A recent report by researchers at the University of Michigan demonstrates that bank and brokerage websites are plagued by security flaws. These widespread design flaws make it easier for accounts to be compromised. According to Finextra, an examination of 214 bank websites revealed that more than 75% have cracks in security that hackers could exploit to access customer information and accounts.

Says Atul Prakash, professor in the department of electrical engineering and computer science: "To our surprise, design flaws that could compromise security were widespread and included some of the largest banks in the country. Our focus was on users who try to be careful, but unfortunately some bank sites make it hard for customers to make the right security decisions when doing online banking."

The hue and cry from the press regarding Hedge Funds continues unabated. Obviously a good number of funds have blown up over the past year, causing a sizeable investor headache.

One recent article “4 Reasons Why Investors Should Avoid Hedge Funds at All Costs” outlines issues with oversight, managerial churn, investment concentration, and short life spans. These aspects should be concerns for many individual investors, but should not serve to rule out hedge funds as appropriate portfolio component for qualified investors. Despite the recent turmoil, Hedge Funds have a long history of serving the needs of qualified investors; one excellent summary can be found here.

Is there such a thing as a bride so ugly that no one will marry her? Apparently there is such a thing as a business so toxic that everyone steps away from buying it.

One of the great fears of any party seeking to close a deal to purchase Circuit City (CC) is that the due diligence would reveal information so negative that potential acquirers would drop their bids. Apparently this scenario is playing out.

Circuit City (CC), the electronics retailer in dismal shape due to gross mismanagement, received a take-over bid from Blockbuster (BBI), the video rental retailer that has an existing set of problems. Vultures have been eying the carcass of Circuit City for a good period of time; it should not be a surprise that another retailer has swooped in to take a peck.

The recent subprime CDO plague has clearly cut down the stock prices of major banks. However it is the small local financial institutions that have the least financial strength to weather the storm. Many of these smaller banks did not get caught up in the residential loan fiasco because they were not focused on this market.

However, the other shoe is about to fall. Many of these local institutions focused their lending activities on commercial real estate development. A good number of these loans to sub-division developers, builders, and commercial property developers are about to turn sour, leaving these small banks holding the bag.

As pointed out in a recent article in Investment Dealers' Digest, 130/30 Strategies are Set to Gain Traction. Hedge funds and major brokerages have been heavily marketing these funds to institutions such as pension funds. The recent tumble in stocks has only increased the marketing blitz and associated claims that these strategies will squeeze out excess alpha in both down and up markets.

As outlined earlier, 130/30 funds allow managers to short-sell up to 30% of their portfolios, and use the proceeds to buy an extra 30% long. The funds both use leverage and short-selling. The current market size is estimated to be $50 billion, many analysts expect the funds in 130/30 products to grow to $1 trillion over the next few years. However it is an open question if these funds actually can deliver on their promises, or are simply a scheme to increase the fees generated for brokerages and hedge funds.

Most investors continually search for the next “ten-bagger” which will explode with enormous returns. Many of these opportunities are found in small company stocks. Typically small caps as a group outperform larger companies. However significant risks must be navigated when selecting individual small cap stocks.

A dearth of analyst coverage means that small-cap stocks are more likely to be priced inefficiently. The majority of the growth and stock price acceleration occurs when companies are still small. Most institutional investors avoid small caps, at least until they grow larger; this leaves many small caps as yet undiscovered champions.

Risk free yield is shrinking, as many investors have been finding out when recently logging into their on-line bank accounts. The interest rate on many “high yield” bank accounts has shrunk to near 4%. Leaders such ING Direct (4.10%), EmigrantDirect (4.65%), and HSBC (HBC) Direct (4.25%) have reduced rates over the past months. While these rates are not dreadful for FDIC insured deposits, the yields are significantly down from the 5% region before the Fed started to drop the short term rates.

The situation at your neighborhood brick & mortar bank is even bleaker, many money market funds are back to yielding below 1%. Heaping further injury on banking customers, most local corner institutions have been busy increasing fees for every imaginable service. This combination has left many investors seeking opportunities for better yield.