Why Target’s Security Breach Offends Us Both

46 | By Shah Gilani

I’ve got some very valuable gifts coming for you. Give me a couple of weeks, and I’ll deliver the first one to you, right here at WSII.

In fact, I have so many exciting things coming your way, I’m thinking about changing the name from Wall Street Insights & Indictments to Wall Street Insights & Profit Opportunities.

Because I’m always researching markets to find trading and investment opportunities, and because so many of you are so great and I owe you for your inspiration, I’m going to start gifting you with real-time trading and investing ideas, right here.

Not just “ideas,” but actual recommendations and instructions. Not every day, and not every week, but often enough.

For example, today I want to get into the outrageous breach of security that just happened with Target Corp. (NYSE:TGT). In the future, if I were writing about what I’m going to touch on today, I’d give you reasons to buy or sell Target, with suggested entry points and stop loss and profit target levels. I might have recommendations and trade parameter suggestions for getting into some cybersecurity plays or for shorting some likely “fallout” stocks (you’ll see what I mean).

In 2014, I’ll be giving you trades to get into if you want and telling you how to manage them too. In a perfect world, our trades will turn into investments, because every investment begins with a trade, and we’ll make lots of money and have fun doing it.

So, let me know if that’s something you want me to do and keep doing (I imagine it won’t hurt) and how I can best deliver it to you.

Okay, now let’s take aim at Target…

Last Thursday Target had to admit they had a problem. What they didn’t want to admit is that some 40 million people who shopped at their stores between November 27 and December 15 had a problem. A really big problem.

Somehow, someone hacked into Target’s inner security sanctum, where they could steal customers’ credit card and debit card numbers, their addresses, those digits that are printed on backs of cards as added security checks, and some PIN numbers.

All of their 1,800 stores were affected.

So what happened?

We may find out the truth or we may not; it’s a security thing, you know.

But what probably happened is that Target’s transaction aggregation servers were hacked. All the point of sale (POS) card readers store transaction data, which gets loaded onto the company’s servers. Someone likely hacked into those servers to get access to all that data.

Besides the horror show at Target, imagine 40 million card customers being forced to deal with daily withdrawal and spending limits right now or scrambling to cancel their cards – the ones they desperately need for their holiday shopping and everything else we use our cards for on a daily basis.

How much do we use our cards? According to Gary Taylor, executive director of the National Association of Convenience Stores, whose outfit tracks card-use data, 24% of our GDP is conducted through the use of credit and debit cards.

The magnetic strips on the back of our cards hold some personal data. Additionally, when you have to punch your PIN into a POS terminal, the terminal stores your PIN. Everything that goes into the POS terminal gets parked and stored on the transaction servers.

If you used a debit card at Target recently and punched in your PIN, there’s a chance a crook who buys the data (it’s selling on the Internet now for around $44 per card) can imprint a card (even a hotel guest card will do) with a magnetic strip with your data on it, go to an ATM, and, using your own PIN, withdraw hundreds of dollars from your account.

Target isn’t the first mega retailer to be hacked like this, and it won’t be the last.

Is this Target’s fault? Yes. Will it be fixed? Yes. Will it ever happen again? Yes.

The truth is, we live in a world where there is very little privacy any more. The price we are paying (and will continue to pay at ever-escalating costs to our basic freedoms) is the cost associated with modernization. It’s the cost of technological innovation.

There’s no going back. It’s even hard to “get off the grid” now. Not only is Big Brother watching us all, if you aren’t up to speed on what the NSA’s been up to, your head’s in the sand. We’re being watched and tracked and marked and profiled by Google and Facebook and Twitter and almost every outlet on the Internet, retailers and wholesalers and banks and boogiemen.

Where we’re headed is so frightening that most people don’t even care anymore. They just accept that they’re being watched, that it’s okay that merchants know more about their spending habits than they know themselves, that Internet eyeballs are following them, that the NSA is snooping on all of us.

I guess it makes a lot of people feel a lot safer.

Me, I’m saddened by this invasion. I will not pardon the intrusion! Whether it’s Target storing our very valuable data on a ledge where it can fall into the hands of crooks or whether it’s any of our national security services (forever embedded in America’s soil now as a result of the Patriot Act) watching us, listening to us, profiling us, we’re all prisoners now.

I want to be happy this holiday season. I want to be happy all the time. But I can’t be.
I’m mad and sick with sadness. The Shining City on the Hill is glowing from electrons transmitting our private lives onto a grid to be used for us, against us, for the sake of what?

