Well today, I wanted to take this opportunity to wish everybody, and I do mean everybody a wonderful 4th of July!! Although I have my political views on this current Administration, I am proud to be an American citizen. My parents immigrated from India, and worked damned hard to bring me up. The results of their labor paid off, as my Dad became one of the most, world renowned researchers in the field of Neuroscience.
So be proud to be an American. We have many rights and freedoms that we take for granted in this country, which many people around the world do not have, especially those in the developing nations.
So with all this said, I decided to write on a different topic, but of course, it still relates to Cybersecurity. Today, we explore what Cybersecurity means in the world of finance, especially in the stock markets. Keep in mind that I am no where near to even being close to a stock specialist, but I do have an MBA, in which I took numerous courses in financial and stock theory.
In some ways or another, we can view today’s climate of Cybersecurity stocks to that of the .com boom in the late 90’s. But I characterize this kind of uptrend as a much more cautious and slow growth one, as opposed to the rapid rise and demise of the all of the .coms that existed.
I do scour the financial news headlines as well, and there are some startups out there that are getting some serious rounds of fundings from both VCs and private equity firms.
But the key difference that I am finding between now and the late 90’s is that these kinds of deals are not making the big headlines like in the .com era, as many investors are now taking their time to see what they will be potentially be investing in, and reviewing business with a microscope.
This is good. I would much rather see slow and steady, rather than what transpired in the .com era. This means that growth is solid, real, and will be long lasting.
It also means that their will be real value in their stocks, which of course the best news will be is that they will pay out some nice dividends. But then, there are those established Cybersecurity companies that have been around for some time, and whenever they bring about good news as to how they mitigated a Cyber threat, their stock will go up as well.
Now, you may be wondering as to how you can get a piece into this action. Well, the best way of course is to be investor. There are multiple ways in which you can do this, for instance, if you have the money, you can invest directly into one of these startups, or you can buy shares of stock into them. But probably the safest way for the average investor is to invest money into what is known as an “Exchange Traded Fund”, or an “ETF”.
These are like mutual funds; however, they trade like normal stocks. So, trades are immediately (such as buy and sell) executed, just like a real stock. This is different from a mutual fund. For example, if you sell a fund, you don’t know what the executed price will be until 4 PM the day of the trade.
Also, an ETF differs from a stock trade in that the proceeds from a sale is “swept” into your money market account that same day. Unlike a stock, you have to wait for three days for the money will clear before you will have access to it. This is known as T+3, and this rule has been around for a long time.
So, here are some Cybersecurity related top picks you may want to consider to add to your portfolio.
As you can see, this is the ETFMG Prime Cyber Security ETF Fund. It’s got a nice growth trend, and is up 18% just this year alone. It’s overall trend of growth has returned investors 31% since this fund launched back in November 2014. This is actually double the rate of the growth of the S&P 500 during the same time period. This ETF invests in the following Cybersecurity companies:
- Palo Alto Networks (has experienced a 33% Year over Year (YoY) growth rate);
- Fortinet (has experienced a 66% Year over Year (YoY) growth rate);
- Juniper Networks;
- Cyber Ark Software (has experienced a 66% Year over Year (YoY) growth rate);;
Here is a chart for the First Trust NASDAQ Cybersecurity ETF. It has yielded a 23% Rate of Return since July 2017.
But if you want to invest directly in a startup, here are two top picks:
This is the chart for Carbon Black Inc., and is currently traded on the NASDQ. The ticker symbol is CBLK.
This is chart for Zscaler, Inc., and is currently traded on the NASDQ. The ticker symbol is ZS.
Both of these startups have just recently gone public, and have beat the analysts in their first quarterly reports.
Other reasons to invest in Cybersecurity related stocks:
- Cybersecurity spending is expected to climb 7 percent to $93 billion this year compared with $86.4 billion in 2017;
- Cyber attacks will cost a total of $6 trillion annually by 2021, double the $3 trillion in damages in 2015, thus creating a huge demand for products and services;
- The launch of the General Data Protection Regulation, a sweeping data privacy law that went into effect across the European Union last month.
So here some picks in which you can hopefully prosper from. Of course, there are many others, but always check with an investment professional first to determine your risk tolerance. From there, he or she can then tailor a Cybersecurity portfolio just for you!