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Jun 10
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Unmasking AI’s Hidden Biases: A Practical Guide for Investors, Business Owners, and Everyday Power-Users

By Artificial Intelligence

Introductory note from Anthony Baruffi, Founder, Baruffi Private Wealth…

Over the past year, I’ve reviewed and utilized generative AI tools to assist me with tasks ranging from portfolio research to day-to-day firm operations.  They’re astonishingly powerful—and, if used carelessly, astonishingly dangerous. The CFA Institute article summarized below cuts through the hype and shows exactly where hidden model biases lurk and how to neutralize them. I’m sharing the key points—with a few prompt “shields” and workflow tips—so you, your business, and even your personal life can enjoy the upside of AI while steering clear of costly missteps.

The following article is based on “AI Bias by Design: What the Claude Prompt Leak Reveals for Investment Professionals,” Dan Philps, PhD, CFA & Ram Gopal, CFA Institute Enterprising Investor, 14 May 2025.

Generative AI—ChatGPT, Claude, Gemini, Copilot—can digest 50-page contracts before lunch and brainstorm a marketing plan on the drive home. But a leaked 24 000-token “system prompt” (the invisible rule book Claude follows) shows these tools also hard-wire human biases into their answers.

Below is a plain-English tour of the risks, plus simple prompts and habits you can use—whether you’re valuing a company, running a shop, or planning next weekend.

Why this matters beyond Wall Street

If you are a … Hidden AI risk Real-world impact
Investor Over-confident summaries skip footnotes Mispriced risk in your portfolio
Business owner AI clings to first framing (“launch ASAP!”) Blind spots in market or compliance checks
Everyday user Tool favors newest over best sources Advice that ignores durable facts (tax rules, safety standards)

The seven biases revealed—and how to disarm them

Quick fix: Copy each Mitigation Prompt into chat before your real question.

Bias What the leak showed Mitigation Prompt
Confirmation Model echoes your wording, even if wrong “If my framing is inaccurate, correct it before answering.”
Anchoring Clings to first impression “Challenge my assumptions and offer alternative views.”
Availability Overweights recent docs “Rank sources by evidential strength, not recency.”
Fluency Smooth tone hides uncertainty “Include probability ranges or confidence levels.”
Simulated reasoning Neat logic that’s really post-hoc “Show only reasoning actually used, no decoration.”
Temporal gap Implies it knows events after Oct 2024 “State your knowledge-cutoff date clearly.”
Truncation Trims nuance to stay short “Be comprehensive unless I ask for a summary.”

Four habits that keep AI helpful—and honest

  1. Double-loop your queries.
    Run the same question twice—once without mitigation prompts and once with them—then compare. Gaps highlight hidden bias.
  2. Log the entire exchange.
    Export the chat or copy it into your CRM/notes. The paper trail matters if auditors, regulators, or future-you asks, “Where did this number come from?”
  3. Mix human and machine insight.
    Investors: Pair AI earnings-call recaps with primary filings.
    Owners: Let a colleague vet AI-drafted contracts.
    Consumers: Cross-check AI health or legal tips with professionals.
  4. Run quarterly “bias drills.”
    Feed the model a historical case (a stock that imploded, a product recall) and see whether it surfaces key red flags. Adjust prompts or tool choice accordingly.

Copy-ready “Master Prompt”

“Use an analytical tone. Correct inaccurate framing. Present dissenting as well as consensus views. Rank evidence by relevance, not recency. Quantify uncertainty with ranges or probabilities. Be comprehensive—do not truncate unless asked. State your knowledge-cutoff date and avoid simulating events after it.”

Paste this at the top of a new chat; you’ll feel the rigor immediately.

Big picture: Scale ≠ wisdom

Today’s AIs are optimized for usability—short, fluent answers that make us feel smart—not for truth or completeness. Bigger data alone won’t fix that. Progress requires sharper human oversight—the same qualities that separate disciplined investors, savvy owners, and smart everyday users from the pack.

Final takeaway

AI is like a power tool: enormous leverage in skilled hands, dangerous shortcuts in careless ones. Layer a few targeted prompts and disciplined review habits, and you’ll harvest AI’s speed without paying the price of hidden bias.

Source: Dan Philps, PhD, CFA, and Ram Gopal, “AI Bias by Design: What the Claude Prompt Leak Reveals for Investment Professionals,” CFA Institute Enterprising Investor, 14 May 2025. (≈840 words)

Jun 09
Love0

Update on Recent Market Volatility – 6/5/2025

By Market Update

Market data through the week ending May 30 2025 (unless noted otherwise)

Equities – Stocks finished May decisively higher. The S&P 500 rallied 6.3 % for the month, erasing earlier losses and turning positive +1.1 % YTD. Mid- and small-caps also advanced (+5.4 % and +5.3 %, respectively), though smaller companies remain in the red for 2025. Developed-market equities added 4.6 % and now lead the major asset classes at +16.9 % YTD, while emerging-market shares rose 4.3 % MTD / 8.7 % YTD.

Style & Size – Leadership rotated toward growth: large-cap growth surged +8.9 % MTD, nearly 2½ times the +3.5 % gain for large-cap value. The pattern repeated down the-cap curve, with mid-cap growth (+9.6 %) and small-cap growth (+6.4 %) outpacing their value counterparts.

Sectors – Technology (+10.9 %), Communication Services (+9.6 %) and Consumer Discretionary (+9.4 %) powered the advance, lifted by robust earnings and AI optimism. Energy eked out a +1.0 % rise as WTI crude hovered near $61, while Health Care lagged at -5.6 % amid renewed policy scrutiny.

Fixed Income – A late-month bid for safety trimmed yields; the 10-year Treasury yield fell to 4.41 % from 4.58 % at the end of April. Treasuries still finished lower for the month, leaving the Bloomberg U.S. Aggregate Bond Index -0.7 % MTD, yet credit held up: high-yield bonds returned +1.7 % as spreads tightened.

Economy & Policy – The Fed stayed on hold, stressing data dependence. Fresh figures showed core PCE inflation up just 0.1 % MoM / 2.5 % YoY, consumer confidence rebounding to 98.0, and personal income climbing 0.8 %. Durable-goods orders, however, slumped 6.3 %, and initial jobless claims ticked higher, underscoring a still-mixed backdrop.

Looking Ahead – With the S&P 500 back near record territory and bond yields still elevated, June’s inflation prints and any progress on trade policy could determine whether risk appetite endures into the summer.

 

Index Returns – May 2025

Total return (%)

 

Asset Class / Index May (MTD) Q2-to-Date 2025 YTD
EQUITIES (STOCKS)
S&P 500 6.29 % 5.57 % 1.06 %
S&P MidCap 400 5.40 % 3.02 % –3.26 %
Russell 2000 5.34 % 2.91 % –6.85 %
MSCI EAFE (Developed Intl.) 4.58 % 9.37 % 16.87 %
MSCI Emerging Markets 4.27 % 5.64 % 8.73 %
MSCI EAFE Small Cap 5.61 % 11.74 % 15.86 %
FIXED INCOME (BONDS)
Bloomberg U.S. Aggregate –0.72 % –0.33 % 2.45 %
OTHER
Bloomberg Commodity –0.58 % –5.36 % 3.05 %
S&P Developed Property 2.54 % 3.72 % 5.57 %

Sources: Bloomberg, Standard and Poor’s. Past performance is not a guarantee of future results. For client use only.

