The consensus of major weather forecasting services – public and private – is that this season will be an average or above average in storm activity.
National Weather Service is looking for up to 16 tropical storms with six to nine becoming hurricanes.
Stock Market and Hurricanes
The National Oceanic and Atmospheric Administration puts the odds at 75 percent that the hurricane season which began June 1 will be above average in activity.For 2008, the outlook indicates a 60 to 70 percent chance of 12 to 16 named storms, including 6 to 9 hurricanes and 2 to 5 major hurricanes (Category 3, 4 or 5 on the Saffir-Simpson Scale), according to the NOAA official report.
If storms hit the Florida and/or Gulf Coasts, construction companies may find work for crews idled by the housing slump in other areas.
Building material supply companies might also do well in storm recovery areas. Financial services companies often find new customers with money to re-build looking for mortgages.
Another major industry that could suffer is oil refining and distribution. Hurricane Katrina knocked out several refineries and damaged a major oil distribution pipeline to the Midwest.
A disruption in domestic refining or distribution could have a dramatic impact on fuel prices.
Bet against Insurance
Other investors may want to bet against insurance companies, although modern underwriting techniques and re-insurance programs limit the risk of most companies.However, if the thought of profiting off your fellow citizens’ misery bothers you, consider forgetting trying to outguess the weather and stick with your long-range investment plan.
If the TV weather person can’t tell you for sure whether it will rain in two days or not, investing on long-range hurricane forecasts is more like gambling.