So, what am I going to do about it? Not nothing, I’ll tell you that.

I’m going to work my butt off to make us a lot of money so we can spend it on buying back our freedoms and America’s greatness… one legislator at a time, if we have to.

Happy Holidays!


P.S. I’m taking off Thursday to enjoy the holidays. I’ll be back with you on Monday.

46 Responses to Why Target’s Security Breach Offends Us Both

  1. Joe F. says:

    Thanks, Shah. I was beginning to think I was the only one who resents all these invasions of my privacy. When I complain to anyone about it ,they look at me like I’m conspiracy kook.

  2. khalfani says:

    Shah enjoy your time off!!! You deserve it. I’m a new reader but I enjoy reading your spin on things. Take care.

  3. Alan Graham says:

    Hi Shah,

    I share your indignation over the loss of our freedoms and “Patriot” Act spying!

    I enjoy your writings and look forward your forthcoming recommendations.

    All the best,

    Alan Graham

  4. kj shah says:

    Yes change the name but not your style or honest and frank writing. We are all slaves but we still need to sing in the field doing our chores!

  5. James Bowe says:

    I too am very saddened – and very mad – at how our freedoms and privacy have been taken from us. Unfortunately, we have willingly aided and abetted our own losses of privacy and freedom. I would vote to end the Patriot Act in an instant. The Patriot Act has taken away all of our freedoms and we have traded a sense of so-called security for our freedom. Freedom is the greatest gift we had and now it is gone. Trading our freedom away was easy. Getting it back will be next to impossible. I will
    take my freedom, and the dangers that go along with that, any day over a (false) sense of security. I know that we will never go back to the days before credit cards but maybe something can be done to limit the information that companies can collect and use.

    • Sailor Jo says:

      There is a motto in the US: KISS.
      In Europe bank transactions are a little more tedious. If you want to do a transaction you need a transaction number that has been provided by the bank. These so called TANs are one time use only. So a potential thief may have all your information but the lack of the next TAN on the list stops him/her dead in the tracks.
      KISS may sound good but it is not good.

  6. james says:

    Hohoho. Happy hijack I mean hollowdays. I really mean it. Do it. Change Indictments to Opportunitues. I went to join your Capital Wave but the price got too high. Let’s make some money here so I can move on up to CW.

  7. Jose Navarro says:

    Are we in 1984 yet?….I experienced these same Government intrusions, and loss of freedom back in Cuba in early 1960…..I guess there is no difference anymore.

  8. Vincent F. Celli says:

    I look forward to your picks. As to the loss of our freedoms I bemoan the lack of public outrage. Our system of government is being completely turned around – we are being asked to serve its aims like puppets dancing on a string. George Orwell must be turning over in his grave.

    This is your world. Shape it or someone else will. Gary Lew. Good advice for going forward

    Thanks for your insights..

  9. Gregory Wood says:

    Shaw is a true patriot and a breath of fresh air ! So nice to have someone in the know, who can point out the true behind the scenes games being played across Wall Street and beyond. Fortunate to be able to receive your in depth insight. Thanks and keep the great info coming! GW

  10. Kali says:

    “I’m going to work my butt off to make us a lot of money so we can…

    Happy Holidays!
    P.S. I’m taking off Thursday to enjoy the holidays. I’ll be back with you on Monday.”

    Does anyone see the irony here? Yes, well said. Yet butt how? 😉 That’s ok. I’m taking off Thursday also to enjoy the Holidays, butt I wont be back 😉 I like you Shah than most/ all writers in the financial sector, butt I’m just giving you a hard time (challenge) to step up!!

  11. Rick says:


    The Cold, Hard and Sick truth Is…that they want to by- pass all this external hand 2 hand credit-card usage–and Micro-Chip Us All like Doggs. There are Many here that are with you! Let Us Fight this Very Important Good Fight!

  12. Terry says:

    I actually can’t imagine what value info about me would have for a hacker? May be can go to revolving credit cards instead of revolving credit. Use once and then move on to another card? Or have two bank accounts. One for exposure to the e-jungle, to be funded by cash, or maybe bitcoins? Or a temp time erasable link to fund it. Or be able to establish credit at your bank based on your private account or have to call a designated person to physically transfer funds? In short max security would be like in the ‘good old days’ when there was no e-link. A hacker, aka bank robber, would have to show up in person to rob the bank account. How about like a flash mob at a mall entertaining shoppers. Flash funding of an e-account. Exposure account. As far as I know no one can get time back, not even God can change history. Merry Christmas.

