Financial Blog Corliss Group Cybercrime Could Cost Global Economy Over $500 Billion

McAfee report paints grim picture of lucrative industry, despite incomplete data.

Cybercrime could be costing the global economy as much as $575 billion annually, according to a new report from McAfee.

The Intel-owned security company based its estimate on a range of sources, from government agencies to NGOs and academic institutions, counting both direct and indirect costs.

The report, Estimating the Global Cost of Cybercrime explained the methodology as follows:

“This study assumes that the cost of cybercrime is a constant share of national income, adjusted for levels of development. We calculated the likely global cost by looking at publically available data from individual countries, buttressed by interviews with government officials and experts. We looked for confirming evidence for these numbers by looking at data on IP theft, fraud, or recovery costs. In addition to a mass of anecdotes, we ultimately found aggregate data for 51 countries in all regions of the world who account for 80% of global income. We used this data to estimate the global cost, adjusting for differences among regions.”

However, the vendor cautioned that “differences in the thoroughness of national accounting”, as well as underreporting of incidents and the difficulty of valuing IP all make calculations an imprecise art.

High income countries lost more as a percentage of GDP, which could be because they have better accounting systems in place and/or that their IP is more valuable and therefore a bigger target for criminals.

The $575bn figure therefore comes from extrapolating a global total from high loss countries. It could be as low as $375bn if McAfee had extrapolated from “all countries where we could find open source data”.

On the other hand, the figure would be $445bn if the firm aggregated costs as a share of regional incomes, it said.

Whatever the final figure, it’s clear that richer countries in Europe, North America and Asia lost the most, because they are bigger targets and provide a better return on investment for the hacker. For example, G20 countries are said to have lost $200bn to cybercrime.

The UK, at 0.16%, had one of the lowest losses to cybercrime as a percentage of GDP, while the US (0.64%), came just ahead of China (0.63%) but trailed the most affected G20 nation: Germany (1.6%).

McAfee warned that as more businesses and consumers move online and more devices connect to the internet of things, cybercrime will continue to grow. IP theft, a “tax on innovation” will also increase as those countries which acquire it become more adept at building a competitive advantage.

Aside from calling for improvements to technology and defences, the report urged governments to work harder on creating best practice cybersecurity standards and cross-border law enforcement agreements.

It added that they must do a better job on accounting for cybercrime losses to provide a more comprehensive picture on where deficiencies lie.

For the record, McAfee's report last year estimated cybercrime losses of $100-500bn annually.

Global Economy to Grow Less Than Expected by Financial Blog Corliss Group

By Maria Gallucci - Global economic growth is expected to dip this year, following the fiercely cold winter that plagued the United States and turbulence in Ukraine and the world’s financial markets.

The World Bank on Tuesday said it reduced its global growth forecast to 2.8 percent this year, down from a January projection of 3.2 percent, Bloomberg News reported.

The U.S. forecast was cut to 2.1 percent from 2.8 percent, and outlooks for Brazil, Russia, India and China also fell -- a sign that emerging economies aren’t moving fast enough or investing sufficiently in domestic structural reforms, which are needed to accelerate economic expansion, according to the Washington-based institution. It recommended smaller budget deficits, higher interest rates and productivity-boosting measures to stave off future financial unrest, Bloomberg said.

The growth setbacks, however, might be short-lived. The 2015 projection for global economic growth held steady at 3.4 percent, Bloomberg noted, and growth is expected to regain speed this year despite earlier weaknesses, the World Bank said in its Global Economic Prospects report.

"The financial health of economies has improved. ... But we are not totally out of the woods yet," Kaushik Basu, the lender's chief economist, said. "A gradual tightening of fiscal policy and structural reforms are desirable to restore fiscal space depleted by the 2008 financial crisis. In brief, now is the time to prepare for the next crisis."

Financial Blog Corliss Group Economic growth to accelerate around the world

The World Bank's most recent Global Economic Prospects (GEP) report, released this week, says a global economic recovery is underway, underpinned by strengthening output and demand in high-income countries.

Global GDP growth in 2014 will be 2.8 percent and it is expected to rise to about 4.2 percent by 2016, according to the report, which the World Bank publishes twice a year.

Average GDP growth in developing countries has reached 4.8 percent in 2014, faster than in high-income countries but slower than in the boom period before the global financial and economic crisis of 2008.

Demand side stimulus or supply side reforms?

