Biological and Chemical Defense

The second wave of covert attacks after September 11 was biological in nature (anthrax) and the culprits have yet to be identified. Now that we are faced with the necessity to be able to identify and neutralize lethal agents in air, food and water supplies, the government has dramatically increased funding for biodefense, launching the $5.6 billion Project Bioshield.

Many of the companies that stand to benefit from this initiative supply equipment that utilizes advanced genomics, a fast-growing field that is essential for identifying military toxins but which is also required to analyze the genetics of avian flu strains to prevent or treat a pandemic. We also follow and recommend the companies that provide the 'picks and shovels' for biodefense.

Biometrics

Biometrics, as applied to the security field, is the use of distinctive anatomical characteristics to positively identify individuals. These systems use fingerprints, retinal and iris patterns, hand geometry, voice and facial relationships to establish identity. They are already in use by security conscious corporations, airport personnel, casinos, banks and law enforcement agencies around the world. Companies that make secure ID cards, visas and passports also fit into this group.

Data and Internet Security

As the Information Age progresses, information becomes more valuable and more strategic. An information breach can compromise the personal lives of millions, the function of a nation's electric grid, the flow of water through a metropolis, or the flight path of a plane or a missile. Meanwhile, the Internet has become ubiquitous, and along with its extraordinary benefits come equally large risks from hackers, as well as from debilitating viruses and worms. Malicious attacks on information networks are doubling every year. We follow the leading companies in this field.

Defense & Government Contractors

The US government, and not just the defense department, is still the largest consumer of security technology of all kinds. After 9/11, the government took on additional security responsibilities in areas such as aviation security, immigration and customs, emergency communications, identity management and nuclear safety. In addition, the government is in the process of overhauling much of its IT (information technology) infrastructure after a congressional subcommittee red-flagged dozens of federal agencies for lax data security.

We follow the large defense contractors as well as many of the small-cap players who act as key sub-contractors. Our ideal stock pick in SSIA has dual income streams from both the public and the private sectors.

Energy & Alternative Energy

Although the US oil supply is now more diversified than ever, global supply is slowly but inexorably becoming concentrated in the Middle East. Both producers and shippers are now national security assets. Meanwhile, new types of energy production, such as hydrogen fuel, wind and solar cells, are being perfected and subsidized by state and national governments, as well as international conglomerates, now that oil seems to be more or less permanently priced above $60 a barrel. The re-emergence of safer nuclear energy is also a powerful trend. The long-term opportunities in this field are of historical proportions.

Explosive Detection (EDS)

The detection of explosives, weapons and other contraband has become a national and international priority as never before. The technology for this kind of operation is evolving quickly and goes far beyond simple x-rays. This industry has consolidated somewhat since 9/11, but there are still players of interest and likely acquisition targets.

General Security Products and Services

As both the government and the private sector become more security conscious, they are investing in enhanced security capabilities in a variety of areas. These projects run the gamut from sophisticated audio and video recording equipment that documents client activity, to surveillance, building and grounds security, business investigations and intelligence, background screening, substance abuse testing, forensic accounting, crisis management, kidnap and ransom negotiation, travel risk mitigation and executive protection. We sift through the field to find the hidden gems.

In an increasingly interdependent world, travel is a point of vulnerability that can be used against a country, as was proved on 9/11. In dangerous times, businesses naturally seek technology that facilitates meetings at a distance, using teleconferencing and telecommuting solutions. In the event of a pandemic, for example, we believe companies in this industry will thrive.

Stable High-Yield 'Bird-in-the-Hand' Investments

Since 9/11, the individual investor is faced with a unique problem: How does one invest securely in an insecure world? We believe Wall Street is in the midst of a secular shift from more risky growth-oriented investing that was the hallmark of the 1990's, to a more risk-averse approach. In this regard, we believe capital will be flowing to stable, but growing companies that pay high dividends. Why? In uncertain times, investors are less willing to wait for returns. We offer a Growth and Income Portfolio that provides subscribers opportunities to participate in secular growth stories while mitigating risk and hedging against catastrophe.