The cybersecurity sector may offer significant long-term investment opportunities
My name is Robert Picard. I head up private market solutions at Hightower Advisors. Hightower is a community of 135 separate advisor businesses and wealth management firms spread across the United States in approximately 34 different states.
One of the areas that we've been spending a lot of time looking at, of course, is the growth areas, specifically technology. We know public markets, to a degree, are very overweight in technology. We have focused on certain specific segments or themes within technology that we believe to be relatively robust, have meaningful tailwinds, and will continue to generate returns and grow consistently over time.
One example would be cybersecurity. Just to give you an idea of some of the elements—and not to scare anyone—but it's fascinating to understand that ransomware is increasing almost 1,000% per year. Every day, we're waking up to news of someone who's been locked out or hit by ransomware.
Another area that's quite frightening is the fact that the average breach—when I used to negotiate contracts about how soon we had to be alerted if there was a breach with one of our counterparties, we would negotiate five days, seven days, and go back and forth with the lawyers—it turns out the average breach takes almost one year to be discovered. This just highlights how much risk is still in the system and how important cybersecurity is.
Lastly, in certain market downturns or if there's a recession, people may be concerned that CapEx spending in technology could be reduced. Cybersecurity, however, really can't be reduced. It's now a fiduciary responsibility at the board level in corporate America to ensure cybersecurity is properly maintained. We believe this creates a floor that enables this sector or segment within technology to continue outperforming as we evolve as a society.
We need to evolve on the cybersecurity side, and we believe there will continue to be meaningful investment. Some of the best investments and opportunities are not at the public company level. The purest investments are often at the venture capital and private equity level in private companies that are still being managed or run by their founders.