The global economic slowdown that struck in 2008 was caused by a financial crisis that resulted in large part from the bursting of an enormous, fraud-ridden mortgage lending bubble in the US.

The crisis led to varying responses in different countries. The GEP report's authors said that in general, developing countries privileged demand stimulus policies over structural reforms during the past several years.

For example, in 2008 to 2009, China implemented a four trillion-renminbi ($586 billion) stimulus program as a direct response to the slowdown in global trade caused by the global financial crisis.

Critics pointed to over-investment in China as a risk to continued fast growth. The country is now struggling to contain a real estate bubble of its own.

The World Bank wants China and other emerging countries to refocus on structural reforms.

"A gradual tightening of fiscal policy and structural reforms are desirable to restore fiscal space depleted by the 2008 financial crisis," the bank's chief economist, Kaushik Basu, has said. "In brief, now is the time to prepare for the next crisis."

The World Bank's mantra: Fiscal discipline and structural reforms

Yet the World Bank is well known for nearly always prescribing fiscal "tightening" - or cutbacks to government expenditures - and "structural reforms."

What is the rationale for public expenditure cutbacks? And what does the World Bank mean by "structural reforms?"

The World Bank consistently urges policymakers to prevent annual deficits from growing faster than the rate of GDP growth. Rising debt-to-GDP ratios mean that an increasing share of the public budget is devoted to servicing debt, leaving proportionately less money available to pay for government-provided infrastructure and services.

However, sometimes countries fall into recession when households, in aggregate, attempt to pay back previously incurred debt faster than they take up new debt. In the jargon of economists, this is called "deleveraging."

Financial Blog Corliss Group Lenders Fear Spread of Chinese Commodities Fraud Case

Large banks and trading firms are frantically trying to determine whether they have fallen victim to a suspected commodities fraud emanating from the giant Qingdao Port in northeast China.

Citigroup and several other large Western banks are concerned that their loans may lack the appropriate collateral, big stockpiles of copper and aluminum at the port. The banks have inspectors on the ground who are trying to assess whether enough of the metals are there.

The worry stems from suspicions that a Chinese company pledged the same collateral for multiple loans. Chinese authorities are investigating the matter.

The case could have broad repercussions for the commodities market and the Chinese economy. Banks have funneled billions of dollars into the Chinese economy through these murky transactions, and commodities prices have been falling over concerns that such lending will dry up.

Western banks, including Citigroup, are bracing for any potential fallout.

Just months ago, Citigroup fell victim to a multimillion-dollar fraud in Mexico. If the Qingdao developments harm the bank, regulators and shareholders are likely to press it to explain why its controls had failed again.

Chinese companies are at risk, too.

Citic Resources, part of the state-controlled conglomerate Citic Group, plunged nearly 10 percent on Tuesday after it disclosed that it might be affected by an investigation into stockpiles of metals held at the port. Citic Resources said on Monday that it had asked the local Chinese courts to secure its metals stockpiles. The shares recovered on Wednesday.

The potential fraud is linked to an opaque corner of China’s financial system that has grown substantially in recent years, bringing huge amounts of capital into the country. Many Chinese companies and investors, struggling to secure traditional loans from the state-dominated banking sector, have instead turned to alternative, unregulated financing methods involving imports of materials like copper, aluminum and iron ore.

These commodities financing deals are part of a growing number of nontraditional lending activities that have pushed credit in China to levels that are raising fears among investors and analysts. Jonathan Cornish, the head of North Asia bank ratings at Fitch Ratings, estimates that total outstanding credit in China rose to more than 220 percent of gross domestic product last year, up from 130 percent in 2008.

A typical commodities financing deal works like this: Copper is imported using letters of credit, warehoused in duty-free zones and pledged as collateral for cheap bank loans. The loan proceeds are used by the importer to speculate in higher-yielding, short-term investments. The importer then either sells the commodity or the investment product after a few months when the original letter of credit falls due.

The problem in Qingdao appears to revolve around one such importer. Last Friday, Qingdao Port International, the biggest port operator in the Chinese city, announced that the authorities had begun investigating a suspected fraud related to the aluminum and copper stored in its warehouses. A day earlier, a report in The 21st Century Business Herald, a respected Chinese-language newspaper, identified the company under investigation as Qingdao Decheng Mining.

