Hacking and cybersecurity are huge issues facing America. Last year saw attacks that rocked our financial and political systems. This year could be worse.
Is our new president, Donald Trump, going to do anything about it?
Just as importantly, can you as an investor make money off of it? The answer to both questions is “yes.”
First, anyone who tells you cyberattacks aren’t a problem has their head in the sand. Just last year, a massive cyber heist was pulled off through the Society for Worldwide Interbank Financial Telecommunication. That’s the global financial messaging system. And it was used to steal $81 million without using guns. Only computers.
The Attacks Are Relentless
That’s not all. LinkedIn (NYSE: LNKD) got hacked to the tune of 117 million accounts, 65 million Tumblr accounts were stolen, and 500 million Yahoo (Nasdaq: YHOO) accounts were hacked.
Does that sound bad?
Hold on to your tin-foil hats. Hacking tools belonging to the NSA were stolen. The theft was discovered in August. These are programs used to gather intelligence on a massive, super-secret scale. They can chew through Cisco (Nasdaq: CSCO) firewalls like they’re toilet paper.
Russia hacked Hillary Clinton’s campaign as well as the Democratic National Committee. President-elect Trump made a lot of hay about that. But his organizations were hacked repeatedly. For example, his hotel chain suffered a cyberattack in April of last year.
What Can Trump Do?
So that brings us back to Trump. As president, what will he do about the surge in cyberattacks?
Well, Trump and his team are already putting a lot of thought into cyberterrorism and cybercrime.
He already announced that he’s going to order an immediate review of all U.S. cyber defenses and vulnerabilities.
The Department of Defense is spending $5.49 billion on cyber defense in 2017, down slightly from the $5.5 billion it spent last year.
But that’s only a piece of the $19 billion it will spend across the federal government this year. And that, in turn, is up from $14 billion in 2016.
We’ll see if Trump boosts this. He has promised to spend more on the military, and that should include U.S. Cyber Command.
And Trump named Thomas Bossert as his deputy for domestic and transnational security priorities.
This is separate from the duties given to incoming National Security Advisor Michael Flynn. Bossert is a former cybersecurity aide to George W. Bush and the president of Civil Defense Solutions, a consulting firm. He is there specifically to focus on cybersecurity.
Our Man in Cyberspace
The fact that Trump brought Bossert on board shows that he is concerned about Russian and Chinese cyberattacks on America.
And China has done plenty. Its cyber heists include stealing the plans for America’s newest fighter, the F-35. Chinese hackers also stole the personal information of 20 million government employees.
What were the Chinese up to? Maybe Bossert will find out.
Bossert is an advocate of presidential leadership in cyberwarfare. He shrugs off any divide between military and civilian cyber targets.
In 2013, he said, “There will be a military objective associated with almost every internet connection in this world once we go to war.
“And the cascading consequences will be on civilians – civilians as individuals, but also on civilian economic constructs – banks, financial centers and communications capabilities.”
The experts at respected research firm Forrester expect that President Trump will face a “cybercrisis” within his first 100 days. It could be criminals, or it could be an attack by another nation.
“Whether you know it or not, the cyber cold war has started,” Corey Nachreiner, chief technology officer at WatchGuard Technologies, said in press reports. “Nation-states, including U.S., Russia, Israel and China, have all started both offensive and defensive cybersecurity operations.
“Nation-states have allegedly launched malware that damaged nuclear centrifuges, stolen intellectual property from private companies and even breached other governments’ confidential systems.”
So Bossert and U.S. Cyber Command could have their hands full.
But things aren’t all bad. For one thing, Trump could build on the work that President Obama ordered.
A special nonpartisan Commission on Enhancing National Cybersecurity released its report recently to both President Obama and the president-elect.
Its top recommendation: “Train 100,000 cybersecurity specialists by 2020.”
Other recommendations include better defense of information infrastructure, international protocols to stop countries from hacking each other, a national cybersecurity strategy and a new “cyber advisor.”
It looks like the Trump team is already working on the last two ideas.
But it may not be enough. A recent Christian Science Monitor survey of U.S. political, intelligence and business leaders in cybersecurity shows that 75% of them “do not believe cybersecurity will improve with the Republican in the Oval Office.”
The damage from cybercrimes is projected to double from $3 trillion annually in 2015 to $6 trillion by 2021.
To me, that sounds like an opportunity for companies with the tools to battle that crime wave.
That’s why I expect some cybersecurity stocks will do quite well in 2017 and beyond.
Importantly, the global cybersecurity business is estimated to be worth $49 billion in 2017. It is riding a wave of cybersecurity spending. That spending is projected to exceed $1 trillion over the next five years!
Wow! That’s a heck of a lot of money. Let’s scoop some of that up.