Protecting Your Cellphone Privacy

The Ohio Supreme Court has ruled that the contents of your cellphone is private information and authorities can not browse your mobile device without a warrant.  This is great news for the American People.


The Ohio Supreme Court ruled this month, by a 4-to-3 vote, that the search violated the Fourth Amendment’s protection against unreasonable search and seizure. Rather than seeing a cellphone as a simple closed container, the majority noted that modern cellphones — especially ones that permit Internet access — are “capable of storing a wealth of digitized information.”

This is information, the court said, for which people reasonably have a high expectation of privacy, and under established Fourth Amendment principles, police officers must get a search warrant before they can look through call logs or examine other data. The court wisely decided that it made no sense to try to distinguish among various kinds of cellphones based on what specific functions they have. All cellphones, the court said, fall under the search warrant requirement.

The judges were wise in their decision.  Modern smartphones contain a great deal of information that you don’t want falling into unauthorized hands.  Today many people sync their entire online address book to their phones.  Also consider that social networking applications app could expose your associations beyond the address book on your phone. And while not sound information security practice, many small businesses use free email services and employees do work on personal equipment.  As an employee, you could be exposing your employer’s business to unauthorized viewing.  Small business employers should also be concerned.  You normally don’t want just anyone reading your company information without a proper NDA.  If you are planning to IPO anytime soon, this would not be a good thing.

You can protect yourself by setting the password on your phone.  I won’t go into specific details since there are many different phones.  A 4-digit PIN is all you can get out of most older phones.  If you have the option to set a password that consists of other characters you might consider enabling that feature. Password protecting your phone will also help prevent anyone from going through its contents or making calls using your account.  If you’re going to put a password on your phone for privacy reasons, then consider the cost of someone using your phone to make international long distance calls. 

Many people put off reading the user manual, but now might be the time to take a look.

Using Bear Call Spreads to Get Paid to Trade

One strategy for growing your portfolio is using Bear Call Spreads to get paid to trade.  We can look at a relatively low risk trade using a Bear Call Spread on the Russell 2000 Index.  The Russell 2000 Index (^RUT) is a small-cap stock market index of 2000 small companies.  In downtimes smaller companies will be harder hit and we can assume that the Russell 2000 Index will have a hard time climbing upward.  If we look at a chart of the Russell 2000 Index we see that has encountered resistance or in simple terms it has had a hard time going above 625.

We can make some money by selling the January 10 650 CALL.  This is an options contract that we sell to someone else.  These options contracts are going for $2.66/share.  So we could make $266 per contract sold.  We would get to keep this amount as long as the ^RUT stays below 650.  If it goes above 650 our losses could seriously add up.  To protect against this possibility we also purchase the January 660 CALL contract from someone for $1.26.  This brings our initial net profit down to $1.40/share or $140 per call spread.  This limits the maximum amount you could lose on making this trade.  The advantage is that the January 660 CALL is gaining in value along with the January 650 Call if ^RUT goes up. To get out of this trade if it does go bad you would do the opposite of how you entered.  That is you would sell the January 660 CALL you bought and take part of the proceeds to buy the January 650 CALL you sold.

Max Profit occurs when ^RUT below the price of the CALL you sold.  I this case as long as ^RUT is below 650 you get to keep 100% of the 1.40/share from making this trade.

Break Even occurs when the price of ^RUT is equal to the price of the call you sold (650) + the premium you received (1.40).  In this case you would break even if ^RUT made it to 651.40 and only lose money after it went higher.

Max loss would occur if ^RUT were higher than the CALL you bought (660).

If we were to go and buy 3 contracts (300 shares) using this setup we would see this calculation in our trading software.

Max Profit: $420.00

Max Loss: $2580.00

You collect the $420 immediately if you click send.  You only start to lose money if ^RUT makes it above 651.40.

Is this trade worth the risk?  We can calculate that to make our own decision before hitting send.

