Cybersecurity Likely to See Long-Term Growth

Hacking into personal information, intellectual property, and government data has reached epidemic proportions. The Equifax data breach last month compromised around 145 million people’s personal credit information. HBO is struggling to protect their flagship programming from being viewed before they release it. Government and military intelligence is stolen almost daily, and the results of several elections around the world may have been affected by hackers, too. The war of hacking is in full bloom, and it seems as if there is little we can do to avoid it.

You have probably seen several articles on what you can do to add protection to your own data. For my personal protection I use a password-protection site called LastPass that has been helpful. It’s now been over a year since my personal debit card has been hacked, after several previous incidents.

I could spend today discussing the various tactics of protecting your personal data, however, my focus will be on what the implications of data breaches are from an investment standpoint. Until recently, it appeared that Fortune 500 CEO’s did not see cyber hacks as a big enough worry to warrant much budget. I believe, in the wake of certain CEO terminations due to cyber hacks, that these budgets will see a larger piece of the budget pie in their next fiscal year.

The two biggest issues in fighting cyber security attacks is the lack of a “holy grail” to stop it and the problem constantly evolves. You can win a battle, but you will never win the war. This is why I don’t suggest investing too much in any one company, but rather look at a diverse holding of cybersecurity companies. There are a couple of different exchange traded funds that concentrate their investments in a few dozen different cybersecurity related companies.

There is a saying in my industry that goes like this, “the trend is your friend”. One of the big things most investment managers look for are huge and sustainable trends to participate in. I feel it is safe to say that cybersecurity is an area that has nowhere to go but up for many decades. While some of the companies will certainly fail, and others may have rich valuations, the overall trend in this sector should have a very large and sustained rise. That’s the kind of investment piece I want in my long‐term portfolio.

October 18th, 2017|Categories: Business, Resources|