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The Hack on HACK

Pull up Bing (www.bing.com) and search on "Hack Fund." There you will see the PureFunds ISE Cyber Security ETF [2]. This is an exchange traded fund [1], meaning that a constellation of computers is constantly monitoring this fund's price and making long and short positions to take micro profits all through the trading day.

The fund is made up of security technology companies who are directly involved in the infosec world. You will have to become an investor in the fund to get the full prospectus of the funds that are being traded. On the PureFunds web site [2] you can see the top 10 holdings in the fund, such as IL, SAIC, PFPT, FTNT, SPLK. Wait, Splunk? Indeed, the log file analysis company, Splunk, Inc. [3], is part of the HACK fund. That's an interesting addition to the fund.

This post is not about the analysis of the holdings, but rather a warning about the fund. Recently Kaspersky Labs claimed to have been hacked by external "nation state" hackers [4]. You have to wonder why Kaspersky would ever disclose their own security breach. Kaspersky benefits from claiming to be hacked because it shows their vulnerability and lessens their "untouchable" status. This is exactly why the C.I.A. claims to have had their public web sites hacked in the past. You should doubt the sincerity of these claims from Kaspersky, or any AV software provider. These companies are just trying to manipulate the hacker's opinion on whether or not these companies are worthy of attack.

Back to the HACK fund and what it means to you. Every company listed in the holdings is an attack vector for the young and aspiring "Wind Ninja." I call them Wind Ninjas because I once tracked a team down to Uruguay and their monikers were the Japanese names for some mythical "Ninja" spirits, one in particular was a "Wind Ninja." These hackers, like you, have money in their pockets, time on their hands, but unlike you, they enjoy disrupting public opinion. Now they have a passive way of making use of their time and money. You won't be seeing much from the ransom ware people anymore because they can invest their $18M [5] in the HACK fund. Once invested in HACK, the hackers will then continue to drive more and more hacker activity, raising the public awareness (and scare-o-meter) of hacking, and thus increasing the value of their equity position.

This all reminds me of the Dilbert "$10 bug fix." (no citation, sorry) Remember that strip, where Dilbert's team gets paid $10 per bug fixed. So what does he do? Make lots and lots of bugs, and then fix them quickly, thus printing his own money. You can bet the hackers of the world are reading Dilbert and they are all moving their money into the HACK fund [8]. The growth of the fund has exceeded $1B in assets [10], which is serious money now. You can bet there will be some hefty manipulation in this fund. We have already seen some hints of it [8] after the SONY hack.

Now for some stock advice. First you get a team of hackers together, some kids from a local high school. Then you invest your money in HACK. Next, teach the kids how to hack and get them to go after some mid-level business. Once the hack is exposed, the HACK fund will go up in value, and you sell. Boom, you owe me 1% bro!

[1] https://en.wikipedia.org/wiki/Exchange-traded_fund
[2] http://www.pureetfs.com/etfs/hack.html
[3] http://www.splunk.com/
[4] http://www.eweek.com/security/kaspersky-hack-reveals-conflict-between-spy-agencies-security-firms.html
[5] http://www.darkreading.com/endpoint/fbi-cryptowall-ransomware-cost-us-users-$18-million/d/d-id/1321030
[6] http://etfdb.com/2014/inside-the-cyber-security-etf-hack-qa-with-christian-magoon
[7] http://seekingalpha.com/article/2680305-finally-a-cyber-security-etf
[8] http://www.ibtimes.com/new-cybersecurity-etf-hack-sees-shares-jump-after-sony-hack-increased-security-1763538
[9] http://www.theguardian.com/uk-news/2015/may/21/trinity-mirror-alleged-phone-hacking-payout-fund-sunday-people
[10] http://www.businesswire.com/news/home/20150618005830/en/PureFunds-ISE-Cyber-Security-ETF%E2%84%A2-HACK-Surpasses#.VZK3Bk_bKUk

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