Apr 10
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Tariffs, Tensions, and Staying Grounded

By State of the Economy - 1Q 2025

The first quarter of 2025 has ended, and while I usually take a few days to review the quarter, gather my thoughts and gaze into my ever cloudy crystal ball, this quarter also gave me the added benefit of allowing me to be able to comment on the president’s much anticipated tariff policy.  Sometimes, it pays to let the dust settle before trying to make sense of the landscape. And in this case, that dust came from Washington, where a new round of tariff announcements is more of a haboob sandstorm, and it sent a jolt through global markets.

Before we dig into that, let’s set the stage with how portfolios closed out the first quarter of 2025.

 

A Quarter of Quiet Strength—and a Surprise Ending

Markets largely coasted through Q1, with returns flat to slightly positive depending on exposure to large-cap growth stocks. Clients with high exposure to growth stocks saw negative returns during the quarter due to worries that competition out of China would hurt their investments in artificial intelligence. But while domestic large-cap growth was on pause, other corners of the market were quietly delivering.

For the first time in quite a long time, international equities stepped into the spotlight. The Vanguard FTSE European Markets ETF (VGK) gained a solid +11.07% during the quarter—driven by hopes that Germany and the European Union would make legislative changes to allow for more fiscal stimulus and improve the earnings outlook across key European economies.

Bonds, after being the forgotten stepchild for years, continued their comeback tour. The Bloomberg U.S. Aggregate Bond Index rose +2.78%, offering both stability and income.

This was a reminder for diversified investors that not every party is hosted by the S&P 500.

 

Tariffs: The Sequel Nobody Asked For

Just as Q1 wrapped, markets were confronted with a plot twist: fresh tariffs on imported goods. The equity markets didn’t take it well—and for good reason.

Having been a student (and teacher) of markets for decades, I’ve learned a few things about how the economy reacts to trade policy. One of the clearest lessons I recall from studying international trade is that tariffs are rarely helpful for growth. They increase friction, distort incentives, and almost always lead to higher consumer prices.

And here’s a common misconception worth clearing up: tariffs are not paid by countries—they’re paid by the companies doing the importing. Those companies often pass the cost along to consumers. So, while headlines might suggest otherwise, this is not a tax on foreign producers—it’s a tax on the things we buy.

From a risk perspective, what makes this even trickier is that trade policy is now a one-person variable. Investors don’t just need to model economic data—they need to guess what the president might decide on a given Tuesday. That’s a legislative risk, and it’s one of the hardest forms of risk to quantify. It’s no surprise that since the announcement, we’ve seen investors shift quickly toward safer assets like Treasuries.

 

Bond Market: The Canary in the Coal Mine

If you’ve read my previous letters, you know I have a soft spot for bonds—not just because they generate income, but because they offer insight. In times of stress, they often speak before the equity markets even clear their throat.

This latest flight to quality is a page straight from the history books:

  • In 1997, the Asian Currency Crisis triggered a sharp pivot to U.S. bonds.
  • In 2002, accounting scandals (hello, Enron and WorldCom) sent shockwaves through corporate credit.
  • In 2020, it was the pandemic that turned the Treasury market into a temporary safe haven.

Now in 2025, we’re seeing echoes of those events: richly valued equities, a sudden external policy shock, and a repricing of risk.

The lesson? Markets tend to underestimate the probability of tail events—until one happens. That’s why we build portfolios that can withstand surprises, not just perform in smooth sailing.

 

Looking Ahead: Stay Nimble, Stay Grounded

So, what’s next?

Much depends on how the tariff story unfolds. If the policy escalation continues, we could see downward pressure on corporate margins and consumer spending. If it stalls—or reverses—we could be back to debating Fed policy and earnings season within weeks.

Regardless of the headlines, our approach remains unchanged:

We have built our portfolios with the understanding that events like these, which throw the market into confusion, come along fairly regularly.  We never want to be in a position where we are forced to sell risky assets during one of these market episodes.  By being diversified, we can fund cash flow needs from assets that are holding their value, namely fixed income securities, until markets calm down.  We can also take advantage of volatility by regularly rebalancing our portfolios, which enables us to purchase small amounts of assets that are falling in value.  It can be a very uncomfortable thing to do, but by sticking to our investment policy, we will be able to meet our investment goals over our investment horizon long after this current episode is over.

  • Global diversification helps us sidestep overconcentration in any one region or asset class.
  • Fixed income exposure, especially with real yields now attractive, provides stability and ballast.
  • Rebalancing, particularly from areas that outperformed last year, ensures discipline over emotion.
  • Risk awareness, not risk avoidance, is our compass.
  • The bond market continues to signal that neither inflation nor recession is imminent. But, as always, we’ll be watching closely for signs of change—and adjusting portfolios accordingly.

Thank you, as always, for your trust, your partnership, and your belief in a long-term view. If you’d like to review your portfolio or discuss any of the recent developments, I’m just a phone call or email away.

Feb 17
Love0

Are Big Estate Tax Changes Coming?

By Estate Taxes

Key Takeaways:

  • Currently, some big estate tax provisions of the 2017 Tax Cuts and Jobs Act are set to expire at the end of this year.
  • Strategies to consider include accelerated gifting, stress testing an estate plan and certain trusts.
  • Other possible changes on the horizon mean now could be a good time to review your overall wealth plan.

Around this time next year—January 1, 2026, to be exact—we will see some very big changes to laws and rules governing estate and gift taxes.

Well, maybe. Or maybe not.

What’s clear is that many key components of the Tax Cuts and Jobs Act are currently scheduled to expire at the end of 2025. It’s less clear, however, whether things will stay that way by the time the calendar turns over to 2026. The resulting changes, should they occur, could have big wealth transfer implications for many families with significant wealth—as well as families seeking to join the ranks of the ultra-wealthy and take care of their heirs financially.

The keys to planning for these potential changes are to pay attention and begin your efforts earlier rather than later, as amending wealth transfer plans may take a significant amount of time and effort. With that in mind, here’s a look at some possible developments on the horizon—and some ideas you might want to consider during the coming months.

2017 law may sunset

Back in 2017, the Tax Cuts and Jobs Act was passed by Congress and signed into law. Among many other things, it doubled the lifetime gift and estate tax exemption, indexed for inflation (while keeping the top estate tax rate at 40%) from $5.6 million for single filers to $11.2 million and from $11.2 million to $22.4 million for married couples filing jointly. In 2024 the individual exemption limit stood at $13.61 million.

At the end of this year, however, that exemption will sunset unless Congress extends it—resulting in an exemption limit that is expected to be around just $7 million in 2026 (and adjusted for inflation moving forward).

 The upshot: Families with a net worth of more than $7 million (around $14 million for married couples) could find themselves facing—virtually overnight—the prospect of a large estate tax bill. The estate amount over the exemption amount is subject to a 40% federal estate tax.

That said, much uncertainty remains about the ultimate direction and magnitude of any estate tax law changes. For example, Congress could act to extend the law as is, arrive at a new agreement, or do nothing at all (in which case the above scenario will come to pass).

