November 9, 2007 - Volume 2, #152

Good Morning:
Happy Friday. Yes, it's an uncharacteristic Friday Incite, but perhaps you didn't notice I missed yesterday. After a quick jaunt across the country and back for speaking gigs and meetings, I was a bit run down and felt sea sick. But that may have been from watching my portfolio dip over the past few days. Yes, the old US stock market has been a bit tumultuous, as Cisco's 17% top line growth sent the market into a tail spin. Of course, it's not that simple, but Cisco's outlook on tech spending and failure to appropriately manage expectations relative to growth last quarter gave most of big technology a hair cut yesterday. Those of you who have ridden Google, VMWare and Apple the past few months were feeling some pain. 

But not me. Well not exactly. I actually have no idea what specific stocks I own. I, like millions of others, have outsourced stock picking in lieu of mutual funds. And no, that doesn't mean that I let some faceless guy in a suit with a headset on "advise me." I run 4 self-directed portfolios that have consistently beaten the markets for the past 5 years. Not to pat myself on the back (OK, maybe a little), I do this in a total of about one hour a month. Take that, 4-hour workweek guy.

Stocks rise, stocks fall and I go about my business, but it wasn't always like that. I remember back in the Internet bubble, I was one of those guys that had a Palm Vx with the sled modem so I could get email and make stock trades when I needed to. I had multiple back-up methods to ensure my trades got executed and subscribed to trading newsletters. I was probably trading for 1-2 hours a DAY. I was also making a LOT of money, but that was not unique. It seems almost every jackass that did any trading was making a lot of money in 1998 and 1999.

But alas, gravity hit me upside the head big time in late 2000 and 2001, like everyone else. I learned all sorts of key lessons on stocks like USi and Microstrategy. Something trying not to catch a falling knife. Those lessons cost me a fortune. So in grand Rothman tradition, I had made and lost a fortune by the time I was 32. Bully for me.

After beating myself up for quite a while (and still riding a huge tax-loss carryover), I looked for a better way with less stress and using the appropriate time frames to, in the immortal words of Peter Lynch, "get rich slowly." At the time, I was in my early 30s and finally figured out that life is a marathon and not a sprint. So I looked for an investment philosophy that played into that.

I'm also a quant guy and a systems guy. I look for better systems to accomplish a job. So a systems-based approach was something I was very interested in. Something that told me when and what to buy and when to sell it. I wanted to take emotion out of the equation. I had followed the mechanical investing boards at the Motley Fool for a while and even played my hand at running a few of my own systems. I found I did pretty well buying stuff, but selling - not so much.

After some more tooling around, I finally found a system that worked. Here is my secret for all of you folks out there. It's called Fund*X (www.fundx.com [1]) and they provide a newsletter which provides detail on their mutual fund investing system. It's based on following trends (which every quant guy will love) and it's embarrassingly easy to follow. It's out-performed the broad market indexes over a 30 year period, through up and down markets. But check it out and see if it's for you. To be clear, I'm not giving you investing advice and I'm not recommending you do anything but go visit the site. It works for me and that's all I'm saying here.

I've got a lot to do today and watching the stock market gyrate isn't high on the list. Have a great weekend.

Technorati: Information Security [2], CSO [3], Security Mike [4], Internet Security [5]

[6] The Pragmatic CSO: Available Now! Read the Intro and Get "5 Tips to be a Better CSO" www.pragmaticcso.com [7]

Get Your Special Report: 6 Easy Steps to Protect Your Identity and pre-order your copy today www.securitymike.com [8] [9]

Top Security News

Wired does a great peace highlighting the fact that if your mail is within someone else's service, it's in their control [10]. To be clear, I don't think Hush is doing anything wrong here. We have law enforcement for a reason and I'm cool with that. Not sure if Captain Privacy groks it, but as long as it's in the fine print of the service agreement - it's OK with me. I guess it's back to the tried and true methods of forcing the bad guys to do the encryption themselves (PGP anyone?). But just remember, SaaS is a wonderful thing, but you really are beholden to the whims of your service provider. If you aren't cool with that, then don't use the service.
Link to this [10]

Dark Reading's Tim Wilson rants a bit about people once again calling the accelerated rate of consolidation the beginning of the end of the security business [11]. For the most part I agree with Tim. Security isn't going away, per se, but I do believe the security INDUSTRY has seen it's best days. Security really does need to be a feature within the broader set of technology services and I'm not sure how that really happens if we still consider the market a stand-alone entity. I do believe that there will continue to be innovation. There will continue to be investment. There will continue to be consolidation. That is the natural law of things. BUT, I also believe that security practitioners and vendors need to focus more on how we play into the broader technology ecosystem. It's not about us vs. them, good and evil, fire and brimstone kind of stuff anymore. It's about how we can add value to the business or make sure other folks don't take value away. We can't do that ourselves and thus we shouldn't expect that our little business will stand by itself. Not forever anyway.
Link to this [11]


The Laundry List

Top Blog Postings

http://blogs.ittoolbox.com/security/dmorrill/archives/time-for-a-more-flexible-sense-of-ethics [15]
Link to this [15]

http://www.computerweekly.com/blogs/stuart_king/2007/11/i-was-dissapointed-to-learn.html [16]
Link to this [16]

http://www.darkreading.com/document.asp?doc_id=138130 [17]
Link to this [17]

http://securitymike.blogspot.com [18]

Check out the latest on the Security Incite blog
http://blog.securityincite.com/ [19]

Read the most recent Daily Incite
http://securityincite.com/security-incite-rants/daily-incite [19]