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Bigger than Pot, Cocaine, and Heroin Combined

Written By Brian Hicks

Posted September 24, 2011

It’s $100 billion bigger that the combined global black market in marijuana, cocaine, and heroin…

The Internet may not be an unlit corner on the dark streets of Baltimore, but it could prove just as dangerous to your wallet.

According to The Norton Cybercrime Report 2011, 431 million adults worldwide fell victim to this new frontier last year. All told, cybercrime cost victims $388 billion in 2010 between the financial losses they incurred and the time they spent working to repair the damage.

“There is a serious disconnect in how people view the threat of cybercrime,” said Adam Palmer, Norton Lead Cyber Security Advisor. “Cybercrime is much more prevalent than people realize.”

The truth is 14 adults become a victim of cybercrime every second, resulting in more than one million cybercrime victims every day.

It Could Happen to You

Unwittingly, you may be one of them — especially if you are a man between the ages of 18 and 31 who accesses the Internet with your mobile phone. In this group, four out of five have already fallen prey to a cybercrime in their lifetime.

For Internet crooks, the wave of new mobile devices creates an even more target-rich environment, as users log on with an increasing number of devices.

According to mobile phone maker Ericsson (NASDAQ: ERIC), roughly 50 billion devices will be connected to the Internet by 2020, including airport kiosks, industrial control systems, and remote network-monitoring devices.

By U.S. Census future estimates, that pans out to 6.57 devices for every man, woman, and child on the planet.

Experts realize keeping the Internet safe will be a monumental task by then.

And individuals only represent just a small slice of this modern crime wave; major corporations and government agencies make for even bigger targets.

Here is the short list of successful cyberthug attacks:

The CyberCrime Short List

  • Visa – December 8, 2010

  • MasterCard – December 2010

  • PayPal – December 3, 2010

  • Nasdaq – March 30, 2011

  • The London Stock Exchange – Jan 31, 2011

  • JP Morgan Chase – April 1, 2011

  • Google – June 1, 2011

  • The International Monetary Fund – June 11, 2011

And that list just scratches the surface…

  • On July 15, 2011, the Pentagon’s secure databases were broken into, allowing cyberspies to steal over 24,000 highly-classified documents.

  • In May 2011, more than 360,000 credit card numbers were stolen during an attack on Citigroup.

  • In March 2011, email handler Epsilon was the target of a massive breach costing anywhere from $225 million to $4 billion in damages.

  • On August 26, 2011, officials from a Chinese top military research institute bragged about how they could and could breach U.S. State Department and Defense databases, despite any cyber strategies adopted by the Pentagon.

And as I reported in an article back in January, the threats of cybercrime have national security implications that could one day lead to a full-scale war.

David Hess, president of Pratt & Whitney, said recently he suspected the attacks against his firm’s network were coming from “foreign countries,” and were not the result “of some guy with sneakers in his cubicle hacking away at a computer screen.”

The Internet Cold War

The Stuxnet virus that mysteriously crippled an Iranian nuclear facility last year is a perfect example of what’s possible.

These real-time threats have led to beefed-up budgets to combat them. A report released in December by Input predicts federal investment in cyber security will reach $13.3 billion by 2015, up from $8.6 billion in 2010. That’s a compound annual growth rate of 9.1% — nearly twice the rate of other government IT spending.

This is going to create a money-making opportunity for investors as public companies with security expertise begin to win big new government contracts…

Make CyberCrime Pay

In this arena, one of the biggest beneficiaries is a diversified technical services company called SAIC Inc. (NYSE: SAI).

Headquartered in McLean, Virginia, the company’s 45,000 employees serve customers in the U.S. Department of Defense, the intelligence community, the U.S. Department of Homeland Security, and other U.S. Government civil agencies and selected commercial markets.

At the company’s core, SAIC helps governments and companies plan, manage, and protect critical public infrastructure. As a result, the company wins contract after contract, largely from the federal government.

In fact, the company’s backlog of signed business orders at the end of the second quarter of fiscal year 2012 was a whopping $17.7 billion. As compared to the end of the second quarter of fiscal year 2011, that marked a total backlog increase of 12%.

Trading at a low P/E of 9.19 on forward basis, the current market selloff has left SAIC heavily discounted for a company that boasts a return on equity of 23%…

At 12.5X 2012 earnings, that makes SAIC worth $16.87/share — offering investors 40% upside from here.

These are threats are real and growing. You, your family, your company, and even your country are at risk.

In the future, I’ll be publishing a free report on how to protect yourself.

As for more ways to make money in these markets, our editors have put together a few of their best ideas in this week’s Wealth Daily and Energy and Capital articles, below.

Your bargain-hunting analyst,

 Steve Christ Signature

Steve Christ
Editor, Wealth Daily

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