By Kris Sayce, editor, Casey Daily Dispatch
Most people know him as a resources analyst.
The commodities guy.
But this Casey Research expert is more than that.
He’s an entrepreneur, a venture capitalist, an investor, and a speculator.
Plus, he heads up our Strategic Investor, Strategic Trader, and International Speculator newsletters.
But what separates him from many analysts is his ability to see big trends that others ignore.
The subject of today’s Dispatch gives a neat example of that.
We’ll show how Casey Research expert Dave Forest has spotted one of the biggest threats facing America today.
And how he plans to help investors profit as Americans fight back…
Welcome to the Dispatch, regardless of whether this is your first time with us or you’re a regular reader.
At the Dispatch we have two goals:
To introduce you to the most important investing themes of the day, and
To show you how to profit from them.
We do this by showcasing the ideas from our in-house investing experts: Nick Giambruno, Dave Forest, and the founder of our business, Doug Casey.
And today’s idea is one of the most important there is.
How Could This Happen?
You may have seen these or similar headlines in recent days:
Ransomware Gang Says D.C. Police Won’t Pay $4 million Demand, Begins Leaking Files – The Daily Dot
Russia Denies Involvement in Darkside Attack on Colonial Pipeline – U.S. News
As Reuters explains in more detail:
Top U.S. fuel pipeline operator Colonial Pipeline shut its entire network, the source of nearly half of the U.S. East Coast’s fuel supply, after a cyberattack on Friday that involved ransomware.
The incident is one of the most disruptive digital ransom operations ever reported and has drawn attention to how vulnerable U.S. energy infrastructure is to hackers. A prolonged shutdown of the line would cause prices to spike at gasoline pumps ahead of peak summer driving season, a potential blow to U.S. consumers and the economy.
According to reports, more than 2.5 million barrels per day of liquid fuels (including gasoline) pass through more than 5,500 miles of Colonial’s pipelines.
So this is no small disruption. Pre-COVID, according to the Energy Information Administration, Americans used on average 9.3 million barrels per day of gasoline.
But how could such a cyberattack happen?
Quite easily, it seems.
In 2018 (the most recent year available), industry experts PurpleSec identified more than 812 million malware (malicious software) infections.
And the Identity Theft Resource Center says there were 1,001 data breaches in 2020. These exposed more than 155 million personal records.
But these recent ransomware attacks aren’t the first.
Two years ago, scammers struck another east coast location…
The U.S. Government Knows This is a Major Problem
Dave Forest wrote specifically about that ransomware attack in the February issue of his Strategic Investor newsletter (current subscribers can catch up here). He explained:
In May 2019, hackers infiltrated Baltimore’s computer network. It was the second ransomware attack on Baltimore in just over a year. If the city paid the ransom, the hackers would release all of the city’s files.
The hackers wanted a ransom of 13 bitcoins. At the time, that was worth around $76,000. In return, those responsible for the attack would “release” the city of Baltimore’s computer network.
The city never paid up. Instead, it cost them $4.6 million to recover their files.
And this is just one example. Dave went on to explain the wider extent of the problem:
Cybercrime as a whole costs somewhere close to $6 trillion a year in damage. By 2025, that number could reach $10.5 trillion, enough to be the third-largest economy on the planet.
The U.S. government knows this is a major problem. Even with unlimited resources, it’s just as vulnerable as the local business down the street. In fact, the FBI reported that 966 ransomware attacks against U.S. government entities in 2019 cost $7.5 billion.
…we’re on the verge of a massive increase in cybersecurity spending. According to Statista, the global cybersecurity market will reach about $248 billion by 2023. That’s up from $184 billion last year.
It’s a simple fact that cyberattacks happen way more often than people think. And worse is that many people seem to underestimate the risks posed by these attacks.
Fortunately, there are solutions. One of those comes from the company Dave profiled in his February monthly issue.
If Dave is right, that company will benefit as governments and industries use its expertise. As Dave notes, spending on cybersecurity in 2023 will be $64 billion higher than 2021. That’s a 35% increase.
And he doesn’t expect the spending growth to stop there.
Attacks like this are very sophisticated. It takes a lot of time and know-how for cybersecurity firms to keep up with the latest scams. And that also takes a lot of money and investment in infrastructure.
Hence why the dollars spent on this sector are only going to increase… creating an opportunity for smart investors who see the writing on the wall.
We Prefer the Best Few of the “Bunch”
If you’ve been keeping up with us the past few weeks, you should be able to see how this is a perfect example of the Casey Research approach to investing.
With the “10 x 10” Approach, our experts aim to help you find investments that could increase by up to 10 times or more over a given timeframe.
The timeframe involved differs depending on the individual idea.
But overall, you’re looking for critically important businesses and industries that have great growth potential themselves in a growing market.
The cybersecurity industry and Dave’s top pick both meet that criteria.
Now, you don’t have to follow Dave’s pick. There are ETFs (exchange-traded funds) that you can use to play this trend. But as always, we favor investing in the best few of the “bunch,” rather than the entire “bunch.”
Good analysis helps filter out the bad stocks that drag down the performance of ETFs. If you want individual stocks, you can check out the holdings in an ETF such as the iShares Cybersecurity and Tech ETF (IHAK).
The iShares website will show you which stocks are in that ETF.
You can then do your own research to pick the stock or stocks that look the best to you…
Or you can find out which stock Dave says will be a standout performer in his Strategic Investor research. He and his team have already done the hard work. Details on how to get access are here.
Editor, Casey Daily Dispatch