Investor Takeaways from The Russian Hacking Scandal

Shocking the norms of political discourse is customary for Donald Trump and he did so again on Wednesday, when he publicly sided with WikiLeaks founder Julian Assange against America’s own intelligence community. Contrary to the findings of the NSA, CIA and FBI, Trump endorsed the activist’s claim that Russia didn’t provide WikiLeaks with hacked Democratic Party emails.

Trump’s assertion is dubious… at best.

It’s no secret that Russian President Vladimir Putin and Trump have expressed great admiration for each other. In addition to their budding “bromance,” the Russian dictator and the former reality television star also share extensive financial ties.

Putin-directed cyber attacks on Trump’s behalf during the 2016 presidential election are a reminder that all individuals are vulnerable to hacking.

As a new year gets under way, make it your resolution to better protect your data. Increasing numbers of technology companies are notifying users of their online services if they have been victims of state-sponsored hacking attempts. But there are cyber security measures that you can take as an individual, right now.

Five years ago, staying safe online meant not giving out passwords to strangers. Today, with data breaches assaulting systems regularly, that’s not enough. Among the six steps you can take:

1) Clean up your social media practices by not “friending” or connecting with unknown people.

2) Don’t click unknown websites that have appeared in your inbox via unsolicited emails.

3) Avoid using debit cards online. Credit cards companies enforce fraud control and restitution; you can usually get your money back if you’ve been a victim of cyber crime. But if hackers access your checking account via a debit card, the money is usually gone forever with no hope of redress.

4) Strengthen password protection. Don’t use family names or personal biographical data that can be deduced or unearthed.

5) Never respond to Internet ads for anti-spyware programs, because they may actually open up spyware.

6) Use security software, made by major anti-hacking companies such as Cisco Systems (NSDQ: CSCO).

Cyber security plays…

Small wonder that networking and cyber security leader Cisco Systems is thriving. Since a Cisco fixed-income issue was added to the Personal Finance Income Portfolio on November 12, 2014, it has generated a total return of 26.65%.

Our rule for buying any bond is to always stick to companies whose common stock you’d want to own. Healthy companies with strong balance sheets are the best assurance that interest and dividends are sustainable.

With a market cap of $151 billion, Cisco dominates the global market for networking equipment as well as cyber security. The company’s entrenched position in these arenas has given it resilience during the ups and downs of the economic cycle, and you can expect plenty of economic and market volatility in 2017.

Despite growing concerns about a recession this year, Cisco should see greater demand for its products and services, as cash-rich corporations make belated investments in their IT infrastructures and attempt to beef up cyber security.

Cisco is a major developer and marketer of Internet-based networking products; the company’s routers and switches are ubiquitous in offices, classrooms and government agencies around the planet.

Cisco also has carved out a specialty in protecting these networks, which are increasingly vulnerable to hacking from foreign governments like Russia as well as organized crime. Cisco’s security products provide firewall, web and email intrusion prevention, without impeding mobility or interactivity.

An often overlooked opportunity…

Jim Pearce, chief investment strategist of Personal Finance, highlights an often overlooked opportunity to profit from the boom in cyber security:

“The tech sector’s cyber security firms aren’t the only way for investors to capitalize on a 21st-century plague. The cyber risk insurance market has the vast potential to grow almost as much as the tech companies providing arms in the global war against hackers.

This fast-growing, $2.5 billion insurance market could be worth at least $5 billion worldwide in 2020, with some estimating the industry’s size closer to $10 billion.”

Chubb (NYSE: CB), a leading insurer in the cyber risk market, is a PF Growth Portfolio holding. Since Jim added Chubb to the portfolio on April 9, 2014, the stock has racked up a total return of 41.58%.

Got any personal tales of cyber breaches? Our readers could learn from your example. Shoot me an email: — John Persinos

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