Biometric Banking: The Eyes Have It

The Apple iPhone with the fingerprint security sensor was an introduction to biometrics, and the technology (as all technology today) has gone into overdrive since. Regardless of the contentious nature of Samsung’s relationship with Apple, each claiming the other stole this or that, the sneak peek into tech was too good to be ignored. Samsung included a similar fingerprint reader on its phone thereafter. Theft or inevitability? For the purposes of this article, let’s just stick to biometrics.

Biometrics -- Irises
Biometrics — Irises

Biometrics first and foremost is meant to keep your information secure: passwords, banking, information. At an age where information is power and hacking is gaining on cyber security methods, biometrics is the next line of defense against the ‘bad guys’.

According to the Pew Research Center, 57% of people have used their smartphones for banking. Smartphones like Samsung have merged the tech of fingerprinting sensor and added it to some banking apps, Bank of America being one. Along with setting up your fingerprint as a login to your smartphone, those same ridges and swirls can unlock the BofA app. Easy peasy. Maybe.

Since black hats catch up as soon as new groundbreaking technology is launched, tech has to constantly be advancing. The newish en vogue advance is the iris scanner. Sometime in the very near future, Samsung, will have an eye scanner to unlock your smartphones which they think will be safer than your fingerprint. Afterall, a fingerprint could be lifted, but an eyeball? Less likely.

Woori Bank in South Korea has already entered a partnership with Iris ID to develop a program whereas clients will be able to access their deposit boxes with, you guessed it, their irises. If this is successful, the bank’s nearly 1000 branches will use this iris system.

Charles Koo, president and chief executive officer of Iris ID says with great enthusiasm, “We intend to work closely with Woori Bank to capitalize on this agreement and introduce advanced iris recognition technology to South Korea’s Fin-Tech industry. Our plans are to include iris information linked to banking networks and in transactions with other banks.”

But banking and smart-phoning aren’t the only place the biometric space is exploding. Two leading companies in the biometric movement are Grabba and Bi² Technologies. The two companies are leaders in the homeland security, border patrol, and public safety. With their efforts, law enforcement.

In Homeland Security states:

[…] if someone is pulled over by a police officer on the highway, the usual routine is for the officer to take the driver’s license and registration and return to his or her patrol car. With a Grabba device, the police officer is able to scan the driver’s license and immediately receive real-time background data on the officer’s smartphone. The data is encrypted and available over cellular or Wi-Fi connections – letting the police officer know who he or she is dealing with. The same process is utilized by CBP agents who can quickly scan a passport or other immigration document through the Grabba device and acquire immediate information.

This begs the question of whether biometrics is too much a good thing. The same question could actually be asked across the board when we’re talking about technology. Yes, the speed in which we’re developing what would’ve been deemed science fiction a mere 15 years ago is staggeringly breakneck. But, does it really offer more security and to whom?


LISTEN: Blame The Failing World Wealth on Geopolitics and China

Geopolitics & China Equals Bad News for Market
Geopolitics & China Equals Bad News for Market

Listen below to my interview on Game Changer as Sarah Westall and I discuss the failing markets caused by geopolitics and China.


For more game-changing topics, visit Sarah’s site here.


How we outperformed the market in 2015

2015 performance +8.42%

At the end of 2014 we viewed the coming year as a poor return environment for passive allocation as well as a poor risk adjusted return year for stocks overall. In light of this we established a portfolio with dual objectives; tactical allocation to asset classes while avoiding some asset classes altogether and 2) invest in specific stock or stock sectors we like only on corrections in the market. Although in hindsight that strategy proved to be correct a vast majority of our performance for the year was attributed to 3 factors. 1) we did not allocate  or exited quickly any capital allocation to high yield, emerging markets, and oil during outsized declines. 2) our market timing on the equity market was one of the best in a very long time. As seen in the history of the blog- we went to 100% cash in july and reentered the equity market at the end of september, sidestepping the market declines and catching the majority of Octobers 8.3% move. In terms of individual stocks, we maintained our strategy of committing most of our capital to positions on significant pull backs.  See a graph of our winners and losers on a relative basis.

Going into 2016 we have the same view about the poor risk adjusted return  in the market and the performance of a passive allocation model. We also believe its possible to have significant drawdowns in 2016 without corresponding quick bounces of the magnitude we saw in 2015.  Ie tactical and agile, even more than in 2015.

Back from overseas and west coast

I’m back from my travels. The market has moved much higher and in a faster time period than I thought and the performance from the leverage in our options positions has led us today to the decision to start taking profits on 70% of our portfolio which we execute opportunistically till the end of the month. We think the market still has about 2-3% upside till the end of the year but this has been a market in which taking profits has proven to be a good strategy.

October Market Forecast and Strategy

First, I wanted to let those who follow the blog that I will be on the west coast and europe for the next three weeks and posts will be sporadic or non existent.

As those following know,  we went to 100% cash at the end of July, leaving only small remaining option positions in the portfolio. This month we have added to our oil stock positions adding XOM, CVX, APC with a total 4% allocation. We also have added long term calls 2017 on Alibaba ($baba) (see post below). We think the market has gone way too far in this sell off but quite frankly  are quite nervous about market sentiment. We want to increase our exposure significantly.  Our strategy, limit our downside by buying a portfolio of long term options 2017,2018 on what we want to own: FB,GOOG,BABA,MSFT,AMZN, V, GE, as well as both consumer discretionary and industrial elf’s (outright). We are paying the price of premium to have leveraged upside and known downside as this market still seems quite unstable. Hopefully buying low and buying time with options will give us the chance to sell high over the remaining qtr of 2015 or beyond. Our outlook for October is clearing skies.Unknown-2

interest rates no longer on radar

The Fed’s decision last week to keep rates at 0% instead of starting the normalization process ( note: NOT tightening), was a bit of surprise to us as we thought they should have shown strength and demonstrated  confidence in US economy, especially given the declines in the stock market. They chose to once again kick the start of the normalization process down the road, making the fixed income sector once again an area of little interest (pun intended).Unknown-1

Ten year note on radar

10yr note

As we approach the September FOMC meeting it is worth watching the movement of the 10 year note over the next few weeks. The reaction function of the yield level has been much lower to the volatile global equity & currency market movements this summer and this month. Having made successive higher lows over the last year, I think its very important to watch if it retests the highs of the year and whether it is in the process of an adjusting to a slightly higher range than we have seen for the year. Market expectations have been for a flatter yield curve as the Fed normalizes, however this may not be the case. It is on my radar screen.

Barron’s cover story on Alibaba – couldn’t disagree more.

It often makes me laugh how the media makes these sensationalist headlines or dramatic cover stories,o ften lacking in true facts or correct fundamental analysis. I’m not going into a counter point analysis here, i will just say we think Barron’s is dead wrong about Alibaba. We think the cover story will actually mark close to a low in the stock and we are buying longer term Jan 2017 60 calls. – A final point, – if these journalists were so good at analysis they wouldn’t be journalists they would be a analyst or investment professional on Wall Street making 10x as much money. baba