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April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review

If this scares you, you shouldn't be investing

By Morgan Housel





One of the most fundamental traps investors fall for


JewishWorldReview.com | There are a lot of things to worry about as an investor. Hackers aren't one of them.

Last week, hacker magazine 2600 described what a potential cyber attack on global stock markets could look like. It wrote (via Business Insider):

"Now imagine this attack scenario. Agents of an enemy of the United States successfully break into the mainframes of a High Frequency Trading Company, Dark Pool Crossing Network or Brokerage Company. They infect the system with rogue trading algorithms or change the code on currently deployed algorithms. In a single coordinated attack, they buy and sell millions of shares of a single company or multiple companies, causing trading to halt or decimating the value of a single stock. Multiply that by 100 stocks of the top Fortune 500 companies and we have market collapse. Trading for the day would halt and uncalculated economic damage would be done."

Scary stuff -- until you get to the last sentence, which tiptoes into the absurd: "Uncalculated economic damage would be done."

Stop, stop. No, it wouldn't.

The market is a thermometer. If your thermometer breaks and says it's 300 degrees outside, it isn't actually 300 degrees outside, and no one will actually burn to death. This is obvious when thinking about temperature, but it becomes easy to forget when thinking about stock prices and the businesses they measure. Money is just emotional like that.



To assume a hacker-driven market crash would cause vast economic damage, you have to assume that day-to-day stock prices have an influence on the businesses they represent. But they do not. It's the other way around -- the underlying businesses are what drive stock prices. In a hacker attack, Coca-Cola stock might temporarily fall to $0, but Coke isn't going to stop selling Coke, the bakery won't stop selling bread and bricklayers won't stop laying bricks. Things would get real itchy on Wall Street exchanges, but broad business values and economic activity wouldn't change an inch.

Last week, the Nasdaq experienced a technical snafu that halted trading in all the stocks listed on its exchange for three hours. What impact did it have on the economy? Nothing, really. A few Nasdaq executives might lose their bonuses, and a few day traders might have been left hanging. The economic damage of both was likely offset by journalists having something new to write about.


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We don't have to guess what an attack shutting down the stock market might do to the economy. We've experienced it: U.S. markets closed for six days following the 9/11 terrorist attacks. And while the actual terrorist attacks affected all kinds of businesses -- airlines and theme parks and such -- I can't think of a good argument for why keeping the market closed for a few days led to a measurable drop in economic activity. After the Flash Crash of 2010 sent the Dow Jones down 1,000 points before rebounding, a group of Motley Fool writers set out to find anyone -- investors or otherwise -- who had been negatively affected by the incident. They couldn't find one. Most investors didn't even realize it happened until long after it was over and stocks recovered. Of course, most people aren't concerned when the market remains closed every Saturday and Sunday. It causes no problems for the same reason a hacker crash would have no direct impact on economic activity: There is a vast difference between stock quotes, business values and economic activity.

One of the most fundamental traps investors fall for is not realizing the difference between business values and stock prices. Business values are driven by human ingenuity, creativity, brand awareness, patents, contracts and ideas. Stock prices are just short-term quotes on what other people are willing to pay for those assets at a given moment. When you conflate the two, you become a victim to the stock market's ups and downs rather than a beneficiary of a business's profits.

Cyber attacks could wreak havoc on the economy if targeted at actual commerce: Supply chains, energy pipelines or payment systems, for example. That's what people should worry about. But as Warren Buffet says, you should buy companies you'd be happy owning if the market shut down for the next decade. Bring it on, hackers.

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Morgan Housel, a columnist at The Motley Fool, is a two-time winner, Best in Business award, Society of American Business Editors and Writers and Best in Business 2012, Columbia Journalism Review.


Previously:


What I plan to do when the market crashes

The three most important words in investing

Monkeys and investing

Two types of risk, two types of bubbles

The secret to financial success: Use ignorance to your advantage

How to effectively fight investors' greatest enemy

Four mistakes that make everyone a bad investor

Learning from the past, and the Next Big Tren

What newspapers were saying when you should have been buying

Why you never learn from your investment mistakes

The curse of success, and why most mutual funds fail miserably

If you know only five things about investing, make it these

Why spotting bubbles is so much harder than you think

When smart investors do stupid things

The deep downside of home ownership

The biggest retirement myth ever told

He's rich, smart and old: Listen to him

Admit it: No one has any idea what's going on

Gold collapse: The start of something big?

BAD NEWS: EVERYONE IS RIGHT!

Twitter: The carnival barker of investing

Warning: Don't waste your capital being fooled by profit prophets

25 important things to remember as an investor

New paradigm for both drivers and car companies

Biases that make you a bad investor

Nine financial rules you should never forget

Gaining from financial destruction

How to read financial news

Housing: Partying like it's 1925

A rebuttal to student loan horror stories

CONGRATULATIONS: We just saved half a trillion dollars

End this crazy tax: It will boost the economy

Medicare: A dangerously good deal

Economic future looks bright

The Biggest Threat to Your Portfolio (It's Not What You Think)

Bond Market Bull Run dead at 30



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