This Simple Photo Has Dark Implications

Matthew Carr
by Matthew Carr, Emerging Trends Strategist, The Oxford Club
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At first, it appeared to be a simple snapshot posted by one of the wealthiest men in the world.

But what it really showed was something much darker.

Shortly after the photo above was posted, an eagle-eyed user noticed that Facebook (Nasdaq: FB) CEO Mark Zuckerberg had placed tape over the camera and microphone of his laptop. He apparently did so to prevent hackers from seeing him or listening in to his conversations.

The photo sparked a discussion about whether everyday individuals should take such do-it-yourself steps to protect their privacy...

Even former FBI Director James Comey said, “I put a piece of tape over the camera because I saw somebody smarter than I am had a piece of tape over their camera.”

Most experts agree that all of us should take this simple step. But fast-forward 15 months, and the message of this photo seems to have been brushed under the rug.

Apple’s Annual Letdown - Now With Facial Recognition

Now, September is synonymous with many things.

There’s the start of school... the start of the NFL season... and the end of the MLB regular season. Plus it’s the month the S&P 500 tends to “swoon.”

But in recent years, it’s become synonymous with Apple’s (Nasdaq: AAPL) latest iPhone or product release.

And traders know that’s not a good moment for Apple’s share price.

On average, Apple shares have finished the day of these events down a little more than 1% since 2011.

Often it’s the result of the classic “buy the hype, sell the news” scenario.

We’ve had some recent letdowns like the “cheap” iPhone 5C and the lack of a sapphire screen on the iPhone 6.

And sometimes Apple just leaves us scratching our heads.

Since September 12, shares of Apple have fallen more than 4%.

And the internet has been abuzz about the company’s newest long-awaited release, the iPhone X...

This year is the 10th anniversary of the launch of the iPhone. Everyone was expecting something groundbreaking - something extraordinary.

What we got was facial recognition software to unlock your phone.

It didn’t help that, during the presentation, two tries were needed to unlock a phone using Apple’s Face ID. Not to mention that the Twin Peaks-esque backdrop for the whole thing was a wall of disembodied faces...

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But Apple’s Face ID announcement isn’t just creepy... or a colossal letdown... or a massive privacy violation waiting to happen. It’s the future.

Android phones are exploring Smart Lock technology that does the same thing.

This is the dystopian reality on our horizon.

From Toilet Paper to Mobile Payments

The compound annual growth rate (CAGR) for the global facial recognition technology market is expected to be 21.3%. By 2022, the market will generate an estimated $9.6 billion in revenue.

In comparison, the general IT market will grow at a compound annual rate of just 3.3%. That means the facial recognition technology market is expected to grow seven times faster than the broader tech market.

For the most part, we think of facial recognition technology in terms of security. And that’s often what it’s being used for.

In fact, at the Temple of Heaven in Beijing, facial recognition software is used on toilet paper dispensers in several restrooms. A person must stare into a computer screen for three seconds before 2 feet of toilet paper is dispensed. And the machine won’t provide toilet paper to the same person within a nine-minute span. The idea is to reduce rampant toilet paper theft.

But security isn’t the only application for the technology...

In Paris, ESG Management School uses facial recognition software called Nestor to scan its online students’ faces and ensure they’re not slacking off. It then asks each student questions on quizzes from moments when they weren’t paying attention.

Facial recognition technology is also being used to detect a rare genetic condition called DiGeorge syndrome.

Snapchat (Nasdaq: SNAP) recently filed a patent for software that would use facial recognition software to protect people’s privacy. If you decide you don’t want your photo shared, it places an emoji over your face.

Alibaba (NYSE: BABA) and its AliPay subsidiary want to make facial recognition technology for customers to authorize online payments. And Mastercard has plans to launch “Selfie Pay.”

This is the bizarre reality investors - and private citizens - face...

On one hand, we’re placing tape over our laptop webcams and microphones to protect our privacy. On the other, we’re taking selfies to unlock our phones and make online payments.

Either way, facial recognition and other forms of digital surveillance are simply facts of life today. You might want to change your portfolio - and your lifestyle - accordingly.

Good investing,


Thoughts on this article? Leave a comment below.

A Play on the Golden Age of Hacking

Matthew Carr’s VIPER Alert service looks for companies with exceptional growth prospects.

In this golden age of hacking and surveillance, many of his picks are cybersecurity companies. Qualys (Nasdaq: QLYS) is one of his favorites.

Here’s Matt checking on the pick back in August...

Over the last few months, we’ve had a lot of headlining cyberattacks. And I’ve written that investors have to take note. It’s a new era, and we’ve had cybersecurity companies in our VIPER Alert portfolio for two years now. Last year, we closed out gains of more than 100% on cybersecurity shares.

And we’re closing in on another triple-digit gain on cybersecurity shares this year with Qualys...

Wall Street was looking for revenue of $54.83 million, with EPS of $0.20.

Qualys topped that, reporting revenue of $55.3 million, with EPS of $0.26.

Then the company provided third quarter guidance above consensus and raised full-year guidance to $226.8 million to $228.3 million. The bottom of that range was above what analysts were expecting...

Shares of Qualys surged more than 13.5%, setting new 52-week highs and coming close to a new all-time high.

This moved our gain on our Qualys shares to 84%.

Because of WannaCry and Petya ransomware attacks, demand for Qualys’ products have soared. In the second quarter, deployments of its Cloud Agent platform - the technology that underpins almost all of Qualys’ solutions - rose to 3.4 million purchases in the last 12 months.

That was a 30.8% increase from the first quarter.

Plus, the customers it added in the quarter included Avago/Broadcom (Nasdaq: AVGO), KKR (NYSE: KKR), Helen of Troy (Nasdaq: HELE), LendingTree (Nasdaq: TREE), Pinterest, Spectrum Brands (NYSE: SPB) and Xilinx (Nasdaq: XLNX).

- Samuel Taube with Matthew Carr

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