  13. Phil says:

    NO more credit cards for me. Going back to either checks or cash and if a company dose not like it they won’t get my business….just the BUSINESS! 😉

  14. Aprov says:

    Well, if you feel this way, then the solution is simple, have the courage of your convictions and stop interacting with these people’s technology. Leave the city environment and do what the pioneers did. They were happy enough. I suppose the only issues would be diminished healthcare and creature comforts. The rest can be managed by a healthy individual. I’m not sure I see the point to complaining without a concrete solution.

    Finally, when I think about all of this, I once again see more Bible truths confirmed. They are: Store not up for yourselves treasures on Earth …… and …. the root of all evil is the love of money.


  15. H. Craig Bradley says:

    ” I DID IT MY WAY”

    Target’s security breach is not directly related to a loss of privacy, but rather, the lack of modernization in U.S. retail settings. Magnetic strips are old technology from the 1970’s. We are way behind. Currently, POS terminals in Great Britain utilize a system called ” Chip and PIN” where customers enter their PIN number along with swipping their credit card. The PIN validates their I.D. while the Chip stores the personal information in a secure manner.

    We just don’t want to modernize our I.T. systems in retail. In a way, its the same mentality we have shown in resisting conversion to metric decades after Europe and the rest of the world already converted. We still use ounces, pounds, yards, feet, and inches in the public area. Science labs and medical labs use strictly metric weight measurements. Think about America as a metaphore of the Frank Sinatra Song: ” I Did It My Way”.

  16. Peter Bonfield says:

    Dear Shah, I never answer articles on any subscriptions, but in your case I will make an exception. Keep up the fight. We need you. Your valuable experience and your willingness and also ability to share your knowledge are all priceless. Merry Christmas to you and yours.
    Peter Bonfield

  17. Joe Ball says:

    Merry Christmas Shah!
    Let us know how we can help you get these people off our backs.
    Perhaps they really don’t NEED to store our pins and passwords and other info.

  18. Dan says:

    Too bad such a great job of watching us is being done so well but “they” can’t watch or even g– d— those monkies that want to do so much harm to so many others.

  19. kevin says:

    So our High Tech wizards are not able to Design a method of facial recognition, or other non-copyable, that eliminates the need for cards and signatures and pin numbers that can be scammed? How about the bank routing number as the only thing you enter, apart from visual recognition by the retailer’s equipment?

  20. Donald Patriquin says:

    Re “I know that we will never go back to the days before credit cards” this reader is only half right. We are looking forward to the days when credit cards will be replaced by something else, and I suspect a lot of us know what that is…

    Happy Hopeful Days!

  21. robert w. says:

    So the credit card companies may get screwed out of a few million dollars.
    It’s what they get for having cheap card technology. I don’t care. I have cancelled my card that was used at Target and, maybe, compromised; and asked for a new number and card.
    I am not going to spend the next two years worrying about someone else using my old number they got from Target.
    Actually, I never liked Target that much, and now much less.
    Also, I am not on facebook, twitter or any such services: they may need me but I don’t need them. Also, as of now, no cell phone. Maybe I am invisible to the NSA. Ha!

  22. Bill says:

    I usually hate to see more new laws but where are the harsh penalties for identity theft when it is such a big issue for average person? Where are the laws to protect the innocent victims of same when it does happen so they dont have to go bankrupt to correct it. I sometimes think we deserve what we have become because many people I talk to dont want to talk about or even know about how bad our liberties have been lost. When I mention the truth, people want to know why I worry about it. Hoping people are waking up now with the new health insurance issues.

  23. Sailor Jo says:

    your writing means a lot to me. I always have the feeling you have a heart for the common man and woman. Not that I always agree with your viewpoints but I consider that a given among different people.
    What amazes me is that the US spends billions on illegal operators like the NSA but is not able to create a safe online environment. Where are the priorities? Does the freedom of the people not mean anything any more in the “land of the free”?
    Btw, I do not consider the US the land of the free any more. I saw today a lady doing some promotion for a liqueur in front of a liquor store. A cop stopped by who had an “issue” with her little stand. As much as I like the cops keeping us safe I thought they may have bigger fish to fry. I see at least 10 traffic violations in a 15 minute ride, the most dangerous being the running of red traffic lights.
    Thanks for your great work!

