Tom’s Take on Investing in Cybersecurity ETFs
Transcript:
Katie Nealis:
We have this huge ransomware attack. I’m interested in investing in cybersecurity. What is the best way to do that?
Tom Vaughan:
Yeah, that’s a good question. Actually. We have been investing in cybersecurity. So there’s a couple of different things that I would say there. First of all, the cybersecurity industry is fairly fragmented. It’s really powerful. They’re making some unbelievable tools. There’s hardware, there’s software, there’s a whole bunch of different ways that you look at trying to protect yourself from a hack, or these ransomware situations. And because these things are happening, and they keep happening, and we’ve had some really big ones, the one that’s happening right now is $70 million, maybe 1500 different companies involved, we’re starting to see a lot of interest in cybersecurity stock. So number one is I would be looking at ETFs as a whole, in that arena. Just because I want to buy all of the cybersecurity stocks, I don’t want to try to figure out which ones are going to be the big winners here, because it’s a little fragmented, a lot of them are a little bit smaller, as far as that goes. And so there’s there there are not a tremendous number of ETFs that specialize in cybersecurity, I think there’s seven, three of them are real new.
One of the other four, one of them is kind of having some troubles, there’s basically three we used to, and we’ve had one called AI hack, and that’s the ticker symbol. That’s the AI share cybersecurity. This is part of their mega trend portfolio, where they’ve identified some major trends that they see happening in the future, and cybersecurity is one of them, you know, it’s just continuing, you can see why they picked us as a mega trend with these ransomware attacks that have happened. And so that we’ve had since so last April, I’d say in the portfolio and in some different form or fashion. And then recently, we purchased bug BG, which is global axes, cybersecurity piece, it’s a little narrower, a little bit more, you know, focused on that cybersecurity, and that’s done pretty well for us. So far, I’ve actually been pretty happy with that even like the down day yesterday, for example, kind of held up a little bit better still came down. But there’s a demand for the cybersecurity companies and I believe that they’ll continue to see their revenue growth. Because you know, these guys are making a lot of money, they got to $5 million out of that colonial pipeline piece. Some of that they got recovered, but $11 million from the meatpacking plant, now they’re asking for 70 million, these are just the ones we’re hearing about. So there’s probably lots of little ones too. They’re not going away. And so companies are starting to look at this and say, Hey, this is a mission critical piece, you know, we’ve got to focus on, you know, getting our things under protection. So I would look at bug and I hack as two pieces to really consider for cybersecurity.
Easan Arulanantham:
The thing about cybersecurity is it’s not just the public sector or the private sector, it’s also the public sector. Yeah, you know, militaries need, and like the government needs the same kind of cybersecurity. And so you have spending across the board, government contracts can be quite, you know, quite profitable. They usually have, you know, really stringent requirements or what have you.
Tom Vaughan:
Yeah, yeah, I guess the other way to look at that, too, is you’ve got governments and companies with a lot of money to spend in this area, because they have a lot to risk. And so you got the small companies who could get big revenue. And the other thing about cybersecurity, it’s really fascinating to me, it’s not just like, you know, your computer, it’s everything is Internet of Things. They call it IoT Internet of Things. And so everything’s kind of connecting. So in 2018, somebody hacked into the thermometer of a fish tank, in a casino, and then they managed to work their way through into the high roller database. And so who would have thought, right? So every single thing that you have, that is connected to the internet might need some type of cybersecurity protection. That’s a big market, big companies with lots of money, the government and and all the little things, it’s a huge market that somebody is going to make a fortune off of this whole area. So and that’s where that’s why you want to maybe invest in that area, you know, and that’s why we have it in our portfolio.