Doubling Down on My Trade of the Decade

Lou Basenese

Tuesday, December 21, 2021

Forget Omicron or inflation…

Last week, Fed Chairman Jay Powell revealed what really keeps him up at night: a cyber attack on financial institutions.

Welcome to the anxiety party, Mr. Powell!

You’ll recall that in August of 2020, I pegged cybersecurity as my “Trade of the Decade.”

Why? In short, because as the Digital Age has unfolded — and as the need for protection has increased — the world has criminally underinvested in cybersecurity. And that leaves us tragically exposed to attack.

This topic came up on a recent appearance on Making Money With Charles Payne. Check out the video below for my immediate reaction.

Then, keep reading, because I provide even more information on why cybersecurity promises to be a rapidly growing trend — and in turn, a robust investment opportunity for years to come.

Not to mention, I share four easy ways for any investor to quickly add exposure to the market’s top cybersecurity stocks in their portfolio.

So let’s get to it!

Making Money!

(click image to enlarge)

Forever Growth, Here We Come!

I first started doing extensive research on cybersecurity seven years ago. And every year since, I’ve become more and more convinced about a simple fact:

Without adequate cybersecurity, our world is doomed.

Think about it: Our world is quickly becoming entirely digital and internet-connected.

Nearly 90% of business assets are already digital.

Credit the Covid-19 pandemic for accelerating the transformation to a completely digital world.

Tack on the billions upon billions of dollars pouring into the Internet of Things (IoT) and everything will eventually be connected to the internet — and, therefore, everything will be vulnerable to attack.

Power grids, banks, hospitals, cars, airplanes, communication networks… you name it.

Add it all up, and it’s no surprise that worldwide cybersecurity spending is expected to pop 13% higher this year to $172 billion — and then another 11% in 2022 and 2023 — according to the latest estimates from tech research firm, Gartner.

But it still won’t be enough to adequately protect us! Instead, we’ll have to keep spending hundreds of billions of dollars every year.

Here’s the sobering reality, though: Even then, the spending won’t be enough to catch up with the problem, let alone get ahead of it.

Or as one industry insider famously confessed, “We can’t hire our way out of the problem. There aren’t enough resources and the cost is too high.”

Expanding Attack Area

You see, the growing amount of data being stored means the number of digital assets that need to be protected keeps expanding.

In fact, our “always on” society creates an astonishing 2.5 quintillion (one followed by 18 zeros) bytes of new data every day.

It can be hard to grasp the enormity of that figure.

To help, though, think about each byte of data as a landmass. The more bytes we produce, the larger the overall landmass gets. And every inch of it needs to be defended against attack.

Long story short: the cyberattack “surface area” is growing at a dizzying pace.

In fact, if cybersecurity spending increased at the same rate as data expansion, we’d be talking about a $2.6 trillion industry.

Yet even the most bullish estimates only call for spending to hit $200+ billion in the years ahead.

Against such a backdrop, I can’t envision a more compelling investment trend. So much so, I’m doubling down on calling it the “Trend Trade of the Decade.”

But just because the trend is so obvious doesn’t mean the profits will come easy…

No Silver Bullet

The cybersecurity industry is bound to produce huge individual winners. Some could include upcoming IPOs, as Ann Berry of Wheelhouse, my counterpart on television last week, revealed.

(Don’t worry, I’ll be monitoring the filings and will alert you of any fresh opportunities.)

But in the here and now, here’s the rub: There’s no silver bullet solution to protect against every cyber attack.

Hackers are too damn intelligent and innovative, leaving cybersecurity companies playing a nasty and perpetual game of catch-up. And every company can’t quickly develop defenses against every new type of attack.

So just like a single vitamin can’t cure every vitamin deficiency, a single cybersecurity firm can’t adequately protect against every type of attack. Instead, we need a multivitamin or a diversified portfolio of cybersecurity stocks to best protect ourselves.

The good news is that multiple exchange-traded funds exist that focus on cybersecurity, allowing us to gain exposure to dozens of cutting-edge firms. In a single investment, at a low cost to boot!

I shared my favorite in my appearance above. But here are all of them for your consideration.

  • ETFMG Prime Cyber Security ETF (HACK)
  • First Trust NASDAQ Cybersecurity ETF (CIBR)
  • iShares Cybersecurity and Tech ETF (IHAK)
  • Global X Cybersecurity ETF (BUG)

This trend is so powerful and the need so great, just pick any one of them and add it to your portfolio. You can thank me a decade from now!

Ahead of the tape,

Tags: cybersecurity etf