Planning in an uncertain environment

Given the many question marks that currently exist, you might wonder why you should be thinking about doing anything at all to your estate plan.

One big reason: When it comes to tax laws and rules, perfect clarity is rarely achieved. It seems there are always new guidelines from the IRS or proposals from Washington, D.C., that could shift the tax landscape. In other words, if you waited for absolute certainty to make your wealth transfer plans, you probably wouldn’t have any such plans—which could, in turn, result in less of your wealth going where you want it to go.

The good news is that you don’t need 100% certainty to evaluate options and make informed considerations about your wealth. An estate plan—or any component of an overall wealth plan, for that matter—that is set up to be dynamic and flexible can be well positioned to evolve along with new developments in the financial and tax arenas.

Ideas to consider

Here are some ideas to consider as 2025 progresses. Keep in mind that there’s no one-size-fits-all approach to wealth transfer planning—and that this in-no-way-comprehensive list of possibilities likely includes some ideas that are worthy of your attention along with others that could be irrelevant given your particular situation.

The key, ultimately, is to discuss your situation with your trusted advisors to determine which steps—if any—could potentially position you for better outcomes.

Consider accelerating your outright gifting schedule

Given the current high exemptions and the possibility of much lower ones on the way, affluent individuals could choose to gift more of their assets today—removing those assets from their estate for tax purposes—than they might have originally planned to. This might involve transferring stocks or income-producing property to family members who could be in lower tax brackets. One caveat: If you transfer an appreciated asset to an heir, they will generally pay capital gains tax on the original cost basis of the asset. In contrast, if that asset passes after death, it will benefit from a step-up in cost basis. Choosing which assets to gift pre-death should be part of the estate planning process.

 Making large gifts now won’t harm estates after 2025

The IRS in 2019 formally clarified that individuals taking advantage of the increased gift tax exclusion amount currently in effect will not be adversely impacted if the exclusion amount falls in 2026.

Look into a SLAT

Some married couples might benefit by creating a spousal lifetime access trust, or SLAT, in today’s high exemption environment. A SLAT is an irrevocable trust for your spouse into which you gift assets and use your exemption amount. Unlike some other trusts, however, a SLAT can allow access to the funds in it if certain conditions are met (such as withdrawals for health or educational reasons). However, SLATs are complex and there can be risks—such as losing the money in a divorce or if the beneficiary spouse dies unexpectedly.

Consider maxing out one spouse’s lifetime exemption

A married couple can opt to fully use one of their lifetime exemptions completely by gifting assets but preserve the other spouse’s exemption. If the current exemption rules do end with the sunset of the Tax Cuts and Jobs Act, one spouse’s exemption would still be usable in 2026.

Engage in scenario planning/stress testing

You might not know exactly how things will shake out, but you can model different potential scenarios to see how various changes to the tax laws and rules might impact your outcomes. Armed with that information, you might decide to make changes now—or simply be ready to implement new solutions if certain trigger points occur.

In recent years, we’ve seen stress testing become an increasingly common action step taken by wealthy families and their advisors. At its core, stress testing is a formal process designed to put a wealth plan (or certain components of it) “through its paces.” That means evaluating and assessing it to see if the strategies being used are likely to achieve a wealthy family’s key financial goals and objectives.

Often that’s done by examining how a wealth plan would likely behave in a variety of scenarios—both positive and negative—that would have an impact on it. The goal is to ensure that the plan doesn’t spring any unpleasant surprises on the family. But stress testing also seeks to identify any strategies or opportunities that are currently being overlooked in the plan but that could add significant value to the family’s financial life.

Revisit your plan anyway

How long has it been since your estate plan was drafted—and have you looked at it once since then? If your estate plan is more than a few years old, it’s probably a good idea for you and your trusted advisors to review it. Regardless of whether current tax laws change, there’s a decent chance that your life, your goals and your net worth have evolved in the past few years—and those developments might mean that it’s time to alter your plan to reflect your current situation or your revised goals for the future of your family.

Don’t overreact

When big changes that could impact your wealth appear likely, it’s easy to get excited and let your emotions override your logic. Yes, the estate tax landscape might look very different in 2026. But your goals should drive your decision-making at least as much as external changes do. Discuss your priorities with your team of professionals so that you’re all clear on what you’re hoping to accomplish with your generational wealth planning. Then assess how you might create or revise a plan based on the information you know while building in a level of flexibility (to the extent possible) to help address new developments.

The bigger picture

If you’re evaluating your estate plan in light of these upcoming potential changes, keep in mind that other provisions of the Tax Cuts and Jobs Act are set to expire, too. If they do, we’ll see results such as higher marginal tax brackets, a lower standard deduction and many others.

 The upshot: A broader, bigger-picture look at your overall wealth plan might be in order. While trying to predict what Congress will do next can seem like a fool’s errand, we believe that thinking carefully about how you’re positioned for the future is never a bad idea.

 

VFO Inner Circle Special Report

By John J. Bowen Jr.

© Copyright 2025 by AES Nation, LLC. All rights reserved.

No part of this publication may be reproduced or retransmitted in any form or by any means, including but not limited to electronic, mechanical, photocopying, recording or any information storage retrieval system, without the prior written permission of the publisher. Unauthorized copying may subject violators to criminal penalties as well as liabilities for substantial monetary damages up to $100,000 per infringement, costs and attorneys’ fees.

This publication should not be utilized as a substitute for professional advice in specific situations. If legal, medical, accounting, financial, consulting, coaching or other professional advice is required, the services of the appropriate professional should be sought. Neither the author nor the publisher may be held liable in any way for any interpretation or use of the information in this publication.

The author will make recommendations for solutions for you to explore that are not his own. Any recommendation is always based on the author’s research and experience.

The information contained herein is accurate to the best of the publisher’s and author’s knowledge; however, the publisher and author can accept no responsibility for the accuracy or completeness of such information or for loss or damage caused by any use thereof.

 

 

Jan 28
Love0

Keeping Those New Year’s Resolutions

By Setting Goals

Key Takeaways:

  • Making New Year’s resolutions, and then soon falling short on them, is a very human practice. (One that dates back millennia, in fact.)
  • The human brain craves habit—and making new, healthier habits is hard.
  • Prioritizing positive, proactive, “approach-oriented goals” is just one way to potentially set yourself up for success.

So many of us start each January 1 with such high hopes. This will be the year we stick to our New Year’s resolutions, we tell ourselves. The weight loss goals, the exercise regimen, the pledge to get organized or learn a new skill—regardless of the objectives, the motivation to see them through is at its strongest when the calendar flips.

Of course, quite often that “eyes on the prize” attitude sours in short order—leaving us with a sense of disappointment that we got off track so quickly.

With that in mind, consider focusing on what is commonly the hardest part of resolutions—keeping them well into the new year and beyond. The good news: There are plenty of strategies that can potentially help you do a better job at identifying the right goals for you, framing them so you pursue them consistently, and ultimately generating the outcomes you most want for yourself.

Why it’s so tough

The history of New Year’s resolutions is a long one. The ancient Babylonians are said to have started the practice more than 4,000 years ago. They would make promises to the gods when crops were planted at the start of the new year. If they kept their word, those gods would smile on them during the year to come. If not, they would fall out of the gods’ favor.