The report said Qingdao Decheng was suspected by the authorities of having pledged the same stocks of the metals — about 100,000 tons of aluminum and 2,000 to 3,000 tons of copper — as collateral for multiple loans, amassing bank debt exceeding 1 billion renminbi, or $160 million. Phone calls and emails to Qingdao Decheng’s parent company, Dezheng Resources, went unanswered on Wednesday.

Financial Blog Corliss Group: 3 Financial Tips for Engaged Couples

Planning a wedding comes with excitement -- not to mention arguments and compromise. Many couples spend a lot of time securing the right caterer, venue, and honeymoon location. But merging two people's finances is no small feat, either, and it's even more important to plan how they will handle money together after the honeymoon is over.

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By implementing these three financial tips, you'll keep the marital arguments to a minimum and the newlywed bliss alive and well.

1. Honestly discuss your financial pasts

The goal of this discussion is to truthfully disclose everything. Tell your significant other about your income, assets, and all of your debts. This is the time to air your financial secrets; it shouldn't be a lecture about whose money management methods are better.

Use these conversations to listen without judgment and learn more about your spouse-to-be. No decisions have to be made about how to handle any of these issues. First, it's most important to disclose your past, understand your partner's, and open up the lines of communication.

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2. Talk about what type of person you are when it comes to money

It's likely that one person is a spender, the other a saver. These "permitter" and "restrictor" archetypes will appear hundreds, maybe thousands, of times over the course of your marriage. But for a much more harmonious union, both partners will have to compromise when it comes to money matters. Through that compromise you'll be able to develop a game plan for how much to save, how much to spend, and how much to contribute toward goals like traveling, buying a home, and securing your retirements.

3. Craft your road map

Talk about your financial goals. Discuss how you'll construct, manage, and monitor your household budget. Determine whether you want to commingle your assets and incomes or keep them separate. Many couples choose to keep individual accounts and create one joint account for shared household expenses like rent, utilities, and groceries. Other couples commingle all of their income and have separate "fun money" accounts where they receive a certain monthly "allowance" -- say, $100 per month, to save or spend however they'd like.

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Consider a prenuptial agreement, especially if one partner comes to the marriage with significant assets or debts. Even though this can be an awkward discussion to have with your betrothed, a mutually agreed-upon plan will quash any misunderstandings or nasty situations later on. Draft the agreement, sign it, put it away, and hope you never need to use it.

Congratulations are in order

Having these conversations before you walk down the aisle will make life much easier once you're married. So carve out the time to focus on your finances now. It certainly isn't as exciting as planning your honeymoon, but your marriage will be much better off for it.

Your credit card may soon be completely worthless

The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days.

By Nicole Seghetti

This article is from The Motley Fool

Financial Blog Corliss Group: 20 essential pre-flight checks for investors

The simple checklists used by pilots and doctors every day have saved countless lives. Use these investment checklists to avoid losing money.

On October 30 1935 an early test flight of America's first four-engine bomber, the Boeing B-17, ended in disaster when it nose-dived into the ground just after takeoff.

Overwhelmed by the number of different tasks involved in flying what was one of the most complex aircraft of its time, the crew simply forgot to check that a lock on the controls had been disengaged. 

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The crash led to the development of the pre-flight checklist, which pilots around the world now use routinely to ensure that the plane is ready to fly in every respect before takeoff.

An American surgeon, Atul Gawande, realised that his profession also made mistakes by forgetting key tasks – mistakes that could be avoided by the use of checklists. The introduction of these simple but vital to-do lists has saved countless lives in aviation, medicine and many other fields.

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When it comes to investing, checklists could save you a lot of money.

"If checklists designed to focus on the most vital areas and cut out unnecessary distractions can help people stay alive, then they can surely be applied to the financial markets," said Russ Mould of AJ Bell, the investment shop.

Mr Mould has come up with two checklists – one of warning signs, the other of positive aspects of a potential investment.

First, check whether a company has any of these 10 attributes, Mr Mould said. Any should give investors cause for concern.

1. Is there a dominant chief executive or shareholder?

2. Have there been frequent or transformational acquisitions?

3. If there is a focus on growth, what exactly is the company trying to grow? Focusing on growth in "earnings per share" or EPS is a particularly worrying sign, Mr Mould said.

4. Are there management bonuses that are triggered easily (usually via a level of EPS)?

5. Do the accounts regularly feature "exceptionals" and unintelligible footnotes?

6. Is the profit figure significantly bigger than the amount of cash generated?

7. Is interest cover – the ratio of profits to debt interest – less than 2?

8. Is dividend cover (profits divided by dividends) less than 2?

9. Does the company have a "mix of high operational and financial gearing"? Operational gearing means profits heavily depend on a particular level of sales, while financial gearing is simply having a lot of debt.