On Dec 21 we used the Analyze Risk tab in Think Desktop to see what the odds were of ^RUT being under 651.40 by the date the options contracts expire in January.  Based on this chart the odds were 100% likely that ^RUT not go above our break even point.

RUT 100% Chance of Success

We didn’t get filled so we tried again on Dec 22 and raised our price.  ^RUT went up 5 points in one day which was a big move and we performed another risk analysis.  Now there is 72% chance of ^RUT being under 651.40 by January 15.  The odds are greater than 50/50 and much better than winning the lottery.  We also set an email alert when ^RUT gets to 645.  This gives us an opportunity to bail out of this trade before expiration.

RUT 72% Chance of Success

Bear Call Spreads are useful for speculating on a security not rising above a given price.  In this case we didn’t have to have any money up front to invest and made a profit of $420.  With a more than 70% chance of success this was worth the risk since ^RUT is going to have a hard time breaking above 625.  We’ve set email alerts in case things continue to slide in the wrong direction over the next 23 days.  Never trade and forget because you could end up with an unpleasant surprise.

LDK Solar Cash Crisis

We tried a play on LDK Solar last month.  We tried to go long by selling puts at $7.  That would have been a good strategy for about a month as this was not a buy and hold stock.  The guys over at Greenstocks Central reported yesterday that the CEO is trying to come up with a new strategy for funding.

the CEO stated in an SEC filing, “If we do not successfully execute our liquidity plan, we face the risk of not being able to continue as a going concern.”

LDK Solar has dropped from over $9 to under $7 in the past two days.  This is a perfect example of why managing your sell stops is important.  Looking back at the chart some well placed trailing stops would have exited the position on Nov 24.  There was also a strong jump up on Dec 4 where setting a stop at $8.50 would have saved some profits.  The slow stochastic is showing an uptick in the %K line, but this may continue to sell down. 

RTK Good but Not Good Enough

Rentech, Inc (NYSE: RTK) announced revenue of $24.7 million compared to $74.6 million for the prior year.  This is a net income for the year of $3 million or $0.02/share.  Not too bad, but the street was not amused.  We entered a trade on this one at $1.54 at the end of November. Today we were stopped out at $1.59.

Rentech is a clean energy company that has been around for a very long time . They’re testing some interesting technology and seem to have a fairly repeatable process.  We’re still undecided about getting back in.  The debt-to-equity ratio is a little high but this still might be a good short term play with a tight sell stop.  There is support near 1.44 and 1.38 which might prove to be a good entry point in the future.  It’s also still above its 21 day SMA which is a good sign for now.


Spicy Eggplant Parmigiana with Hummus


1 Large Eggplant
1 pkg Sonny & Joe’s Brand Hummus Galilee
1 pkg McCormick Cajun Seafood Fry Mix
1 bottle Arrabbiata sauce
1 pkg Polly-O Whole Milk Mozzarella Cheese

Slice the eggplant lengthwise in thick slices.  A large eggplant should make at least 4 long portions.  Wet the eggplant using filtered water.  Sprinkle lightly with McCormick Cajun Seafood Fry Mix.  Prepare an iron skillet with olive oil and pan fry over medium heat for 2 minutes on each side.  Use enough olive oil to keep the pan moist.  The eggplant will absorb the olive oil quickly.

Place one slice of the eggplant in a casserole dish.  Cover liberally with Hummus Galilee, mozzarella cheese, and Arrabbiata sauce. Stack another slice of eggplant on top and repeat until you have used all the eggplant.  Bake at 350F for 20 minutes.

Protecting Your Customers and Profits From Your Employees

When operating business it is important that line management understands the direction executive officers and board have set for the company.  This includes high level policies and strategy which is communicated down to middle management, who in turn oversees business process and execution of work.  In order to properly operate a business the strategic, tactical and operational policies should be communicated and have signatures from all levels of employees.  Individual line managers should not be encouraged to “do their own thing” since this can endanger the company’s reputation and subject it and the executive suite to legal liability.