Put another way, people have been making New Year’s resolutions—and often failing to keep them—for four millennia. So maybe don’t beat yourself up too much if you find yourself falling short of your goals by the time February starts. Certainly many of us find it a whole lot easier to make resolutions than to execute on them.

The good news: If that describes you, it’s probably not the case that you have some great moral failing. Turns out there’s some science behind humans’ pattern of losing interest in New Year’s resolutions.

For example, one longitudinal study of “resolvers” published in the National Library of Medicine tracked 200 people who set out to tackle a wide array of milestones in the New Year, with goals both concrete (quitting smoking) and abstract (improving romantic relationships). It found that by a week into January, 77% of study participants had kept up with their resolutions. But that number decreased to 55% by February 1. And it lowered still further to 43% after three months, 40% after six months and just 19% after two years.

The challenge is that creating a new course of action and sticking with it involves changing behaviors—whether building new and healthier habits or jettisoning old, unhealthy ones. And the human brain is a creature of habit, craving the familiar and treading well-worn paths of comforting actions (or inaction, as the case may be). Don’t be surprised if it takes around three weeks to start a new habit.

But the good news is that experts have shown that healthy new habits can be cultivated with repetition and mindfulness, reinforcing beneficial behaviors by cultivating a positive and rewarding feedback loop. “Habits aren’t just there, but you get them by repetition and reinforcement,” Dr. Nicole Calakos, professor of neurology and neurobiology at Duke, told PBS North Carolina. “The repetition part is obvious, because a habit means regularly doing something, and the more you do it, the conditions are ripe that will make you prone to have a habit. The second is reinforcement. In other words, is the outcome good? Does it help you get about your business? Is it rewarding?”

Framing your goals

Science doesn’t just tell us that it’s a common occurrence to fall short on our resolutions. It also offers tried-and-tested ways to stay on track and achieve success, cultivating better habits and lasting change.

Ultimately, it’s all in how you frame it.

In one peer-reviewed study from 2020, Swedish researchers studied the success rates of various New Year’s resolutions. Their conclusion: “Approach-oriented goals are more successful than avoidance-oriented goals.”

Essentially, that means you’re a lot more likely to find staying power with a resolution that you can build toward, iteratively and proactively, and that gives you positive motivation along the way. That’s a much better way to frame your goal than a deprivation-based system (“I must give up bad habit X!”) that only denies you the things you’re used to craving.

A one-year follow-up on the Swedish researchers’ study cohort showed that more than half (55%) of the subjects thought they’d been successful in sustaining their resolutions. And those who embraced the approach-oriented model were significantly more successful than those who’d tried to simply avoid bad habits: 58.9% versus 47.1%.

Also try to set approach-oriented goals that you can measure—key performance indicators, if you will. Choosing specific numeric targets for your resolutions and then working proactively toward them can be a valuable and rewarding way to rewire your brain with healthy new habits.

Example: Strapping on the Fitbit and then pledging to walk an extra 5,000 steps a day or jog seven miles per week can be much better than just saying “exercise more.” It’s motivating because it gives you a specific goal to work toward within a specific time frame.

That then allows you to track your progress—giving you warm feelings of satisfaction when you meet or exceed that total, and encouraging you to try harder the next day when you fall short of your goal.

Action steps

Armed with the understanding that achievement is a much better approach to resolution-keeping than avoidance, here are some fine-tuned tips to help you take the goals of January and carry them right through the calendar year.

  1. Keep your goals limited and reasonable. Keep your resolutions to a handful of two or three achievable goals. Don’t try to boil the ocean!
  2. Be specific. As noted, having numeric benchmarks to work toward and track is an immense motivator. It’s not just about “spending less.” It’s about making a budget and trimming monthly expenditures by X amount. It’s not about “eating better,” but rather cooking a specific number of healthy dinner recipes at home each week or only getting takeout on weekends.
  3. Plan it out. By looking strategically at your goals and then being tactical about divvying them up into discrete and doable milestones, you can set yourself on a good path to success and avoid feeling overwhelmed with something that seems abstract and unattainable.
  4. Keep an eye on KPIs. Tracking your progress toward your goal is critical—and it’s easier than ever with any number of smartphone apps that can help you make notes, keep a journal or log specific accomplishments along the way. When you’ve notched a specific win, however small it might be, consider a small treat to celebrate.
  5. Make yourself accountable (but not too much). The goal of a New Year’s resolution is to build a better you. It defeats the purpose of the whole endeavor if you beat yourself up every time you slip up or fall behind on your progress. Holding yourself to account is healthy—but so is being flexible and shrugging off small setbacks.
  6. Slow and steady wins the race. “Rome wasn’t built in a day” is a cliché—but that doesn’t mean it’s incorrect. Consistent, day-in, day-out repetition of productive and healthy behaviors is what will make your resolutions stick. With iteration, success can have a tendency to build on itself.
  7. But also don’t be afraid to change course. If, a month or two into the new year, you decide your resolution was too ambitious or too broad, it’s okay to trim sails and try another tack. Even more modest progress toward a goal is better than abandoning your plan entirely.

Conclusion

Of course, you don’t have to make New Year’s resolutions at all. It’s good to want to improve yourself. But the arbitrary date of January 1—and the self-imposed pressure to comply with the goals you set for yourself—may not be worth the agita when all is said and done.

Many people have decided that the idea is just silly when they know, from experience, the failure rate. One survey found that most people opt to skip the trend entirely—with only four in ten people making resolutions, and of those, barely more than 15% keeping all of them.

If you do decide to go all in for a transformative, new-year, new-you start to 2025, try to take it easy. Stay motivated, track progress toward your goals, reward small victories and forgive small slipups. But ultimately—no matter whether you follow through on your goals in splendid fashion or fall short of them spectacularly—remember to be proud of your efforts.

 

VFO Inner Circle Special Report

By John J. Bowen Jr.

© Copyright 2025 by AES Nation, LLC. All rights reserved.

 

No part of this publication may be reproduced or retransmitted in any form or by any means, including but not limited to electronic, mechanical, photocopying, recording or any information storage retrieval system, without the prior written permission of the publisher. Unauthorized copying may subject violators to criminal penalties as well as liabilities for substantial monetary damages up to $100,000 per infringement, costs and attorneys’ fees.

This publication should not be utilized as a substitute for professional advice in specific situations. If legal, medical, accounting, financial, consulting, coaching or other professional advice is required, the services of the appropriate professional should be sought. Neither the author nor the publisher may be held liable in any way for any interpretation or use of the information in this publication.

The author will make recommendations for solutions for you to explore that are not his own. Any recommendation is always based on the author’s research and experience.

The information contained herein is accurate to the best of the publisher’s and author’s knowledge; however, the publisher and author can accept no responsibility for the accuracy or completeness of such information or for loss or damage caused by any use thereof.

 

Jan 10
Love0

2024 Year End Markets Overview and Outlook

By State of the Economy - 4Q 2024

At the end of 2024, investors had good reason to pop the confetti. Last year was the second consecutive year with S&P 500 gains of over 20%, the first time that has occurred since the late-1990s. The S&P 500 closed 2024, up 23% to an all-time high of 5,869.

The impressive performance begs the question: Is this momentum built on actual muscle or helium balloons? And while the party is certainly going strong, should investors be looking elsewhere for better future opportunities?

