Justin's note: For today’s Dispatch, I wanted to share an essay from Bonner & Partners’ tech expert Jeff Brown.
Jeff has been working in the tech field for over two decades. He’s always on the lookout for the next world-changing tech developments, and today he’s discovered an industry that’s setting up to go parabolic in the coming years…
By Jeff Brown, editor, The Near Future Report
In the past few months, the nightly news has been plastered with political protests turned violent. Riots in the nation’s capital, Baltimore, Chicago, and even on university campuses have caught the attention of the average American.
But behind all this, there is a new crime wave sweeping across the country.
Unlike crimes of the past, this one can’t be stopped by more locks, security cameras, or guards. And these new criminals aren’t desperate amateurs. They are fully funded, sophisticated criminal organizations that function like a normal corporation. Some even have human resource, accounting, and engineering departments.
I’m talking about the rising threat of cybercrime in the United States. This new criminal element is quickly becoming an epidemic as numerous companies and individuals fall victim to this new type of crime.
Markets don’t understand how severe this threat is yet, but they will. And that presents a unique opportunity for investors. Let me explain…
$3 Trillion Stolen by 2020
During the first three months of this year, I attended seven conferences and several other tech-related events.
One of them was the RSA Conference.
It’s the major annual cryptography and cybersecurity conference of the tech industry. It has become absolutely massive (43,000 visitors).
The company that put on the conference, RSA Security, created and successfully deployed public key cryptography. That’s the underlying technology that allows people to send encrypted messages back and forth.
The conference was a great place for industry meetings, but many of the presentations are highly “scrubbed.” Companies are not as open and forward-looking as they used to be.
The big boys like Microsoft and HP had almost nothing interesting to say. Their presentations were so generic and fluffy. I almost fell asleep.
But there was one aspect of the Microsoft presentation that caught my attention…
Last year, businesses lost $1 trillion to cybercrime. And that number is expected to grow to $3 trillion by 2020. That’s right. In the next three years, the financial damage from cybercrime is expected to triple.
Cyberattacks on major companies have been in the news in recent years. Cybercriminals attacked health insurance company Anthem (ANTM) in 2015. Tens of millions of customer accounts were compromised. Yahoo (YHOO) was the victim of a number of cyberattacks in 2016. Yahoo was forced to renegotiate its merger with Verizon as a result, losing $350 million in the process.
The Cybersecurity Industry Is Unprepared
These types of cyberattacks will only continue.
Large cybersecurity firms can’t keep up with the surge in cybercrime. Their product development is just too slow. And even if a firm could put in place all the safeguards necessary to keep networks and data safe, the defenses would be so burdensome that the organization wouldn’t be able to function.
You can see the scale of cyberattacks for yourself by looking at this interactive map.
It’s for this reason that the current U.S. presidential administration’s attention has turned toward the need to drastically upgrade its cybersecurity infrastructure. Under discussion is the need to have a dramatically stronger, more secure, and centralized information technology architecture.
During his confirmation hearing in January, the current Secretary of Defense, retired Marine Corps General James Mattis, said:
I realize [cybersecurity] is a new domain, but that does not give us an excuse not to address it on an urgent basis.
Even the president is on record acknowledging the need to expand cybersecurity measures. He said as a presidential candidate last year:
We have to get very, very tough on cyber and cyber warfare. It is – it is a huge problem…
A Watershed Moment
As these attacks become more and more pervasive, companies capable of defending against these new criminals will surge in value.
Data in a new press release from Zion Market Research confirms this. The global cybersecurity market is expected to reach $181.77 billion by 2021, with a compound annual growth rate of 9.5% for the next five years.
But despite this, the cybersecurity market is undervalued right now. Enterprises are too complacent. I believe that we will see more large, very public, expensive, and painful cyberattacks this year that will reignite this sector.
The bottom line is that 2017 is a watershed moment for the cybersecurity industry. The number of cyberattacks will grow exponentially in the next few years. Companies capable of defending against these attacks stand to profit immensely.
Editor, The Near Future Report
P.S. The rising tide of cybercrime will continue to grow in the coming years. But there is another trend playing out in our society. It’s a health crisis of epic proportions, one that is growing faster than Alzheimer’s, cancer, and diabetes combined.
However, a “cure” for this epidemic is right around the corner. I recently put together a presentation to show how early investors could see triple-digit gains when this solution is put in place. Get the details here.