10. Do returns on capital consistently fail to exceed the cost of capital?

Now, here are 10 aspects of a company that could make it worth considering.

1. Is there "share price momentum"? A steadily rising price can indicate that investors are gradually waking up to a company's strength.

2. Do the shares trade at a discount relative to the company's peers and the market?

3. Is the company's market share on a rising trend?

4. Is there a record of rising profits and dividends?

5. Have the company's directors been buying shares?

6. Is the consensus among stockbrokers' analysts a "buy" rating? Try to focus on research that is certified as "independent".

7. Are profit forecasts rising steadily?

8. Is interest cover sufficient?

9. Are there any activist investors or hedge funds on the shareholder register? This could indicate that the company is about to be shaken up, potentially freeing it from poor management or a record of operational mistakes.

10. Is there a good standard of corporate governance? The chairman and chief executive should be separate and there should be strong non-executive directors.

By Richard Evans

This article is from The Telegraph

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Financial Blog Corliss Group - Here’s a tip: rubbish can be a dirty word

Call him Matt Black, which is not his real name. He looks like a clean-cut junior executive, but he has a dirty little secret.

These days Black is a regular lilywhite. He’s a husband and father and hides behind a glossy front: clean finger nails, Hollywood teeth, $40 haircut, mauve business shirts with matching ties.

It’s rumoured he has a Golden Retriever (not actual dog breed), test-drives Volvo station wagons on Sundays and is saving to send his pair of short Blacks (Jett and Koko) to the private school he went to himself.

But he wasn’t always such a cleanskin. He has hinted he used to “work in recycling management” but it’s odds-on his partner Ebony has no idea what that really means.

The truth is that the young Black was a teenage “tip rat” and lived with other tearaways who furnished their grubby share house with stuff hoisted from the Reservoir tip … including the fridge. Worse, they defrauded honest ratepayers by “recycling” goods straight into the boot and selling them for cash on the black market.

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These scavengers justified the tip-skimming rort by claiming it paid for their education. In fact, they spent most of it on beer, bourbon and home-delivered pizza. “The rest we just wasted,” Black admits.

He eventually got out and went legit. Black is now just a media middle-management type with a shady past he hopes won’t come back to spoil a shiny future. But his story is disturbingly common: Many outwardly normal men are powerfully tempted to collect other people’s cast-offs.

“Even now,” Black confesses shamefacedly, “sometimes I bring home more than I take to the tip.”

At least he regrets a misspent youth as a junk junkie. Some never kick the habit and are drawn steadily deeper into the garbage caper’s rotten core. And clean-living folks are fascinated by dirty work on the dark side. Art imitates life — it’s no coincidence that everyone in Tony Soprano’s family claims he is in the “waste disposal business”.

Like abattoirs, knackeries and motor wreckers, bins can hide a multitude of sins. And tips are literally the pits — huge open cuts, filled to overflowing with the refuse of a throwaway society.

This separately brings us to the smell hanging over Bulla, right on Melbourne’s doorstep on the road past the airport.

Locals are kicking up a stink because the tip has one. A group of residents has got together to tackle the effects of what they see as a blight on the neighbourhood.

What was once a huge quarry is now filled to the brim with garbage — which legally includes asbestos, let alone any other noxious substances that might have been dumped there in the past.

Anyone who drives through Bulla will know the spot by smell and sight.

As an angry local writes on behalf of a posse of residents: “The tip … is an eyesore passed daily by thousands of commuters travelling to the airport and city from Sunbury, Diggers Rest, Gisborne, Lancefield, Romsey, Macedon and beyond.

“Of greatest concern to motorists are the dust clouds that blow out of the asbestos dump and the litter and mud strewn across the busy road. Does the dust contain asbestos particles? Are thousands of motorists being exposed as they drive past with vents open or windows down? Who knows? Who cares? Certainly not Hume City Council.”

The anti-tip people say the tip emits “nauseating odours” and thousands of pieces of litter, exceeds its legal height and generally shows an unhealthy disregard for the “health, amenity and wellbeing” of those nearby.

Now they are outraged because the council has just granted a permit extension to extend the tip’s life by two years. Apparently the council (and the Environment Protection Authority) believes the tip owners’ assurances they can “pulverise” the garbage and jam it into a smaller space so they can fit more in.

