The growth of the Internet has been one of the top advancements in history. But with this good news comes the darker side, namely cyber attacks that cost billions of dollars in damages along with non-monetary impacts. Millions of Americans have gotten their personal data stolen over the past few years, and it will likely only worsen. There’s also the threat of cyber attacks on key government and intellectual assets.
But with the threat also comes a potential investment opportunity in cyber defense.
President Obama just requested another $14.0 billion to improve the government’s safeguards. Could you imagine foreign threats hacking into our nuclear installations and military? The threat is real.
Think about what happened to Sony Corporation (NYSE/SNE), when its database was broken into, costing the company about $100 million. There were also the major breaches to The Home Depot, Inc. (NYSE/HD) and Target Corporation (NYSE/TGT). And just last week, the database at Anthem, Inc. (NYSE/ANTM), the country’s second-largest insurer, was hacked, impacting its 80 million clients.
Cyber Security Stocks a Boon to Investors in 2015?
Cyber security companies are attracting focus as an investment opportunity. The catalyst that will drive up the share price of these stocks will be security attacks that continue to plague companies and governments around the world and cause excessive monetary damage.
In the mid-cap area, an investment opportunity to look at is FireEye, Inc. (NASDAQ/FEYE), which was just hired by Anthem to help protect against further attacks. The company has a current share price of around $39.00.
FireEye has been a favorite on Wall Street following its debut in September 2013. The stock … Read More
The 460-point intraday swing in the DOW on Tuesday could be reflective of what to expect this year. While I was sitting at my trading desk, I was thinking how the volatile swings in the stock market would likely scare the average investor.
Recently, my dad called and asked me what I thought about the state of the stock market. My immediate answer was that it really shouldn’t matter that much to him at this juncture in his life. Now, I’m not saying my dad shouldn’t worry, but he should be largely invested in lower-risk income-producing investment vehicles, such as the banks and utilities, along with higher-yielding bonds anyway.
And that leads me to an important point: the key to successful investing is to understand where you are in your investment lifecycle. Those who are older should have security and income in mind, while younger investors should have growth in mind. An older investor thinking about retirement shouldn’t assume the same amount of risk as a younger investor. The opposite is also true: a younger investor shouldn’t be primarily buying bonds and lower-beta, low-return stocks.
The Best Investment Strategy Based on Age and Risk Profile?
What you need to keep in mind is the concept of a sound asset allocation and diversification strategy that makes sense and fits your priorities based on your age. The idea of asset allocation should be a key part of any prudent investment strategy. Without a plan, you are vulnerable to market shocks that may be insurmountable.
When I talk about asset allocation, I’m referring to the asset mix of your portfolio divided into three … Read More
As we enter the final month of 2014, it’s coming close to the time that you, as an investor, need to start to round out the year and take account of what to look for in the remaining weeks and how you can potentially turn a profit.
The stock market bulls continue to be in full control as we move into the final month of the year. Only the small-cap stocks are threatening to finish the year in the red should a “Santa Claus” rally fail to emerge over the next few weeks.
With QE3 gone and higher interest rates looming on the horizon in 2015, the stock market is looking for direction from retail sales during the next few weeks and the jobs reading this coming Friday.
While major retailers, such as Wal-Mart Stores Inc. (NYSE/WMT) and Target Corporation (NYSE/TGT), offered some positive metrics on Black Friday, the National Retail Federation (NRF) was not as positive. It suggested retail spending fell 11% on the weekend due to low store visits. While it’s not clear how valid these estimates are, the NRF also predicted strong sales in November and December.
Without help from the consumer, the stock market could pause and be vulnerable to downside moves.
What gives me some optimism, however, is the continued growth in the jobs numbers; the economy has managed to generate more than 200,000 new jobs monthly for the majority of 2014. On Friday, when the U.S. Department of Labor reports, consensus is calling for the creation of 225,000 new jobs, versus 214,000 in October. Yet what’s important is that the unemployment rate is expected … Read More
For those who love shopping via the Internet on their computers, tablets, or mobile phones, today is the day many are waiting for—Cyber Monday. It’s a day of great bargains while you’re on the go. But even investors may find a good play for Cyber Monday in the online retail sector.
While Black Friday tends to be huge for the physical brick-and-mortar sales, retailers understand online sales are rapidly becoming a bigger component of total sales. The increased importance of this is obvious as sales online are at more than $2.0 billion and are rising each year.
Plus, with the growing advancement in mobile technology and the desire of retailers to develop a strong online presence to sell their goods to the global market, I expect the trend to continue.
The biggest player in the online retail stock market is Amazon.com, Inc. (NASDAQ/AMZN), which has been one of the most rewarding and impressive stocks in this area. The stock market has rewarded Amazon.com’s shareholders by pumping up the stock from $20.75 in May 1997 to $333.00 as of the close of November 26—that’s a whopping market cap of $154 billion.
I don’t suggest going out and buying Amazon.com at this time, though, especially given its massive stock market valuation at around 375X its estimated 2015 earnings per share (EPS). Instead, I’d look for weakness as an investment opportunity. If you were really enticed to buy the stock, I would rather enter via call options as a leveraged manageable trade.
The point is that Amazon.com is the “Best of Breed” in the online retail stock market. The company has been aggressively … Read More
Jitters in the stock market—or any other market, for that matter—sometimes confuse investors and make them question its direction. They often ask where the market is headed next, or how the recent events will play out. Even worse, they may completely lose trust in the market and just let their life savings decline as inflation continuously takes its toll.
To say the very least, these are genuine concerns, because their life savings are often at stake and a significant move can wipe out their wealth. The broad market sell-off in 2008 and 2009 was a prime example of this, when investors, unsure about the direction of the market, took a major hit to their portfolio—and missed out on the stock market rally that began in March of 2009.
As a matter of fact, according to the findings of the Federal Reserve Bank of St. Louis, when adjusted for inflation, American households have only recovered 45% of the wealth they lost during the Great Recession. (Source: Derby, M.S., “Households Still Haven’t Rebuilt Lost Wealth,” Wall Street Journal, May 30, 2013.) They are still underwater, despite the key stock indices like the S&P 500 being up more than 100% since then.
The recent market action, which occurred after a few members of the Federal Open Market Committee (FOMC) showed concerns about the steps taken by the Federal Reserve and wanted it to reduce its size of asset purchases, has investors rattled once again. The noise is increasing, and bulls and bears are suggesting where the markets are headed next. Some are calling that the stock market has reached its top, while others … Read More