With all the saturation coverage for the spreading coronavirus from China, the plight of Frank Krasovec got very little traction.
Then again, he is hardly a household name. Krasovec serves as the chairman of Dash Brands Ltd. The privately held firm owns Domino’s Pizza franchises in China.
He did not succumb to the coronavirus. Instead, he was the victim of financial fraud costing him at least $450,000.
It all started when hackers gained access to his email address and used that to commit wire fraud against him.
I’m bringing this up now because I fear that with so much worry about the new pandemic, many people may let their guard down.
Even worse, we may see hackers coming at us with phishing emails seeking donations to help those stricken with the virus when in reality they want to rob us blind.
So, there are two points I want to make here. First, be extra cautious regarding emails and access to your credit card accounts.
A Modern Threat
Now then, I have to say I can really sympathize with Krasovec’s plight. My wife and I have had our bank accounts hacked several times.
I recently had to replace my Visa card after cyber thieves grabbed the number from a gas pump where I got filled up on the way back from a ski trip.
All of our accounts were considered breached back in the infamous Equifax Inc. (EFX) network intrusion that broke in the fall of 2017.
You may recall that email addresses and sensitive financial data for as many as 147 million were breached in that hack, including those for my wife and me.
This is one of the reasons why we have since frozen our credit. That way, no one can run a credit check on us or seek to get funds without our express approval.
I’m thinking maybe Frank Krasovec should have done the same thing. The problem is, like so many of us, he traded convenience and access to money for an increased risk of theft.
Because it was access to his email address that cost him so much money. According to a recent report in The Wall Street Journal,he was the perfect patsy.
The short version: Krasovec took on a $1 million personal line of credit from a local bank in 2018. He went on a business trip a few months later.
When he got back, he was stunned to learn that $450,000 of his money had vanished. Hackers had used his email address to get an unsuspecting employee to send them that amount by wire transfer.
If this were an isolated case study, I wouldn’t be spending so much time on it. But the fact remains cyber thieves continue to be very creative in how they go about stealing your hard-earned money.
The Race for Security
These days, they use new-school hacks for email addresses. They then combine that with access to decades-old wire transfer tech.
It’s a cybersecurity trend that’s really on the rise. The FBI says the amount of money stolen in this manner jumped 38.5% last year.
The 2019 reported damages came in at $1.8 billion. That compares with $1.3 billion the year before.
On a global basis, the figure is stunning. Between June 2016 and July 2019, the total damages come in at $26 billion.
Let me be clear. I don’t have any empirical data proving that hackers are using the coronavirus as a lure to get potential victims to respond to spoof emails.
But as the FBI data makes clear, these scammers will use any pretext to gain access to your accounts, often by using fraudulent email addresses.
The privately held cybersecurity company, Agari, issued a warning in late 2018 about California wildfire email scams. The emails purported to come from corporate executives asking employees to make donations, which were actually intended to fatten the bank accounts of hackers.
In other words, the coronavirus challenge is not short-term. It’s part of a larger trend that is expected to continue for years to come. Ditto for the overall world of hacks and cyber intrusions.
Cybersecurity Ventures predicts that cybercrime damages will hit $6 trillion annually by 2021. That’s double the figure from 2016.
And MarketsandMarkets says that sales for the cybersecurity sector in 2018 were worth roughly $137.8 billion. By 2022, that figure will hit $231.9 billion, for a compound annual growth rate of 111%.
On the Front Lines
Now you know why I continue to recommend the ETFMG Prime Cyber Security ETF (HACK). It holds more than 50 stocks that cover the entire field. Debuting in November 2014, HACK was the first true cybersecurity-focused ETF and is poised for a strong 2020.
The fund holds several firms that cater to big corporations and government agencies. Think old guard members like Cisco Systems Inc. (CSCO), the fund’s largest holding, and NortonLifeLock Inc. (NLOK), formerly known as Symantec Corp.
But HACK also holds some of the industry’s lesser-known, more aggressive growth firms. Take a look:
CyberArk Software Ltd. (CYBR) is a fast-moving firm focused on helping organizations prevent privileged account hacks and cybercrimes. Just as it sounds, privileged accounts give IT works access to critical computer systems. By hacking these accounts, intruders can steal and destroy data, launch malware, and install backdoors for future spying.
Palo Alto Networks Inc. (PANW) delivers a broad suite of next-gen firewalls and a range of security features for enterprises that need to protect their IT systems and data. The company says it can protect hacks launched through mobile devices. And that is really valuable in today’s landscape, where companies let their employees use their personal phones for work.
Zix Corp. (ZIXI) offers one of the best ways to encrypt software applications, particularly including one of the most critical of all – email.
This is an emerging sector that Allied Market Research says will grow by 14% a year through 2020 when it will be worth some $2.2 billion. The firm boasts 20,000 clients.
ProofPoint Inc. (PFPT). Eric Hahn launched the firm in 2002 with little fanfare. But the former Chief Technology Officer (CTO) of Netscape, a firm that pioneered the field of web browsers, was really on to something. Proofpoint first focused on email threats and has been steadily branching out to cover a wide range of services.
While it’s not immune to the big selloff we’ve been going through, HACK has a history of beating the broader market.
To filter out the impact of the coronavirus slamming nearly all stocks, I compared HACK and the S&P 500 from the beginning of 2018 through February 21 of this year.
During the period, the S&P 500 was up 18.2%. By contrast, HACK more than doubled that with gains of 39%.
Add it all up and you can see that HACK is the kind of investment that targets a massive tech trend.
Even better, it offers savvy tech investors outsized gains for many years to come.
In the shorter term, when the markets are still unstable, though, making a profit can be a lot less of a steady prospect. It helps to have an expert on your side who first made his fortune during the housing crash of 2008.
A man named Andrew Keene did just that. Now, he’s ready to share his trading strategies with you. All you have to do is click here to check it out.
Cheers and good investing,
Michael A. Robinson