Today’s case study in poor corporate governance comes from Muvico Entertainment, LLC in Fort Lauderdale, FL.  At a theatre in Rosemont, IL Samantha Tumpach was arrested and held in jail for two nights.  What was her crime?  She was filming a birthday party at one of Muvico Entertainment’s theatres which isn’t a crime.  Filming her friends while the movie was running was the crime.  According to police she had less than 4 minutes of footage total.  Management at the theatre called the police and insisted that Tumpach go to jail for a felony.  The police seemed to think the theatre manager had overreacted, but apparently their operating policies do not allow them to refuse to arrest on the scene if the officer thinks the issue is trivial.  In such cases accuser must obtain a warrant have the suspect arrested later.  The judge handling her case released her on her own recognizance, which indicates he thinks it was a minor incident.  She may be facing up to 3 years of prison for having her camera on.  I doubt she will face any prison time since crimes involve motive and intent, neither of which exist here.

I would consider this to be a corporate bail out at the expense of the taxpayers.  Rather than sue Tumpach for damages using the company’s own funds, they decided to hoist the costs off on to the taxpayers.  Muvico Entertainment just gave the government an excuse to raise taxes on the surrounding businesses and residents.  Property and sales taxes fund the judicial system and the police department.  This adds one trivial case to the court system where police and judicial time could be used to fight violent crime.  Either you cut back on police and judicial services for trivial matters, or you hire more cops and judges to deal with both trivial and serious matters.  Muvico Entertainment is not the kind of neighbor I would want to have as a business or a resident, and certainly not one I would be a patron of.

The damage done to Muvico Entertainment’s reputation has mainly been in the media and on the internet.  People have been giving them 1 star ratings on Google Maps and Yelp which is going to hurt their sales when someone reads the review and sees a ton of 1 star ratings.  If they actually read the reviews they may dismiss the ratings or they may boycott the business based on poor decisions made by management.  There is nothing Muvico Entertainment can do to make these 1 star ratings disappear from Google or Yelp.  There is also nothing they can do to silence the blogosphere or the mainstream media.  In the end this may not hurt them financially, but their executive management has a large rotten egg splattered on their faces.

How do you prevent this kind of embarrassment in your business?  Define your company policies and train your employees.  In this case a policy stating that all arrests on behalf of the company must be approved by middle or executive management could have avoided this situation. There is also a question of ethics involved here.  Executive management of any company should have a code of ethics policy which forbids employees from taking payoffs from vendors.  In most cases your company may have a policy prohibiting employees with buying authority from taking free lunch, golf games, or sports tickets from their suppliers. If you don’t have a code of ethics policy in your business, you should get one approved.  Many publicly traded companies publish their code of ethics policy.  You can use one of those as a starting point.

The MPAA is offering a $500 bounty to any movie theatre employee that calls the police on a person operating a video camera in the movie theatre.  The MPAA bounty presents an incredible opportunity for a public relations nightmare and conflict of interest.  If you have a code of ethics policy it would be a good idea to use this situation as another example of prohibited behavior.  It definitely creates a conflict of interest between your employees and your customers and in my opinion is no different than a buyer taking a bribe from a supplier to become the vendor of choice.  Businesses should place the customer at a higher value than their suppliers.  Customers provide revenue, while suppliers contribute to expenses. If one movie studio goes out of business due to bootlegging there are others to buy your content from.  If your customers organize a boycott because you value your suppliers more than them you may be the one out of business.

UPDATE: After checking some MSM sources it appears that Muvico Entertainment is encouraging its employees to screw over their customers. 

"The motion picture industry has encouraged theater owners to adopt a ‘zero-tolerance’ policy prohibiting the video or audio recording of any portion of a movie," Muvico Entertainment, which oversees the theater, told HLN’s "Prime News."

What happens now? Muvico Entertainment says it’s up to local police to determine Tumpach’s future.

Zero-tolerance equals zero-commonsense.  I guess they collected their $500 bounty and are proud of themselves for it.