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No one wants a tip in their backyard but some people want to own one. “Where there’s muck there’s brass,” the saying goes. As with nightclubs and massage parlours, some people see a huge potential for profit in businesses that straitlaced folk avoid.

The people who run Bulla tip are an interesting lot, especially to those who live nearby. So interesting that last year the Australian Securities and Investment Commission deregistered Bulla Tip and Quarry Pty Ltd.

Certain identities associated with the company had previously been investigated over allegations of money laundering and fraud.

The tip operation was also examined by the Senate Inquiry into Liquidators and Administrators in 2010.

The tip is now operated by Bulla Quarry Developments, which just happens to be another company with ties to the previous owner. This might not be a coincidence.

In December 2007 diners at Melbourne’s Society restaurant pretended not to overhear a testy meeting between “Mick” Gatto and his financial adviser Tom Karas and share trader Leo “The Gun” Khouri.

Khouri accused Karas of costing him “$2 million” in a deal involving the purchase of the Bulla tip. Khouri later dismissed the confrontation with Karas over the tip deal as a misunderstanding — and Karas said the deal also left him out of pocket at least $100,000.

It was just one deal of several that led authorities to investigate an official liquidator that had brought in a company to manage the tip.

One man connected with that company was described at the time as a “Sydney bikie” and had earlier been named in court as an associate of so-called Sydney “boss” Karl “The Godfather” Bonnette.

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Not everyone at Bulla is reassured by this. One of many gripes is that a fire has been burning non-stop in the tip for more than 15 years.

The Bulla CFA can’t get keys to the tip from the management and is so angry about it that firefighters recently called in special cutting gear to cut the hardened lock.

Whatever it is that goes on at the tip, someone doesn’t want outsiders wandering around in there.

The council says the Environment Protection Authority has the authority to police the site but the EPA shrugs it off, saying tips have to go somewhere. Meanwhile, the tip produces licence fees for both the council and the EPA.

Something stinks at the Bulla tip but the unspoken policy seems to be “Nothing to see here, folks, so move right along”.

As for Matt Black, I’ll be seeing him at the next meeting of Tip Scavengers Anonymous. It’s our dirty little secret.

This article is from Herald Sun News

Financial Blog Corliss Group: From Corporate Giants to Main Street, Fraud is on the Rise

Investors, analysts and corporate directors rely on external audits to keep companies honest. But a new study says audits are woefully ineffective at uncovering fraud. In fact, more than twice as many frauds are uncovered by accident.

This is a finding in the "Report to the Nations on Occupational Fraud and Abuse" study released Tuesday by the Association of Certified Fraud Examiners, which bills itself as the world's largest anti-fraud organization.

"You can't put the onus on somebody else to keep your place clean," said ACFE faculty member Evy Poumpouras, a former U.S. Secret Service agent. She said internal controls can be much more effective in uncovering fraud—and preventing it in the first place.

The study examined 1,483 cases of fraud as reported by the Certified Fraud Examiners who investigated them.

"The analysis of these cases provides valuable lessons about how fraud is committed, how it is detected and how organizations can reduce their vulnerability to this risk," wrote ACFE President James Ratley in the report's introduction. Read More on Twitter Page

The report estimates the typical organization loses five percent of its revenue each year to fraud. That would work out to a global impact of $3.7 trillion, the report says. But as staggering as the figure might seem, Poumpouras says she is not surprised.

"There are so many more cases that we don't know of," she said.

Nearly half of the fraud cases studied were in the United States, where anti-fraud controls tend to be the strictest. But the biggest losses were in Eastern Europe and Western and Central Asia. The median loss in those regions was $383,000, compared to $100,000 in the U.S.

Employees and middle managers committed the lion's share of fraud, with owners and senior executives accounting for just 19 percent of the cases. But perhaps unsurprisingly, the study noted that the higher-ranking the fraudster was, the greater the losses.

Regardless, financial fraud is particularly difficult to uncover, Poumpouras said, because the perpetrators have less of an emotional connection to what they are doing than they do for other types of crime.

"Usually you are not touching money. You're fudging documents. It feels less real," said Poumpouras, who has been involved in many financial fraud investigations.

"Getting people to confess to financial crime is more difficult than getting them to confess to murder," she said, which may help explain why audits can be so ineffective.

The study says auditors detected just 3 percent of the fraud cases reported last year, compared to 7 percent uncovered by accident.

