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Where some might get mad, I like to get even.
See, when we spoke back on Oct. 22, I told you how I've fallen for my 2019 Acura MDX hybrid, and the broader scope of autonomous driving capabilities.
Thing is, I left out an embarrassing anecdote. As it turns out, what happened to me during the buying process also happens to millions of others. And today, I want to show you a great way to play the best firms that are addressing the issue.
But before I do, let's go back to what happened at the Acura dealership. See, everything was running smoothly until the finance manager came to tell my wife and me that our credit didn't go through.
No, we are not deadbeats. We have very high credit scores. We had simply forgotten one small detail: After the infamous 2017 hack at Equifax Inc. (NYSE: EFX) compromised 143 million accounts, including ours, we froze our credit.
This meant that no one, not even us, could take out a loan or credit card in our name. Fortunately, it only took a few minutes for us to log in to the credit agency and get the lease financing approved.
But the situation got me thinking a lot about our brute-force protection system when reading about the latest big cyber intrusion. This one, announced Nov. 30 of last year, involved 500 million hotel customers – once again, including my wife and me.
It seems that consumers like us can't go very far these days without hearing about some sort of corporate data breach that compromises our private data.
Fortunately, this steady stream of computer hacks and cybercrimes aren't only a cause of concern.
They also present the opportunity for savvy investors to choose an investment that will beat the market, again, this year...
You're going to want to see this...
How to Profit from the Hacks
Let's be clear: Shutting down your credit accounts isn't exactly a move filled with finesse. It doesn't stop thieves from hacking into your online accounts or prevent a data loss if they hit a third-party account you have online.
But it does prevent them from stealing your identity and then using that to start new accounts in your name. If they steal your identity, your life will be turned upside down – and will likely cost you thousands in charges you have to dispute.
My wife and I were discussing this very topic after the latest big hack made the news. See, we're longtime clients at hotels run by Marriott International Inc. (Nasdaq: MAR).
The firm's Starwood properties, where we also stay, started getting hacked back in 2014. The break-in went undetected until last September. No wonder the bad guys compromised 500 million accounts.
Here's the thing: The rate of cyber intrusions isn't likely to abate any time soon. So, there are basically two things you can do:
- Protect your online identity the way my family has, or by subscribing to a professional service.
- Profit from this red-hot trend.
A Hackable Market
Consider that MarketsandMarkets says 2018's cybersecurity value was $137.8 billion. By 2022, that figure will hit $231.9 billion, for a compound annual growth rate of 111%.
Forecasters at Cybersecurity Ventures predict that cybercrime damages will hit $6 trillion annually by 2021, double the figure from 2016. And over the next five years, cyber spending will total more than $1 trillion.
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That's why I continue to recommend the ETFMG Prime Cyber Security ETF (NYSE: HACK). This exchange-traded fund (ETF) holds some 52 stocks that cover the entire field. Debuting in November 2014, HACK was the first true cybersecurity-focused ETF, and it's poised for a strong rebound for 2019.
The fund also offers us some nice diversification – it's comprised of companies that provide hardware, software, and consulting services to defend against cybercrime. Some 80% are firms based in the United States, with the bulk of the rest operating out of Israel, Japan, and the United Kingdom.
Of those, roughly 55% cover systems software and 14% are related to hardware. The rest represent such areas as aerospace and defense, IT services, and application software.
One of the things I really like about this investment is that it holds an intriguing mix of small cybersecurity firms balanced with some larger, more stable leaders.
For instance, HACK holds several firms that cater to big corporations and government agencies. We're talking old guard members like Cisco Systems Inc. (Nasdaq: CSCO) and Symantec Corp. (Nasdaq: SYMC), which rank as the fund's first and fourth largest holdings, respectively.
HACK's Growth Firms
But HACK also holds some of the industry's smaller, more aggressive growth firms. These are companies with breakout technology and huge growth prospects.