  • Valuations: The forward P/E ratio on the S&P 500 hovers at 21.4x, well above the 30-year average of 16.9x and pushing 1.4 standard deviations over typical levels.

In regular-person-speak, the market is quite optimistic about the promise of artificial intelligence and market-friendly policies from the incoming administration.

  • Market Concentration: The “Magnificent 7” (Apple, Alphabet, Nvidia, Microsoft, Amazon, Meta, Tesla) keep hogging the limelight, contributing 55% of 2024’s gains. Their enviable profit margins, at 23.5% versus 9.3% for the rest of the S&P 500, are proof that market darlings can do no wrong—until they do. The top 10 S&P 500 stocks currently represent a record-breaking 38.7% of the total market cap.

  • Earnings Outlook: Analysts forecast even rosier profits for 2025. S&P 500 margins checked in at 12.8% for Q3 2024, well above historical norms.

We’d like to think of it as the market humming along to its favorite tune—albeit one pitched a few octaves higher than usual. In 2022, the Equity market fell because the Magnificent 7 margins started to fall because of shrinking profit margins.  In 2023, the companies cut their workforces, improved profit margins, and mostly stayed disciplined with their expense management. Will they remain disciplined in the face of growing capital expenditures for Artificial Intelligence? We will need to watch this closely.

International Markets

Overseas, it’s the same music, different volume knob. While the US markets are belting out show tunes, international equities are more like your moody cousin who’s got loads of potential but keeps to the sidelines.

  • Valuation Contrast: The MSCI All Country World ex-US index trades at a whopping 37.8% discount to the S&P 500 on a forward P/E basis—a historically wide gap. To put that in perspective, the 20-year average discount is a mere 17.8%. If you have ever been tempted to shop for bargains abroad, you’ll find an entire clearance rack waiting.

  • Regional Performance: 2024 returns were a mixed bag:
    • Asian Equities: Overall, Asian markets were up +2.06% (USD terms), as a strengthening US dollar hurt Asian market returns, which performed well in local currency terms, with Japan up 15% and Australia up 7.5%. Japanese corporate governance reforms have turned the once-sleepy sector into a relatively bright spot.
    • European Equities: Overall, European Equities were up 2.22% as a strong dollar and persistent economic woes again hurt returns. Picture a soccer match that just can’t seem to find a winning goal.
    • Emerging Markets: Emerging market equities ended the year up a respectable +11.63%, proving resilient despite a slowdown in China. If you ever doubted EM’s scrappy nature, let these numbers be your reminder.
  • Sector Disparities: Across the globe, technology and consumer discretionary showcase the most significant discount compared to their US peers. Value investors have started drooling, but it remains to be seen if global fundamentals will turn that drool into actual profits.

Fixed Income Markets

Ah, bonds—a once-forgotten stepchild now strutting back into the limelight. With real yields higher than anything we’ve seen in recent memory, fixed income is now starting to get a second look from the “cool kids” table in finance.

  • Yield Curve: The 10-year Treasury yield is around 4.6%, and the Fed, while having paused its rate cuts, is still making not-so-subtle hints about easing. The dot plot calls for a gentle decline in rates with a long-run estimate of short rates falling to 3.0%.

  • Credit Conditions: Credit spreads, or the difference in yield a corporate borrower pays to borrow compared to the US government, remain historically low. These low spreads are a sign that the market does not see strains in corporate credit quality or risk of a recession:
    • Investment Grade: 80 bps (19.7th percentile historically).
    • High Yield: 282 bps (21.9th percentile)
    • Defaults? Practically on a spa holiday, sitting “well below” historical averages.

  • Credit Conditions: Credit spreads, or the difference in yield a corporate borrower pays to borrow compared to the US government, remain historically low. These low spreads are a sign that the market does not see strains in corporate credit quality or risk of a recession:
    • Investment Grade: 80 bps (19.7th percentile historically).
    • High Yield: 282 bps (21.9th percentile)
    • Defaults? Practically on a spa holiday, sitting “well below” historical averages.

Market Outlook & Investment Implications

In a nutshell, We have a poster-child bull market in the US, with extra sprinkles of valuation risk and a discount bonanza abroad. Meanwhile, the fixed-income markets show expected returns that could give the asset class its first real moment in years.

Top of Mind Risks:

  • Valuation Hangover: US equities are priced for a party that may or may not go till dawn.
  • Market Over-Reliance: With top heavyweights disproportionately driving returns, any big stumble could jolt sentiment.
  • Earnings Surprises: Analysts are collectively whistling “Don’t Worry, Be Happy”; any sour note could cause a market shuffle.
  • Geopolitical Wrinkles: Because the world loves a good plot twist, be it trade disputes or diplomatic entanglements.
  • Shifts in Monetary Policy: The Fed might have an itchy trigger finger—whether on rate cuts or more policy maneuvering.

Portfolio Positioning:

  • Rebalance: If US equities have ballooned into an unwieldy portion of your portfolio, trimming is wise.
  • Bonds Are Back: Higher yields mean more substantial forward return potential. It’s a novel concept, but yes, bonds can be interesting again.
  • International Opportunities: Even if global equities haven’t been the life of the party lately, their discount may offer a compelling entry point.
  • Quality Focus: Late-cycle dynamics reward companies that can navigate choppy waters—i.e., strong balance sheets and stable cash flows.
  • Dollar-Cost Average: Given lofty valuations, it’s prudent to dip toes gradually rather than cannonball in.

In times like these, diversification isn’t a luxury—it’s the main dish on a market buffet that could soon see more volatility. Don’t forget: the best time to prepare for unexpected storms is when the skies are still blue. And if there’s one thing we’ve learned about markets, it’s that sunny days are often followed by quick—and occasionally entertaining—thunderclaps.

Stay diversified, stay curious, and keep a bottle of confetti leftover from 2024 on standby. You never know when the next party (or pivot) might begin.

 

Oct 10
Love0

State of the Economy as Seen Through the Bond Market

By State of the Economy - 3Q 2024

My experience as a bond trader and fixed-income portfolio manager during the Asian currency crisis, the Worldcom and Enron bankruptcies, as well as the Great Recession has given me a unique perspective on risk. As we enter the final three months of the year, the “Bond Guy” in me thought that it would be helpful to take stock of what is happening in the bond market, as it often picks up on changes in the economy that other sectors of the financial markets are slow to recognize. 

Bond investors focus on the risk of recession and inflation, as these risks can reduce or sometimes eliminate the expected returns from bonds.  Looking at how investors value sectors in the bond market and how the bond market is pricing certain risks can give us a good idea of how bond investors view the risk of a recession or a rise in inflation. Three particularly helpful indicators are: corporate bond spreads, the 2-10 year spread, and the 10-year breakeven inflation spread. These indicators can be found on the St Louis Federal Reserve’s economic data website: https://fred.stlouisfed.org/. 

To gain insight into how the bond market sees the risk of a recession as well as the health of the balance sheets of corporations, my favorite indicator to look at is the BBB corporate bond spread as shown by the ICE BofA BBB US Corporate Index Option-Adjusted Spread.   It shows us how much extra-yield bond investors demand when investing in a BBB-rated bond issued by a US corporation instead of a US government bond, which has virtually zero risk of default.