"While independent audits serve a vital role in organizational governance," the report says, "our data indicates that they should not be relied upon as organizations' primary anti-fraud mechanism."

Instead, the study recommends what it calls "proactive detection measures" including internal hotlines that allow employees to report fraud anonymously and keep their co-workers honest.

"Most employees don't want to rat on someone," Poumpouras said. "They want to do it anonymously."

The study appears to bear that out.

"Organizations with hotlines were much more likely to catch fraud by a tip, which our data shows is the most effective way to detect fraud," the study says. More than 42 percent of the cases in the report came to light as the result of a tip. More Articles from Corliss Group

Yet only about half the organizations surveyed had a system for collecting tips, and fewer than 11 percent offered rewards to whistleblowers.

The study found small businesses were particularly vulnerable to fraud, yet they are least likely to protect themselves, often because don't perceive themselves to be at risk—or because they think fraud protection is too costly.

But the report says some of the most effective measures are not costly at all.

They include an anti-fraud policy that employees are required to acknowledge from time to time—"It lets them know what management is expecting," Poumpouras said.

Surprise audits and spot checks by management—rather than by an external auditor who might not know all the potential ways inside a company to hide fraud—can also be effective.

And training all employees to spot fraud not only creates more cops on the beat, it also puts everyone on notice.

"The more police officers you see on the street, the less likely people are to commit a crime," Poumpouras said.

BY SCOTT COHN

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Financial Blog Corliss Group| The Motley Fool: Every Sunday, Useful Tips on Investing

(The Seattle Times)

Q: What’s a leveraged buyout?

A: A leveraged buyout (LBO) is when a company is bought out by another entity (or entities), using a lot of debt.

Private-equity investors are typically involved, borrowing gobs of money without using much of their own, and often using the acquiree’s assets as collateral. (Read More on Facebook Page)

The acquired company is generally taken private (i.e., it will not trade publicly on the stock market), only to go public again after some changes have been made (such as layoffs, the selling of assets, or dividend increases or decreases).

While some LBOs are executed by members of management, others are hostile, executed by outsiders and not welcomed by their targets.

Many LBOs don’t end well for the company or its shareholders (there are substantial interest payments due, after all), though the acquirers often do well. (Read More Articles)

Q: What’s a golden parachute?

A: A golden parachute is when a company gives a hefty payout to a departing CEO or top executive.

It’s often required via a clause in the exec’s contract, and can be triggered if the company is sold or the exec is dismissed.

Many are quite generous and might even seem reasonable given the performance of the executive and the company.

But others are rather outlandish, and sometimes go to folks who haven’t done stellar jobs or been in their positions long.

A classic example is Bob Nardelli, who left Home Depot after an unimpressive six years with a reward that topped $200 million.

Golden parachutes can involve a large cash payout, a generous severance package, stock options and all kinds of perks, such as continued travel allowances, health-care coverage and more.

As you might imagine, shareholders don’t love golden parachutes.

Dear Fool: A certain stock I owned in the mid-1990s spent much of a year bouncing between $23 and $31 per share, while not paying any dividends.

My mutual-fund representative said that I should sell the stock and buy more of a mutual fund I was invested in — which he, conveniently, sold. I did, and shortly after, the stock started climbing, hitting $100 within about two years.

That advice cost me $8,000, but the guy made his 5 percent commission.

The Fool responds: Ouch. There are lots of lessons here, such as how important patience can be for investors.

If you still believed in the company’s long-term growth prospects and found it to be healthy, hanging on would have been reasonable. Even the best stocks can falter for a while.

The commission you paid is a reminder that many financial professionals have conflicts of interest and may not be serving you well.

It’s worth asking an advice giver how he’s compensated and if he will reap a commission.

Try to research investment options on your own and make your own decisions. Put your money in your best, most promising ideas.

Your parents and grandparents may have invested in General Electric (NYSE: GE), and you should consider it, too.

For starters, it offers a dividend that recently yielded 3.3 percent, and it has paid a dividend every quarter since 1899.

General Electric’s operational diversification and its ability to adapt to changing times have kept it going over many decades.

It’s a huge conglomerate, offering turbines, light bulbs, medical-imaging equipment, locomotives, home appliances, financial services, jet engines and much more.

It’s spinning off its retail-finance business and becoming more of an energy company, with oil and gas now its fourth-largest revenue generator. Its industrial businesses are gaining momentum.

