Ok, this is a difficult topic (morally to approach), but does Katrina represent an opportunity to make money and if so how can we capitalise on it?
Every recent disaster, be it man-made or natural, created an opportunity to make a fast buck without harming anyone. For example, terrorists attacks in the USA or in the UK created a temporary stock market depression which the astute investor could have turned a profit from. I personally do regret not buying into the FTSE the day after the July bombings.
In the case of Katrina, is it already too late, or not? I’m thinking that in the coming months, construction firms particularly with large market presence in Louisiana, Mississipi, and Alabama are likely to get a spike in business. Does anyone know the names of any such firms and which stock markets they are listed on?
Are there any other economic sectors that would benefit from the aftermath of the hurricane that should be invested in right now?
It would be low to profit by inflicting misery on others. But in this case, profit can be made through capitalising on companies that will be alleviating misery.
The Home Depot tip was useful. But can I have an answer to my original question - are there any listed construction companies with large market shares in the 3 most affected states?
If you use the four hurricanes in Florida as an example, the large scale reconstruction is sort of a crap shoot as to who wins contracts, and is unknowable as to timing. A great deal of the reconstruction is done by individuals. Another good upstream bet is Masco, which operates a family of companies, all of which are profiting from a strong real estate market, as well as recontruction.
I doubt insurance companies will cough up so much. Most likely they will raise their hands and say “can’t do it”. If insurance companies were forced to pay out, there will be more ripple effects in the economy by way of increased premiums all over. More likely the government will step in and pick up a large portion of the tab.
I am doubtful about more refineries as well. US has not build a new refinery in the last 30 years. This includes period after Andrews. No reason to believe they will start now. For a superpower, in some instances, US can be surprisingly unimaginative.
Last but not the least, don’t forget that hurricane season has barely started. By all estimates this will be a record year. Lets just sit back and see how it unfolds.
Most insurance companies engage in a complex net of reinsurance. No one insurance company absorbs all of the cost, rather the cost is spread over many many companies world wide. The money generally does get paid out, or the government indicts the characters.
The Energy bill that was passed a few weeks ago addresses the reasons that no new refineries have been built. There are tax breaks, enviornmental waivers and other things that have been barriers to new construction for years.
The government generally picks up the tab for relocation, and emergency housing, as well as low cost loans that help people pay for the deductable on thier hurricane policy. Unemployment in Florida dipped to 3% after last years hurricanes, which brings in a lot of tax money for the states.
At the end of the day this disaster will not help the economy, there is a loss of revenue from businesses lost not to mention an entire city daily spending is gone and the increase in gas price throughout the country is going limit disposable income of millions.
UTD, if that is so, it will be a first, most disasters have a negative short term effect and a positive long term effect. Katrina should be no different, unless it precipitates a gasoline crisis and the entire economy goes into recession.
OG, N.O. is a deep water port, so all major shipments get off the boats and sits in warehouses - right now, 100's of tons of coffee is underwater for eample - lost. There will be a lot of reverberations thruout the economy, not good.