The chart above shows bond investors require 1.15% of the extra yield relative to a US Treasury note.  Over the last 20 years, the additional yield required by bond investors to invest in BBB-rated securities has averaged 2.0%.  The lowest amount of extra interest bond investors have required is 1.07%. When the market requires a low level of extra yield, it is a sign that bond investors see a lower-than-average risk of corporate defaults and, by extension, a lower risk of recession over the near term.  The highest spread we have seen was in December of 2008 during the financial crisis when it hit 7.98%. The downward trend in the spread over the last year indicates that bond investors see corporate balance sheets and the economy as strong.

On the risk of inflation, the bond market can tell us how bond investors view the risk of future inflation.  One indicator that can help us see how the market views inflation is the 10-tear breakeven inflation rate. It takes the yield on a 10-year US Treasury note and compares it to the yield on a 10-year US Inflation-protected note.  The difference in yields is the implied inflation rate bond investors expect over the next 10 years.   The chart below shows that the current 10-year breakeven inflation rate is 2.21%.  Over the last 20 years, the average has been 2.09%, and the median is 2.19%.  The highest this number has been is 2.94% in March of 2022, which coincides with inflation hitting its highest level after the pandemic, and the lowest level was 0.11% in December of 2008, the height of the financial crisis.  So, the 10-year breakeven inflation rate shows that bond investors are not worried about inflation over the coming years.

Finally, one indicator that has become very popular over the last few years is the 2-10 yield spread.  The 2-10 spread, or the difference between the 2-year and 10-year Treasury yields, is a common indicator of the yield curve’s steepness. A negative 2-10 yield spread, or “inverted yield curve,” has historically indicated an impending recession. A yield curve is considered inverted when long-term interest rates fall below short-term rates.  An inverted yield curve leading to a slowing economy makes intuitive sense, as many consumer loan rates, such as credit card and car loans, are tied to short-term interest rates.  If short-term rates are high, consumers and businesses will slow their spending due to the high cost of financing. The 2-10 yield spread turned negative in July of 2022 in reaction to the Fed raising short-term interest rates. At the time, many market observers pointed to the inverted yield curve as a sign that the economy was heading into a recession. The 2-10 yield spread stayed negative until August of this year, when the spread finally turned positive, as the yield on the two-year treasury fell in anticipation of the Federal Reserve lowering short-term interest rates at its meeting at the end of September.

As we see from the chart above, the yield curve becoming inverted two years ago has not led to a recession.  Has the indicator lost its value? One reason the inverted yield curve did not cause a recession may be that most borrowers took advantage of the low interest rates in 2021 to reduce their exposure to short-term interest rates.  Consumers refinanced mortgages and used the extra cash flow to pay down credit card and auto loan debt.   In April, a New York Times article said that 70% of all mortgage holders had rates more than three percentage points below what the market would offer them if they tried to take out a new loan.   So, the subsequent rise in short-term rates did not affect the economy as much as it would have in the past. The spread turning positive in early September indicates that the bond market expects the Fed to reduce short-term interest rates over time in reaction to the inflation rate, which is now closer to the Fed’s long-term target. 

In summary, the bond market can give us insights as to how investors view the risk of a recession as well as the risk of inflation.  It’s signaling that bond investors are not overly concerned with a recession or inflation.  It seems that the equity markets would agree, as the S&P 500 recently hit an all-time high.  These indicators can and do change, so it is important to keep an eye out for changes in the bond market that can alert us to changes in the economy.

Sep 12
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Smart Ways To Work On Yourself—and Live Your Best Life

By Health and Wellness

Key Takeaways: 

  • Bring your end goal back to the present day and envision yourself doing the necessary work in the moment to ensure your vision actually comes into being. 
  • Set your intentions for tomorrow before you go to bed tonight.  
  • Expressing gratitude each day can potentially evolve your thinking in important ways. 

“Your level of success will rarely exceed your level of personal development, because success is something you attract by the person you become.” 

That famous quote, by renowned entrepreneur and motivational speaker Jim Rohn, perfectly encapsulates a simple fact of life for many highly successful and highly happy people: The work we put into ourselves—at work and throughout most areas of our lives—empowers us to evolve, move forward and reach higher levels of success as each of us defines it.  

Chances are, you’ve come across that quote—and you may well agree with it. And yet, how often do we sacrifice our personal development in favor of working one more hour or one more weekend, or of “vegging out” in front of the TV, or of any number of habits that don’t help us grow as individuals (or as business owners or bosses or spouses or parents)? 

It’s no wonder many people aren’t terribly satisfied with where they’re at in life. Consider, for example, that when asked to rate their general satisfaction with life on a scale from 0 to 10, people on average registered it at just 6.7. One likely—and big—reason: We keep ignoring that crucial personal component that helps drive great results in areas that can make all the difference. 

The good news: Taking steps to develop yourself personally is not as challenging or painful as you might think—not even close! One of the best approaches to personal development that we’ve encountered comes from Hal Elrod—author of the bestselling book The Miracle Morning. Elrod researched the most effective, proven personal development practices used by top entrepreneurs. They included techniques such as meditation and visualization—strategies that were so well known and obvious that Elrod nearly dismissed them due to their familiarity. 

The upshot: Don’t write off the tried and true in favor of new and flashy development ideas that capture the latest headlines. According to Elrod himself: “We all want the latest and greatest thinking or the newest app to solve our problems, but I ultimately had to admit that these fundamental, well-established ideas were what the most successful people out there swear by.” 

Six steps to personal development 

Most of us benefit when we can take organized, systematic action steps toward a goal. Elrod decided the best route to success was not to try one or two of these strategies, but to commit to all of them. To that end, he created his Life S.A.V.E.R.S. system—a model that frames six key components of development in digestible pieces that can help you get, and stay, on track:

  1. Silence. This can include meditation, prayer or both—any method to quiet the mind and regain calmness and focus. 
  2. Visualization. Simply visualizing your ideal outcome can trick your brain into thinking you’re already there—and reduce your drive to do the actual work needed to achieve it. The key, says Elrod, is to bring your end goal back to the present day and envision yourself doing the necessary work in the moment to ensure that your long-term vision actually comes into being. 
  3. Exercise. Increasing the amount of blood and oxygen going to your brain boosts your cognitive function as well as your mental and emotional capacity, so that you can have the clarity needed to, as Elrod puts it, “crush every single day.”
  4. Reading. Elrod emphasizes the importance of self-help books and articles to stay focused on continually improving yourself. Consistency is the key here. Often we stop reading when things are going well. But if you read just ten pages per day, which might take 15 minutes, you can get through approximately 18 200-page self-help/personal improvement books in a year. Think of what all that insight could mean for your development.
  5. Scribing. Keeping a journal can also boost your personal growth, especially if you keep a daily gratitude journal in which you write down three things within the previous 24 hours for which you are grateful. The key with gratitude is to be thankful for something specific from your day—even if it is something very small. The power comes from the act of expressing gratitude—not from the magnitude of the thing you’re thankful for.  

    The early bird 

    That said, Elrod has a big caveat about these practices: “You have to prioritize your own development, or you’ll find ways to ignore it.” 