In late April, General Electric offered about $13 billion for the power business of French industrial giant Alstom.

With its whopping order backlog of $245 billion, General Electric has a promising future.

It can be hard for such a huge company to be nimble, but it has been thinking outside the box, investing in alternative energies such as wind power, partnering with smaller companies on new technologies, and sponsoring competitions to develop innovative solutions.

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Financial Blog Corliss Group: For Americans in China, the Taxman Cometh

The long arm of the American tax man has officially reached its way to Hong Kong. The question is, will it extend to the rest of China?

Hong Kong, a special administrative region of China, signed an agreement with the U.S. on Tuesday to share tax information about Americans who work or have assets in the southern Chinese city. The agreement is part of the U.S. government’s global campaign against tax evasion and an attempt to recover an estimated billions worth of lost revenue.

The information-sharing agreement is strictly that – the two tax authorities will trade files on an individual if one authority asks for it. Since Hong Kong doesn’t demand taxes from its residents who live abroad, it’s likely the information sharing will be a one-way exchange.

More importantly, the agreement is a precursor to an expected inter-governmental deal that will see the enforcement of the U.S. Foreign Account Tax Compliance Act, or FATCA, in Hong Kong. Under such an agreement, the U.S. government would require financial institutions to disclose details about American-held bank accounts to the U.S.

Initially slated to take force in January of this year, FATCA requires all U.S. citizens and green card holders who reside outside the U.S. to disclose their accounts and financial information. It’s triggered a substantial backlash: Many in Asia have given up their U.S. citizenship or green cards rather than put up with all the paperwork and additional tax liabilities. At the same time, many private banks in Hong Kong have begun refusing to take on the accounts of U.S. citizens and green card-holders, saying the cost of the tax-related paperwork is too great

Though FATCA has been in the works for years, its implementation has been delayed to July 1, partly because many countries haven’t yet signed agreements to abide by its rules. In Asia, only Japan has signed an intergovernmental deals to be fully FATCA-compliant. Hong Kong said on Tuesday a deal is in the works.

Now, all eyes are on China and how the rest of the country will deal with the FATCA.

“The general expectation is that that China will sign,” said Charles Kinsley, tax partner at KPMG in Hong Kong. “Many mainland financial institutions in China are already working on FATCA projects.” (Take note, rich Chinese investors looking for green cards in the U.S.)

What’s at risk if a country doesn’t sign on? A lot of headache for its banks. The U.S. has said that financial institutions from countries who don’t sign onto a FATCA agreement will be subject to a 30% withholding tax from any of its U.S.-related business. For that reason, many banks and other financial companies are hoping their home governments sign on.

“For Hong Kong’s financial institutions, this is a good thing,” said Mr. Kinsley of Hong Kong’s Tuesday announcement.

As for Americans who hope to avoid the IRS by stashing cash in foreign bank accounts? “They’re certainly going to be under pressure,” he said. “Banking secrecy is the thing of the past.”

Financial Blog Corliss Group: Citic's mega takeover deal comes as win-win for Beijing and Hong Kong

One move, two gains. Nowadays Beijing and Hong Kong may not agree on a lot of things, but the Citic deal is clearly a win-win for both sides.

Beijing's decision to let a Hong Kong-listed unit of Citic Group take over its parent company in a deal valued at about 225 billion yuan (HK$283.6 billion) surprised the financial community on Wednesday evening. In fact, the more surprised you feel, the clearer Beijing's resolve to reform its economic structure.

If you read the history of Citic Group - how the firm was founded with special permission from the late paramount leader, Deng Xiaoping, about 35 years ago as the first new type of state-owned enterprises to help the mainland attract foreign capital and expand investments abroad - any big decision about the company will not be made without approval by the very top-level mainland leaders.

That is to say the asset purchase of Citic Group by Citic Pacific, the Hong Kong-listed steel-to-property conglomerate, is more than just a mega-sized acquisition; it means the beginning of a new round of government-led reforms on its major state-owned enterprises through completely new thinking, such as letting the "son" (Citic Pacific) acquire its "father" (Citic Group in this case).

Such a son-to-acquire-father-move is controversial in that it rarely happens in the mainland's business world, in particular to any significant state firm the size of Citic, which is a sign of how desperate Beijing is to reform its state enterprises, many of which have often been linked with big bribery and corruption scandals. They are also under pressure to be transparent about corporate governance and show increased management efficiency.