Take a look:
Mimecast Ltd. (Nasdaq: MIME). Although Mimecast is largely flying under Wall Street's radar screen, it already boasts some 15,000 global customers. The "mime" in Mimecast actually underscores the company's main thrust. It stands for "Multi-Purpose Internet Mail Extensions." The upshot: Mimecast helps protect users against phishing scams and other intrusions made through company email systems that reside in the cloud. It also offers real-time scanning of all Web addresses within incoming and archived emails on every click. That screening shields users from both immediate and delayed attacks.
Palo Alto Networks Inc. (NYSE: PANW) delivers a broad suite of next-generation firewalls and a range of security features for enterprises that have a need to protect their IT systems and data. The company bills itself as "An enterprise security platform...for all users on any device across any network." That is really invaluable in today's tech landscape – especially at the enterprise level, where companies often encourage their employees to use their own mobile devices, a process that cuts overhead but increases cyber risk.
Splunk Inc. (Nasdaq: SPLK) ranks as the fund's 10th largest holding and is a great backend play on Big Data. The Silicon Valley firm has developed a unique business around protecting all types of machine data created by websites and corporate networks. Unprotected, that data can reveal secrets about such key operations as user behaviors and security risks. Founded in 2003, the company has grown quickly and now has a $12 billion market cap.
Qualys Inc. (Nasdaq: QLYS) is the fund's 11th largest holding and is a great play on cloud computing. The firm's sensor-centric Cloud Platform provides clients with a continuous, always-on assessment of their global security with two-second visibility across all their IT assets.
Qualys says it handles more than 1 trillion security actions a year and also maintains 28 billion indexed data points. The system integrates to the major cloud computing providers, from Amazon.com Inc.'s (Nasdaq: AMZN) Web Services, to Alphabet Inc. (Nasdaq: GOOGL), and to Microsoft Corp.'s (Nasdaq: MSFT) Azure.
As you might imagine, HACK was on a bit of tear that pushed shares sharply higher over the fiscal year that ended in late September. After the market's recent sell-off, it offers us a bargain way to play the rapidly growing field.
Now, there's also the matter of performing my ETF test – outlined in this Nov. 21 post – before proceeding.
Recently trading at just under $37, HACK has roughly $1.2 billion in assets under management. The ETF also has a reasonable expense ratio of 0.64%.
As you can see, what happened to my wife and I in the Acura dealership is increasingly becoming a common occurrence for more and more Americans who are forced to respond to cyberattacks playing out on a daily basis.
And it's why I'm expecting HACK, with its great selection of leaders in the space, to show a solid rebound in 2019. I'm projecting gains of 40% over the next three years.
Of course, some of the same technologies involved in detecting cybersecurity threats – artificial intelligence (AI) is one key example – can also be used to make startlingly accurate trade predictions.
Like the kind of predictions my colleague, the renowned pattern trader Tom Gentile, has just devised. This system was developed by rocket scientists with a proprietary sequence-matching protocol that can spot hidden trading patterns that are invisible to the traders on Wall Street – and everyone else who doesn't possess it.
But if you follow along with Tom, all you have to do is click a few buttons on your computer or phone and watch the daily trade opportunities roll in.
You can peruse Tom's underground command center, and learn more about his AI-enabled system, by clicking here.
The post How to Profit From the Only Trend Scarier Than This Year's Market appeared first on Strategic Tech Investor | Michael A. Robinson.
About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top tech and biotech financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
And even with decades of experience, Michael believes there has never been a moment in time quite like this.
Right now, medical breakthroughs that once took years to develop are moving at a record speed. And that means we are going to see highly lucrative biotech investment opportunities come in fast and furious.
To help you navigate the historic opportunity in biotech, Michael launched the Bio-Tech Profit Alliance.
His other publications include: Strategic Tech Investor, The Nova-X Report, Bio-Technology Profit Alliance and Nexus-9 Network.