    Indeed, how many times do we put aside important personal and health-related matters so we can hit the office early—and then never end up going for that run or reading that book? “How you start your day isn’t just one strategy that you could or could not do. It’s literally the linchpin to your success and to reaching the next level,” says Elrod. 

    To combat that counterproductive procrastination, Elrod strongly encourages people to wake up early and dive right into their routine: 

    “These strategies will give you the edge to do superior work throughout your day, so waiting to fit them into your day doesn’t really make sense. Meditation is proven to help you focus better. Exercise brings oxygen to the brain and helps you be a better thinker. If you do these things later on in your day, you won’t harness the benefits when you need to make important decisions.” 

    Can’t fathom the thought of waking up earlier than you already do? Elrod offers the following tips—so easy a child could follow them, he says—to get up and go: 

    1.  Set your intentions before you go to bed. Our first thought in the morning is almost always the same as the last thought we had before falling asleep. So it’s when you go to bed that you get to determine how good or bad you will feel when you wake up. 
    2. Put your alarm clock across the room. If you have to get out of bed and walk across the room to shut off your alarm, you’re instantly three to four times more awake than if you shut it off from the comfort of your bed. This is another example of how something really obvious can be extremely powerful. “A CEO recently told a group of people at a conference that the most important thing he learned from me is to move his alarm clock far from the bed,” laughs Elrod.
    3. Start your day with a full glass of water. After five to eight hours of sleep, our bodies are dehydrated. Yet most of us reach for a cup of coffee right away, which only further dehydrates us. Instead, make sure there’s a full glass of water on your bathroom counter each morning, and drink it all as soon as you wake up. This primes your body to take action. 

    You can take these actions while you’re half asleep. By the time you’re done, you’ll find that you’re fully awake and ready to make great things happen. 

    Conclusion 

    Ultimately, the time we spend on ourselves may have a big impact on our ability to pursue what we most want from life and achieve the great things we aspire to. But the right intention and focus are crucial, of course. Make the time you focus on yourself a true investment—one that can generate real returns—by taking steps that will help you improve in meaningful ways and truly live your own best life. Or, to once again quote Jim Rohn: “It takes a person of character and discipline to be successful for a long time.” 

     

     

     

     

     

     

     

    If you have any questions, please don’t hesitate to contact me, Tony Baruffi, at Baruffi Private Wealth. You can reach me at 425-472-3050 or via email at tonybaruffi@baruffipw.com.

    Based in Bellevue, Washington, Baruffi Private Wealth is a boutique wealth management firm offering personalized services as a Virtual Family Office. We cater to clients throughout Seattle, Bellevue, Kirkland, Sammamish, and the surrounding areas, and also extend our services to the Portland and Bend regions in Oregon.

     

    VFO Inner Circle Special Report 

    By John J. Bowen Jr. 

    © Copyright 2024 by AES Nation, LLC. All rights reserved. 

    No part of this publication may be reproduced or retransmitted in any form or by any means, including but not limited to electronic, mechanical, photocopying, recording or any information storage retrieval system, without the prior written permission of the publisher. Unauthorized copying may subject violators to criminal penalties as well as liabilities for substantial monetary damages up to $100,000 per infringement, costs and attorneys’ fees.  

    This publication should not be utilized as a substitute for professional advice in specific situations. If legal, medical, accounting, financial, consulting, coaching or other professional advice is required, the services of the appropriate professional should be sought. Neither the author nor the publisher may be held liable in any way for any interpretation or use of the information in this publication. 

    The author will make recommendations for solutions for you to explore that are not his own. Any recommendation is always based on the author’s research and experience. 

    The information contained herein is accurate to the best of the publisher’s and author’s knowledge; however, the publisher and author can accept no responsibility for the accuracy or completeness of such information or for loss or damage caused by any use thereof. 

     

     

     

     

     

     

     

    Aug 12
    Love0

    Foiling the Financial Fraudsters

    By Cyber Security, Insights

    Key Takeaways

    • Financial criminals have their sights set on the affluent.
    • Their methods include email phishing, fraudulent investments, tax scams and beyond.
    • Some of the best moves you can make to shut them down involve simple changes to your behavior. 

    When it comes to financial scams, it’s easy to assume that the only victims are the ones we hear about so often in the media—the “little old ladies” who are tricked by nefarious call center workers in distant lands urging them to send what little money they have.  

    But the fact is, financial fraudsters are working overtime to target those of us with significant assets. Even worse: They’re having far more success at parting us from our wealth than you might imagine.

    The upshot: Just because you’re “good with money” or careful in who you deal with when it comes to finances doesn’t mean you won’t be pursued by financial scammers—nor does it guarantee you’ll avoid their traps.  

    With that in mind, consider some of the key ways you may be targeted—and what you can do to avoid these scams, as well as how to best respond if you eventually get scammed. 

    You’re a target 

    It should hardly be surprising that the affluent represent a target-rich environment for financial crooks. After all (to borrow a quote from famed bank robber Willie Sutton), “that’s where the money is.” Consider just how focused these criminals may be on you and your wealth: 

    • Cybercriminals stole the identities of 6.4% of the public overall but 8.1% of individuals with $1 million or more, according to Javelin Research.  
    • The affluent are 43% more likely to experience identity theft, according to research done by Experian and the Department of Justice. 
    • More than a quarter of ultra-high-net-worth families, family offices and family businesses (with an average wealth of $1.1 billion) have been the target of a cyberattack, according to Campden Research. 
    • In the past several years, numerous high-profile examples of fraud and alleged fraud targeting the affluent have come to light (such as Anna Sorokin, Sam Bankman-Fried, Billy McFarland and Elizabeth Holmes). 

    Additionally, you may be more susceptible to their efforts than you realize or care to admit. One of our biggest biases is overconfidence in our abilities. People who are high achievers in one area can have a tendency to overestimate their skill level in a different area. That can lead to, for example, assuming that because you manage a successful business or division, you are equally adept at identifying great investments or top professionals to manage your investing. Consider the many rich and respected individuals who famously fell for Bernie Madoff’s Ponzi scheme. 

    Ultimately, being smart or wealthy doesn’t necessarily make you an expert at spotting scams or shielding yourself from them. One study of British high-net-worth investors found that those whose net worth was more than £3 million were twice as likely to report being a fraud victim as were those with a net worth of £250,000-£500,000. 

    Be on guard 

    The good news is that you can take steps to better protect yourself from financial scams and fraud. A good first step is to get a handle on the many ways the crooks are trying to get at you and your money—and the damage those efforts may cause. 

    In broad terms, many scams typically start with the fraudster’s pitch to you, which is designed to evoke strong emotions such as fear or greed. The criminal then uses various persuasion tactics to get you to take action—for example, by making you feel obligated to follow through on a commitment you made, or making you feel rushed to act because of the scarcity of the “opportunity.” Alternatively, thieves using technology might literally steal your information without your ever having a single known interaction with them.  

    More specifically, the actual methods used—both high-tech and low-tech—include the following (with the caveat that financial fraudsters seem to be continually adapting and tweaking their strategies): 

    1. Phishing and ransomware attacks 

    These may be the two categories with which you’re most familiar. A type of online scam, phishing occurs when scammers impersonate a legitimate company using legitimate-looking emails or texts. You, acting under the assumption that the communication and the links in it are trustworthy, inadvertently share sensitive data with the crooks. Ransomware is a type of malicious software that encrypts your files in a way that makes them inaccessible to you, then demands a ransom for the “key” to get them back. 