Interestingly, about 35 years ago when Deng invited Rong Yiren to launch Citic Group, formerly known as China International Trust and Investment Corp, Beijing faced more or less the same challenges as it did with economic reform today. Rong was one of the top business tycoons from Shanghai who was later appointed one of the vice-presidents of the government and divided his time in business and politics among Shanghai, Hong Kong and Beijing.

Deng's idea to create Citic Group was to have something that never happened before and he made it very clear that he wanted the firm to have first-class international standards.

"Xiaoping told [Rong] three things: you are in charge of all decisions, you find whoever you want to hire and we will help you break and stay away from all administrative disturbance," Min Yimin, a former board member of Citic Group, said in a 2009 interview with Phoenix TV.

What happened to the group later did not disappoint Deng. It is now a steel giant, the mainland's top securities house and a major commercial bank, among others. To some extent, it is a bit like Singapore's sovereign wealth fund Temasek. But it has also been stuck and is unsure of what it can do next in the country's latest wave of economic reforms.

For Citic Group, history repeats itself 35 years on.

Since taking charge about a year ago, Premier Li Keqiang has made his top priority keeping the mainland economy growing (and to make that happen, the government must boost efficiency of its big state enterprises) and repeatedly emphasised the urgency in reforming the state sector. The message from Li and other senior officials is very clear: if not now, when?

The Citic deal gives the answer to when. It is happening right now and right here in Hong Kong, and Citic Group is picked again as a pioneer among the state enterprises to join this new round of reform.

If successful, the deal would give Hong Kong a huge boost as doubts have grown rapidly about the city's leading position as a financial centre. Competition has arisen, for example, from Shanghai's 2020 international financial centre plan, as well as from New York and London, given the economic recovery in the United States and the euro zone since the 2008 global financial crisis.

After the deal is completed, Citic Group is supposed to move its headquarters to Hong Kong. Just recently during Chief Executive Leung Chun-ying's trip to Beijing, he also requested more state firms to consider Hong Kong as the destination for their Asia-Pacific headquarters. Leung is definitely getting something that is much bigger than what he expected.

The most recent setback for Hong Kong's financial centre ambition is the decision by Alibaba, the mainland's No1 e-commerce firm, to launch its US$15 billion listing in New York.

The city lost the deal mainly due to its strong defence and unwillingness to change its regulations for just one company's special management structure. Alibaba executives have publicly raised doubts whether Hong Kong is out of fashion and stuck in its own legacy, unable to catch up with the changing times.

Bill Stacey, chairman of Hong Kong's home-grown think tank Lion Rock Institute, told the South China Morning Post that the Citic deal should definitely be considered as a move by Beijing to strengthen Hong Kong as the leading financial centre for China and the world.

Financial Blog Corliss Group: Traders profit from RMB arbitrage in Hong Kong

Speculators who want make a profit by taking advantage of the forex spread difference between the renminbi and other currencies should not think of this as a risk-free practice because currency arbitragers may have incurred huge losses due to the recent sharp dive in the Chinese currency, reports Chinese web portal Tencent QQ.

Individuals can earn money from foreign exchange arbitrage, buying currency in one financial market and selling it for a profit in another. For instance, while mainland China has strict currency controls in place, Hong Kong is open to currency transactions.

While the renminbi continued its upward trend, speculators from around the world had bought the Chinese currency through the foreign exchange market in Hong Kong, driving up the value of the renminbi. These investors also discovered they could earn a considerable profit by investing the Chinese currency in Hong Kong, the report said. However, they needed to meet two requirements before taking advantage of the forex spread. First, they had to be part of an export and import business. Second, they had to have a partner in banks located in Hong Kong.

Due to Beijing's currency control policy, large amounts of the renminbi could only be channeled in or out through trading or underground banks. If an investor took US$1 million from a Chinese bank and converted it into 6.2 million yuan based on an onshore exchange rate of 6.2, they could import a commodity from Hong Kong and pay the local suppliers in renminbi, namely offshore renminbi, the report explained.

The investor could then convert the renminbi into US dollars at a higher exchange rate of 6.15 through his partner in Hong Kong. The value of the renminbi would then become US$1.00813 million.

Eventually, the individual could also export the imported goods to his Hong Kong partner and be paid in the greenback. This meant that the investor could earn US$8,130 from the process, the report explained.

In addition to the forex spread, currency arbitragers could earn the interest rate spread between banks in China and Hong Kong, given Hong Kong's low interest rates, the report added.