What if I told you a worldwide crime wave has been growing at 66% PER YEAR,
every year for the past five years? Would you think that was a problem?
What if I told you that
you were likely a future victim of this crime wave? Are you worried now?
You should be. That fast-growing crime wave is rolling through cyberspace.
Detected cyberattacks have risen 66%
per year since 2009.
Big corporations are scared. Last summer, JPMorgan Chase's computers were breached. Convinced that the U.S. government wasn't doing enough to help and concerned that it was facing growing threats from China, Iran, Russia and who-knows-where, JPMorgan established a 1,000-person cybersecurity team, most of them ex-military, to create robust defenses against cyberattacks.
Of course, that 66% per year surge in cyberattacks refers to just the ones that are
known. The thing about cybercrime is that it's so easy to hide.
But what we do know is staggering. Here are just some of the latest stats...
- 2014 saw the systems of Home Depot (NYSE: HD), Target (NYSE: TGT) and JPMorgan Chase (NYSE: JPM) all breached by cybercriminals. And Sony (NYSE: SNE) was slammed in a cyberattack by North Korea. That was a huge headline-grabber that cost Sony millions of dollars.
- Russia's Kaspersky Lab is a major cybersecurity firm. You might even have Kaspersky's anti-virus on your home computer (I hope to heaven you have something). Anyway, Kaspersky said a group of hackers has stolen as much as $1 billion from over 100 banks in 30 countries since late 2013. The malware used in the attack was dubbed "Carbanak."
- A couple of weeks ago, the data for some 80 million healthcare enrollees of Anthem was compromised by hackers; Anthem is the second-largest health insurer in the U.S.
- Then Intuit (Nasdaq: INTU) briefly shut down its TurboTax website. The reason: a flood of "suspicious" tax return filings. It appears that hackers were using stolen identity information to claim tax refunds.
When these websites are breached, sensitive customer data is snatched. Heck, the Anthem attack saw cybercrooks spirit away everything from people's medical records to Social Security numbers to credit card information.
What are the crooks going to do with that information? We don't know. That's what's so scary.
You know who's worried? The White House. Very worried.
President Barack Obama recently announced a new cybersecurity initiative that will see deeper cooperation between U.S. businesses and the government.
That's on top of the president's budget proposal for the 2016 fiscal year, which seeks $14 billion for cybersecurity efforts across the U.S. government. This cybercrime funding will hopefully better protect federal and private networks from hacking threats.
And you know who's already getting infiltrated... attacked... sabotaged? The Pentagon. The agency's chief weapons tester told Congress in January that nearly every U.S. weapons program showed "significant vulnerabilities" to cyberattacks. As a result, the Pentagon's budget alone called for $5.5 billion in funding for cybersecurity, including misconfigured, unpatched and outdated software.
The Obama administration has stated that "Chinese spy agencies are involved in a far-reaching industrial espionage campaign targeting biotechnology, telecommunications, clean energy and nanotechnology industries."
It's funny they're not mentioning the Russians - widely known to be the best hackers in the world. You can also bet the Chinese, as well as hackers in Iran, Iraq, Africa and across Asia, will give the U.S. government a run for its money. Or maybe I should say "your money."
As for the future... if anything, we're going to become only increasingly vulnerable. Goldman Sachs says the "Third Wave" of the Internet will see devices connected to the Internet soar from 3 billion to 28 billion by 2020.
So vulnerabilities are going to grow... as will the necessary security responses. And that means, according to expert estimates, that the cybersecurity industry will grow from a $95 billion market in 2014 to $155 billion by 2019.
So what do you think? Do you want to sit passively by and be a victim? Or do you want to potentially profit from the cash cannons that both government and corporations will aim and fire at this problem?
Now let me give you an idea of how to do that.
The best, or at least best-known, cybersecurity stocks are tracked in a brand-new ETF called the
PureFunds ISE Cyber Security ETF (NYSE: HACK). This fund just debuted in November, but look how the news about cybercrime is sending it on a tear...
You can see that money is pouring into this industry. And you know what? I expect we'll see more cyberattacks. And that will send more money flooding into the fund.
Cybersecurity companies are just tech stocks, right? Wrong! The companies in the fund are not widely owned by major tech ETFs. If you look at the
Technology Select Sector SPDR (NYSE: XLK), there's less than a 5% portfolio weighting overlap between the stocks it holds and the stocks in the PureFunds ETF.
You can buy the fund or you can buy the stocks it holds. Or you can do the research to find the next great, undiscovered cybersecurity stock.
Whatever you do, don't ignore this trend. Because this crime wave is growing rapidly... and so are the related investment opportunities.
All the best,
Sean Brodrick
for Free Market Café
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