classified as malicious malware.  A common type of grayware is mobile adware which contains popup ads in your phone’s notification bar.

Symantec reported a 20% increase in grayware application variants recently, for a total of 3,655 types.  Norton research shows that more than 60% of Android apps contain adware or other grayware.  Of these:

  • 63% were found to have leaked the device’s phone number
  • 37% leaked device location
  • 35% leaked installed application information

There are security apps such as Norton Mobile and Trend Micro Mobile Security that can protect your phone from malware and annoying grayware, but perhaps the best thing to do is understand what happens when you install a new app.  Many potentially unwanted app behaviors are written on purpose and documented in the app’s user agreement.  Reading app disclosures and agreements before installing is the best practice.

When an app first installs, it asks you for permissions.  To combat grayware, you should question what an app really needs permission to do.

Does your new weather app really need permissions to access your contacts and calendars?  Often when prompted for access you should just say no.

Permission to Do What?

There are hundreds of types of permissions, and many apps ask for more permissions than they need.  Most people don’t know what they mean. They just enable everything.  This is a bad practice.  You should disable everything unless you know why the app needs it.  The more restricted you keep your apps the safer your data will be.  Here’s a list of a few of the most common permissions:

  • Storage: modify/delete storage contents – apps that store pictures and video will require this.
  • Network communication: full access – many apps need to access the internet, this often relates to ads as well
  • Your location: network-based – weather and travel apps, free games, often contain ads so they can deliver targeted ads based on your location.
  • System tools: prevent device from sleeping – usually means that when you’re using the app, it will keep your phone from going to sleep or from entering into a reduced power mode.
  • Your personal information: read contact data – most social media or messaging apps will request access to your contact information
  • Root: super user access – When an app asks for root access you should seriously consider whether it needs super user access.  Firewalls and backup apps often require root access.  Most apps don’t

Android vs IOS which is safer?

There are millions of apps available for download.  There are twice as many apps on the Google Play store then on the Apple® AppStore.  The number alone at Google Play makes it a more dangerous place to find apps.  If the app is available for iPhone and Android there is a higher probability that it is safer, but no guarantee.

There’s no doubt Android is a bit more of a risk than iOS, but, with the right precautions, it can still be a safe platform. If you must install apps from anywhere on an Android phone, at least do everything you can to ensure they’re safe before you let them loose on your contacts, messages and social media accounts. Install a scanning app such as Norton Mobile Security,  or Google Play Protect and use it wisely on new downloads to prevent any malicious activity.

What about Jailbreaking my phone?

Sometimes an app developer does not play by the rules and the only way to get the app to the public is to recommend jailbreaking your phone.  Jailbreaking your device frees the OS to run unapproved applications.  The process of jailbreaking is legal but it’s not a good practice.   Jailbreaking allows unapproved code, voids your warranty, and can cause stability and security concerns.

Also, if your company issues you a work phone this would generally be prohibited.  Most companies have policies for what you can do with their phone when using it for work.  Unless you’re a tech guru and the risk is worth the reward, jailbreaking is a bad idea.  I refuse to do this on my personal devices.

Is this app Secure?

Apple® AppStore has made it mandatory for all developers to require new apps use a secure connection such as https.   The Android developer platform has also just finalized this process in 2018.   Still, older grandfathered apps exist on app stores that were original approved using unsecure http.  So, check the reviews, and check the date of the last review.  If its 3 years old, perhaps its time to look for a better solution.  Also, it is a good practice to update your apps anytime there is a security update.    A trendy app is no longer great if your connection to their server is compromised on public Wi-Fi.  So, stick to the Official app stores and update your apps often.

Does Spectrum Financial have an app?

I’m glad you asked!  Now would be a great time to download the Spectrum Access app available at both the Apple® AppStore and Google Play™ It’s a secure way for our clients to view

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