I wrote my first computer program in 1971 using 80 column punch cards. Many of you have never heard of punch cards. Forty-one years later and the same fundamentals still apply to writing software- you are only as good as your weakest programmer. Programs are more complex and databases are much larger. 2.5 megabyte disk drives were standard back then. Storage space was at a premium. Now disk capacity is cheap, memory is cheap, but errors still occur.
The latest financial exposure is at Knight Capital Group. A software glitch caused a $440 million loss, or so they say. Did one single line of code wipe out nearly a half a billion bucks? Possibly. Do you think this is the only bad piece of software code out there? What about the recent double posting of debits for mortgage payments in Great Britain? Maybe now you can understand why I don’t pay bills online. Do I really want a third party putting what little cash I have at risk? The system presses us to go cashless and checkless. It is to their benefit, not mine. A check is a tangible contract and is much easier to track than a few bits in a vast computer network created by a debit card.
Do you have most of your stocks in a brokerage account? If so, third parties can expose you to risk. That is why I have most of our stocks in certificate form or in direct registration. As the following article shows, things can go south inside of a week: http://www.reuters.com/article/2012/08/02/us-knightcapital-loss-idUSBRE8710PG20120802
Global risks can increase as quickly. You have once again been warned.