Another Buy EVERY Dip Investment
Dear Wall Street Daily Reader,
Ever since the early days of the pandemic, I’ve been telling you to buy everydip in chip stocks.
So, yes — buy the current dip that’s underway, as semiconductor stocks are selling off for a totally bogus reason this week.
Today, I’ll share another “no brainer” buy-the-dip investment.
But first, let me address why this week’s chip dip is completely overdone…
Renewed rumors that Apple Inc. (AAPL) is going to start making cellular chips for its 2023 iPhone lineup and ditch its current vendor Qualcomm (QCOM) sparked a nasty sector-wide sell-off to start the week, as you can see below.
Even if the world’s largest company keeps bringing more and more chip production in-house, Apple’s not suddenly going to take over all chip manufacturing.
There’s just too damn much of it.
To Chip-Finity And Beyond
You see, as I shared a few weeks ago, total chip shipments are expected to rise 13% in 2021, to a new record of 1.1353 trillion units.
Forget this being the third time in history that chip demand is set to top the “Big T” unit mark.
What’s most notable here is the acceleration in growth.
Last year, chip shipments only rose 3%.
So we’re talking about a full 10 percentage points more growth this year — and then growth to infinity afterwards, as every tech trend for the foreseeable future requires more chips.
The infinity prediction might be a bit of an exaggeration. But it drives home my point:
It doesn’t matter how much of the chip growth Apple hogs for itself. There’s still plenty to go around (and then some) for the rest of the top players in the space.
So, you guessed it: keep buying every dip in chip stocks.
And here’s why you should do the same in cybersecurity stocks, too.
Hack Attack 1000+
As I’m sure you’re aware, gas prices are spiking this week, as a major pipeline shut down because of a cyberattack.
This wasn’t your run-of-the-mill high school geek-squad prank, either.
As Christopher Krebs, the first director of the Cybersecurity and Infrastructure Security Agency told Congress last week, “We are on the cusp of a global pandemic.”
Only this time it’s not biological. Instead, it’s driven by software.
The fact that one of the largest pipelines in the country, transporting more than 100 million gallons per day, can be shut down via ransomware, underscores the vulnerability of, well, pretty much everything.
And that’s no exaggeration.
After all, nearly 90% of business assets are already digital. And now, with the Covid-19 pandemic accelerating the next phase of the digital transformation, businesses will be moving everything online.
Tack on the billions upon billions of dollars pouring into the Internet of Things (IoT), and everything will eventually be connected to the internet — and, therefore, everything will eventually be vulnerable to attack.
And here are the investment implications…
Reactive, Never Proactive
The world has underinvested in cybersecurity for so long that it’s almost criminal.
At this point, we don’t have the slightest hope of getting ahead of the threat.
From here on in, we’ll always be playing catch-up. Why? Because the internet is the only thing more dynamic than the stock market.
Hackers develop new techniques and technologies every day. Or they repurpose well-intentioned and fresh innovations created elsewhere to accomplish their sinister acts.
In other words, with new cyber threats constantly emerging, we’ll always be reacting and trying to update our defenses to protect against the newest threats.
That’s the makings of a “forever” growth trend — which, if you ask me, are the best kinds of trends to invest in.
No matter what’s going on in the world or the market, we can bank on more growth for the sector. Much like we could do with smartphones the second they were unveiled to the public.
The Only Problem
Against this constantly evolving cyber threat backdrop, however, an investment problem exists.
There’s no practical way for a single cybersecurity company to keep up. So, to ensure we’re capturing as much of the growth trend as possible, we need to invest in a portfolio of such companies.
Thankfully, exchange-traded funds (ETF) exist to make it easy to purchase dozens of cutting-edge cybersecurity firms with a single investment, at a low cost!
Over the years, more and more cybersecurity focused ETFs have emerged, including the ETFMG Prime Cyber Security ETF (HACK), First Trust NASDAQ Cybersecurity ETF (CIBR), iShares Cybersecurity and Tech ETF (IHAK), and Global X Cybersecurity ETF (BUG).
It doesn’t matter which one you pick, as long as you invest in one.
As you can see in the chart below, they’ve all been long-term winning investments. Every dip is short-lived.
With the cybersecurity trend set to keep growing for the foreseeable future, the outperformance for these ETFs should continue as well.
Ahead of the tape,
Editor and Founder, Trend Trader Daily