    Ransomware has commonly targeted big businesses and large organizations, which of course have mission-critical technology and deep pockets. That said, small businesses are now the targets of 82% of ransomware attacks—likely because they’re seen as easier prey with less adequate security measures.  

    2. Wire transfer fraud 

    This occurs when criminals fool you into wiring money to them. Often they do so by presenting themselves (via an email or a text) as a trusted individual or organization, such as a family member, a business partner or even a charity. One well-publicized example: Real estate investor and “Shark Tank” judge Barbara Corcoran was scammed out of nearly $400,000 after criminals pretending to be Corcoran’s assistant emailed Corcoran’s bookkeeper to wire funds to pay for a nonexistent investment property.  

    3. Account takeovers 

    This is a type of identity theft in which scammers get unauthorized access to an online account—for example, by setting up a legit-sounding public Wi-Fi network and using it to capture usernames, passwords and payment information.  

    4. Card-not-present fraud 

    Using stolen credit card data to buy items online (or by phone or mail) has become increasingly common, along with the rise in both online shopping and working remotely.  

    5. Tax scams 

    There are numerous tax-related scams that leave taxpayers owing excessive amounts of money. One scam that directly targets people with a high net worth involves getting excessively high valuations for their art in order to get bigger income tax deductions.  

    Avoid getting scammed 

    Armed with insights into how scammers might come at you and your wealth, you can start taking steps to avoid them or shut them down when they try to strike. Some ideas to consider: 

    1. Check your “basics.”  

    Secure your home network, use strong passwords and multifactor identification, and install anti-malware and other internet-security programs. Such plain-vanilla safeguards should form the foundation of your efforts.  

    2. Slow down and use caution. 

    Many financial criminals demand that potential victims act quickly, creating a false sense of urgency to their pitch. That means one key move is to resist the urge to take immediate action, giving you time to dig deeper. Communicate this expectation to your financial professionals, too—advisors, insurance specialists, bookkeepers and so on. Tell them to double-check any financial transaction requests—especially ones marked urgent—with you directly (by calling you to confirm, for example).  

    3. Verify requests independently. 

    Say you get an unsolicited email (or text or call) from your financial institution, the IRS, tech support, etc. demanding that you take action immediately. Rather than click on the link provided to you, call or email the person or company directly to determine whether the communication is legitimate. If it’s a phone call, hang up and look up the callback number. 

    4. Root out impersonators. 

    Would-be online fraudsters often create fake accounts on social media that they use to gather intel they can use against you. Alert the companies if you see that someone has set up a profile claiming to be you, don’t accept friend requests until you verify them as legit, and don’t respond to requests from complete strangers.  

    5. Separate your personal life from your business life. 

    Entrepreneurs should consider using different email addresses for family communications and business communications. This can help prevent a hack in one area of your life from spilling over into the other—and help you avoid some of the scams outlined above.  

    6. Check in on your finances. 

    Review your financial statements for odd or unfamiliar transactions or any unauthorized activity. The same goes for credit reports and other statements that involve your wealth. This won’t prevent you from getting scammed—but it can help you identify possible fraud and shut it down as soon as possible.  

    7. Ask for help if you need it (or even think you might). 

    Even when people get scammed or worry they may be stepping into a fraudulent situation, they often don’t tell anyone or reach out for advice or help. They fear that admitting they’ve been duped will make them look stupid or weak—particularly if they’re known for being financially savvy or intelligent in other ways. Don’t fall into that trap: If you think you’re getting taken or are on that path, enlist the help of the authorities, trusted advisors or others to review the situation and offer potential next steps. 

    8. Consider hiring experts. 

    Fraud prevention firms catering to the affluent can build bespoke strategies designed to wall you off from financial fraud. Other services can monitor social media for scam accounts or posts that could threaten your wealth.  

    Conclusion 

    Note how many of the tactics to avoid getting scammed involve personal behaviors rather than high-end technology. Using both together can be more impactful, but it’s important to remember that keeping financial criminals at bay can depend greatly on the actions you take—and don’t take—when interacting with the world around you. 

     

    VFO Inner Circle Special Report 

    By John J. Bowen Jr. 

    © Copyright 2024 by AES Nation, LLC. All rights reserved. 

    No part of this publication may be reproduced or retransmitted in any form or by any means, including but not limited to electronic, mechanical, photocopying, recording or any information storage retrieval system, without the prior written permission of the publisher. Unauthorized copying may subject violators to criminal penalties as well as liabilities for substantial monetary damages up to $100,000 per infringement, costs and attorneys’ fees.  

    This publication should not be utilized as a substitute for professional advice in specific situations. If legal, medical, accounting, financial, consulting, coaching or other professional advice is required, the services of the appropriate professional should be sought. Neither the author nor the publisher may be held liable in any way for any interpretation or use of the information in this publication.  

    The author will make recommendations for solutions for you to explore that are not his own. Any recommendation is always based on the author’s research and experience. 

    The information contained herein is accurate to the best of the publisher’s and author’s knowledge; however, the publisher and author can accept no responsibility for the accuracy or completeness of such information or for loss or damage caused by any use thereof. 

    Aug 07
    Love0

    Update on Recent Market Volatility – 9/27/2024

    By Insights, Markets

    Equity markets have been falling over the last week as disappointing earnings from technology companies and concerns regarding slowing job growth have caused investors to sell many of the securities that have shown the most growth since the beginning of the year. The sell-off is happening despite many indicators showing that the economy continues to grow.

    Disappointing earnings from Microsoft and Amazon last week caused worries that earnings from A.I. businesses may take longer to develop. On Friday, markets fell in reaction to a weaker-than-expected jobs report, which fueled concerns that the Federal Reserve has kept interest rates too high, increasing the risk of an economic slowdown.  The markets also fell in response to a surprise move by the  Bank of Japan last week, which raised its benchmark short-term interest rate. Many investors have been borrowing money in Japan to invest in other markets, and the rise could cause investors to sell securities in the U.S. and other global markets.

    Currently, the S&P 500 is down  8.7% from its high in July, and the Nasdaq, more heavily weighted in technology companies, is down 13.4%.   The 10-year U.S. treasury note yield has fallen to 3.74%, down from its high of 4.70% in April.

    Fundamentally, while the economy has slowed in terms of job growth, other economic indicators point to a growing economy.  Personal consumption expenditures continue to grow at 2.5% above inflation, and corporate earnings are expected to grow at a relatively strong 4.70% this quarter.  Despite the sell-off, the S&P 500 is still up close to 10% year to date and up over 15% over the last 12 months.  Corporate bond spreads have also stayed relatively steady, indicating that a recession is not a near-term risk.

    The market now places a 95% probability that the Fed will lower short-term rates to less than 4.50%, a reduction of over 1.00% from the current 5.5% target.  Reducing short-term rates will help consumers and the housing market by making borrowing money less expensive.

    Overall, while the fall in equity prices has happened relatively quickly, it is in line with historical downturns.  Long-term investors who rebalance their portfolios regularly and stick to their investment plan can benefit from this downturn.