How To Invest In Companies Fighting The Cybersecurity War
By Jimmy Butts | September 25, 2017 |

Guns, cash and his entire coin collection -- including his Indian Head Gold Quarter Eagle -- were gone. Stolen. The perpetrator had taken an oxygen-acetylene torch to the door of his Fort Knox safe and snatched his precious belongings. 

Of course, my grandfather was bummed that his stuff was taken, but what unsettled him most about the entire ordeal was the feeling of intrusion -- someone invading his privacy. 

New guns can be bought, Fort Knox replaced the vault for free, but what can't be restored is that feeling that your privacy has been violated -- knowing that a stranger forced his way into your home and stole your property. 

These sorts of intrusions, however, are happening more frequently than ever. But not in the traditional sense...

These new perps aren't coming through your window or your back door and they're not stealing cash or rare coins. You see, there is something more valuable to these new thieves than the things in your home. Instead of cash, collectibles and jewelry these thieves want your name, date of birth, Social Security number, credit card information and your driver's license... 

They want your identity. 

By now, you've likely heard about the massive data hack into credit-reporting firm Equifax (NYSE: EFX). On September 7, the company said it had been hacked nearly six weeks earlier, and that personal information -- name, date of birth, Social Security number, credit card info, etc. -- had been compromised, affecting 143 million consumers. That's nearly half the population of the United States. 

Shares plunged on the news and are down about 37% as I write this. Shortly after the company discovered the data breach (and before they made it public) three top executives -- the chief financial officer, president of U.S. information solutions and president of workforce solutions -- unloaded roughly $1.8 million worth of shares. 

Equifax will be under fire for some time. Senate Minority Leader Chuck Schumer called the data breach, "...one of the most egregious examples of corporate malfeasance since Enron." Enron, of course, is the energy-trading company that filed for bankruptcy in 2001 after perpetuating one of the biggest accounting frauds in history. 

Anytime you get compared to Enron, that's not a good thing. 

Despite this being one of the largest data breaches in history, it surely won't be the last. In fact, here's what Cisco (Nasdaq: CSCO) had to say about cybersecurity in its 2017 midyear cybersecurity report: "Our security experts are becoming increasingly concerned about the accelerating pace of change -- and yes, sophistication -- in the global cyber threat landscape." 

We've seen numerous cyber attacks on companies and even our government. In May a strain of ransomware called WannaCry spread around the world, affecting more than 300,000 computers in 150 countries. Then 198 million voter records were exposed in the United States. Then, two days before France's presidential runoff, hackers leaked emails from front-runner Emmanuel Macron. And, of course, we're still trying to figure out the extent of Russia's hacking of the U.S. Presidential election last year. Even Facebook (NYSE: FB) is coming under scrutiny for apparently selling ad space to fake Russian accounts.

In June 2016, I talked to my Top Stock Advisor subscribers more extensively about global digital transformation along with the rapidly growing cybersecurity industry. In that issue, I cited another report by Cisco estimating that attacks would nearly triple over the next five years, and whichever company becomes the industry leader in cybersecurity will reap the rewards. Unfortunately, we still don't have a clear winner in the fight against sophisticated hackers -- or securing our personal data. 

Equifax, which offers credit monitoring and identity theft services, gives us a good example of how quickly things can turn south in this space. The very company that is supposed to be protecting our personal information gets hacked and shares in the company tumble overnight. 

This is the balancing act in this space -- finding a company that fights against hackers while not getting hacked itself. 

Regardless, there are always risks when it comes to investing -- it's just a matter of whether you think the potential payoff is worth it... and I believe that in this case it is. 

If you're anxious to jump in this space now, there are a couple of exchange-traded funds dedicated to cyber-security. The first one, with the fitting ticker symbol HACK, is one of the first cybersecurity oriented ETFs in the world. ETFMG Prime Cyber Security ETF (NYSE: HACK) holds 35 of the top cybersecurity firms in the market. 

Another popular cybersecurity ETF is the First Trust Nasdaq Cybersecurity ETF (Nasdaq: CIBR). Both of these ETFs have the same expense ratio of 0.60% and have plenty of liquidity. These are two good options to immediately take advantage of this promising industry.

As for my Top Stock Advisor subscribers and I, we're determined to find the best-of-breed individual companies in this space and hold them for the long-term. Part of the reason for this is because the opportunity in this industry -- and the upside from finding the best play possible -- are both simply too good to ignore. It's also because that's what's led us to incredible gains in the rest of our portfolio so far -- and we're not about to put that aside for short-term profit. 

When I find a cybersecurity pure-play worth owning for the long-term, my Top Stock Advisor subscribers will be the first to know about it. For now, we can rely on our other high-probability, fast-growing plays to keep our portfolio growing. For access to picks that have produced total returns of up to 305% and counting, as well as any future additions to this winning portfolio, click here.

This article originally appeared on StreetAuthority.