Blog : Brace for Cyberattack!

by Ed Zwirn on July 17th, 2013

Penny stock investors should look for war to erupt on Wall Street tomorrow (Thursday). Not the kind of war using real weapons, mind you, and shedding real blood, nor even the more savage kind of war that pits traders against one another in a genuine fight for survival. The Street is supposed to brace itself for a simulated cyber attack, a fun alternative to the other types of war I mentioned.

About 50 banks and other financial organizations will participate in Quantum Dawn 2, a hacking drill in which so-called "cyber" attacks will be launched--albeit only in a simulated fashion--against financial firms and exchanges. Participants will also include the U.S. Treasury, the Department of Homeland Security, the Securities and Exchange Commission and the FBI.

While this exercise--the second of its kind, after 2011's Quantum Dawn--is likely to prove no more than a sideshow to real concerns about real economic problems, not to mention real wars, it will have at least one unintended, if temporary, consequence for penny stocks.

As is already the case due to recent leaks about U.S. government data surveillance activities, the general public has been primed to go on the defensive, with the upshot here being a boom for penny stocks and other companies dealing with encryption and other forms of data security.

Symantec, a software giant that has much to gain from an increase in hacking, calculates that cyber-attacks against U.S. business jumped 42% last year alone. The businesses themselves, on the other hand, are usually reluctant to give details about how they've been affected, financially or otherwise, leaving the public with no means to verify the extent of this cyber threat and hungering for hot penny stock products to help them deal with threats like these.

Of course, dangers of indeterminate size and probability can be the most frightening ones, and penny stocks and other small-cap issues would probably be inordinately affected by a destabilizing cyber threat to the market. On the other hand, nobody knows who the hackers are, whether they are after money, are spying on behalf of foreign governments or are malcontent teenagers or activists ("hacktivists") seeking to make political statements.

Whether or not any "simulated" exercise like this can truly duplicate the threat of the real thing (assuming it is out there) in any case, it's high time to load up on your anti-virus programs and check your penny stock portfolio for virus protection as well. These steps may not do either you or your penny stock portfolio much practical good, but at least you can say you were prepared and paid for "protection," whether you needed it or not.