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FEYE showed why owning a single cyber security stock is high risk. FEYE drug down other cyber security focused stocks. This performance supports the notion that owning HACK is a much better way to gain exposure to this industry. I am a big fan of cybersecurity companies and the potential that these stocks have as a unit to become extremely valuable over time. CyberArk Software (NASDAQ: CYBR ) is one of my favorites. Palo Alto Networks (NYSE: PANW ) is a trend-setter, and even FireEye (NASDAQ: FEYE ) is still a great company after its disappointing quarter. However, I have discussed the topic of cybersecurity stocks to members of TTS on a regular basis, and have explained that while the companies may be good, the stocks are very expensive and risky due to lofty valuations and high expectations. For this reason, there’s only one good way to invest in a cybersecurity stock. That way is to own an ETF, a basket of cybersecurity stocks rather than just one alone. My personal favorite is PureFunds ISE Cyber Security ETF (NYSEARCA: HACK ). The reason it is important to own ETFs in these extremely volatile and unpredictable industries like cybersecurity is to protect from sudden downside. FireEye investors know all too well this risk, with FEYE down 24% after reporting earnings. FireEye’s earnings weren’t bad. The company grew revenue 45% and its margins surged due to operating expenses rising just 14%, far slower than revenue growth. However, the problem for momentum stocks like FEYE is that every metric in its earnings report is heavily scrutinized, and has the potential to move the stock in a big way. These metrics are important to maintain the lofty valuation that has been given to such stocks. Therefore, investors showed quite a bit of fear when FireEye reported that billings grew just 28% year-over-year and that its product revenue rose only 24%. These are both signs that future subscription growth could decelerate, as could overall revenue growth. Not to mention, its conservative outlook didn’t help matters much. Nevertheless, FireEye’s earnings performance and its stock collapse dragged competitors down with it. PANW fell 4%, Rapid7 (NASDAQ: RPD ) stock fell 5%, and Fortinet (NASDAQ: FTNT ) also fell 5% in response. However, those losses weren’t nearly as bad as FEYE, and had investors owned PANW, RPD, or FTNT they would still have exposure to the growth of cybersecurity without the big, portfolio changing drop that took place in FEYE on Thursday. As previously said, the answer is an ETF, specifically HACK. What I like so much about HACK is that it’s an ETF that tracks the performance of companies across the globe that are service providers for cyber security companies or provide cyber security services. In other words, all of the components have a connection to cybersecurity. Furthermore, no stock’s weight is greater than 5% of the ETF. With that said, HACK tracks PANW, FEYE, RPD, and Proofpoint (NASDAQ: PFPT ) among others, but it also tracks Juniper (NYSE: JNPR ), Cisco (NASDAQ: CSCO ), and providers of cloud security or cloud storage & security. Collectively, HACK fell 2.7% on a day when cybersecurity focused stocks fell far more, and FEYE lost a quarter of its stock value. Therefore, HACK investors get the exposure to cybersecurity and security in general without the risk that comes with owning one particular stock in this arena. With HACK trading higher by 7% over the last 12 months, it has greatly outperformed the 3.8% gains in the S&P 500. Moreover, spending on IT security is expected to grow at a compound annualized rate of 7% until becoming a $101 billion market in 2018, and the global cyber security market is figured to grow at a compound annualized rate of nearly 10%, exceeding $170 billion by 2020 according to Gartner. These industries are growing far faster than GDP, and suggests that HACK will continue to outperform major indexes in the years ahead.