  24. BeM says:

    What? – You people remove my comment that I will not renew because the cost is too high, the profits too low, and the opportunities too few !! I guess the truth just hurts too much for you to let customers post truthful comments. Try charging a fair price and actually delivering profitable opportunities. There are just too many senseless stories and not enough “working hard for us”. Good grief – more of the same old financial newsletter under performance.

  25. Terry says:

    Call the interface account the transaction interface account to be a stand alone, temporarily funded by a temporary flash link. With outside feed back info to a stand alone foreign interface micro personal website. In other words punt the money in a split second and cast off from Target, etc.. After all all they really need is the money, not who I am or a record of my habits. Speed of computers is a hacker’s advantage. Well, turn speed into the individuals friend by limiting access to me or you only when I am “in the store”, just like it used be in the BC days. Need to cur out all these pop up invasive ads and put them all in a yellow pages or classified .classyads website. It is too easy for people to electronically pop in unexpected now. In a way they are all hackers!

  26. Jeff P. in Canada says:

    Merry Christmas Shah. This Target debacle is justification for what I have known for years. A friend of mine is a computer programmer who told me that the banks are getting hacked all of the time but that they never admit it and they just pay out any loses and write it off as the cost of doing business. The only place that I will ever use my bank card is at the bank’s ATM at their branches. I pay cash for everything else. I do occassionally use my credit card, but I keep a close eye on my statements. It is amazing how many people I know who have had unauthorized charges against their credit cards by employees of retailers where they have shopped.
    I even took my name and photo off of Facebook, years ago. I saw this invasion of privacy coming years ago and cannot believe that other people are just giving in to it like lambs to the slaughter.

  27. Bob says:

    Screw Target and their stupidity. It will show up in their bottom line next quarter. They deserve that kind of reward.

    Speaking of rewards, I want to thank you for the presents that I accumulated from your recommendations throughout the year totaling over $9300. That is a whole lot more than I paid for my subscription to Capital Wave Forecast..
    I can’t wait to renew.

    Thanks Again,

  28. nic Wiseman says:

    Hi Shah

    I believe the CHIP & PIN technology for debit/credit cards used in Europe and many other countries (including many 3rd world ones) could be safer than the swipe cards. Swipe cards are now obsolete in Europe. We invented the credit card but now US Banks have fallen so far behind the rest of the world in respect of PIN & CHIP technology


    Nic Wiseman

  29. John D. says:

    Thank you, Shah, for your candid honesty and for the integrity that you express in your articles. Am looking forward to reading your strategies for creating the wealth that it will take to pay for the legislative support we deserve, but will only serve in our best interest when a bribe is at hand. Merry Christmas!

  30. R. Joe Dunnam says:

    Well said, especially the part about buying back one ledge at a time! Let’s all get our states active in passing term limits; I believe that is the only way we will ever get the lifers out! Merry Christmas and keep the picks coming.

  31. Kenneth says:

    Hey Shah and everybody else;
    How about putting some strong publicity pressure on American credit card companies to abandon the out of date magnetic strip technology and upgrade everybody’s cards to the new digital tech cards they’re using in Europe? These are said to be hard to clone. We need some new technology impervious to theft. Haven’t we had enough of this crap?

  32. john says:


    Can you find us some good international investments in the following.

    Hi Shah

    I believe the CHIP & PIN technology for debit/credit cards used in Europe and many other countries (including many 3rd world ones) could be safer than the swipe cards. Swipe cards are now obsolete in Europe. We invented the credit card but now US Banks have fallen so far behind the rest of the world in respect of PIN & CHIP technology

  33. Peggy says:

    I didn’t shop at Target, but apparently right after playing a golf game in NM the first of the month, I bought a rail ticket in Peru with the same cc. So some other company’s system was hacked too and they just haven’t fessed up. Fortunately, my credit card company called immediately and we canceled the card. Yes, I had to wait a few days for a new card, but I was still pretty happy the cc company was on top of it.

    One of my new year’s resolutions is to delete my Twitter, Linked-in, Facebook and any other social media accounts I can find in my name. I’m hoping to go off the grid in future years…which may be impossible :{, but I’m going to try…

  34. Cheryl Batter says:

    Shah, you are the best! It feels good knowing that someone with your knowledge and expertise is on our side. Thank you! CB

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