Speculating on natural disaster players/sectors

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Bwlonge
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Speculating on natural disaster players/sectors

Post by Bwlonge » Sun Feb 18, 2018 8:42 am

I know this isn't a bogleheads thing.. but given predictions of worsening climate change and natural disasters, is anybody throwing 5-10% into sector funds or companies that stand to gain?

Timber (WOOD) has outperformed the total market in this run up, maybe due to demand for all the rebuilding having to be done due to natural disasters.

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Tycoon
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Re: Speculating on natural disaster players/sectors

Post by Tycoon » Sun Feb 18, 2018 9:15 am

No! I would not speculate on natural disasters.
Appeal to Pity:When pity is envoked to support a statement | Appeal to Popular Sentiment:Appealing to unrelated prejudices and attitudes | Hasty Generalization:Too little evidence to support the conclusion

3funder
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Re: Speculating on natural disaster players/sectors

Post by 3funder » Sun Feb 18, 2018 10:22 am

Tycoon wrote:
Sun Feb 18, 2018 9:15 am
No! I would not speculate on natural disasters.
Nope! Simplicity, my friend! Total market index funds!

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Smorgasbord
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Re: Speculating on natural disaster players/sectors

Post by Smorgasbord » Sun Feb 18, 2018 10:44 am

I took the opposite approach a little over a decade ago. Following Katrina there were predictions that disasters like that were going to become an annual occurrence thanks to climate change. Thinking these fears were over-hyped I bought shares in a re-insurance company that had significant exposure during Katrina, Montpelier Re. The stock ended up beating the market in the long run, but not enough to justify the extra effort involved within owning/tracking an individual stock.

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Pajamas
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Re: Speculating on natural disaster players/sectors

Post by Pajamas » Sun Feb 18, 2018 10:48 am

No, too much timing involved even for the casual holder of individual equities.

Valuethinker
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Re: Speculating on natural disaster players/sectors

Post by Valuethinker » Sun Feb 18, 2018 2:18 pm

Bwlonge wrote:
Sun Feb 18, 2018 8:42 am
I know this isn't a bogleheads thing.. but given predictions of worsening climate change and natural disasters, is anybody throwing 5-10% into sector funds or companies that stand to gain?

Timber (WOOD) has outperformed the total market in this run up, maybe due to demand for all the rebuilding having to be done due to natural disasters.
High insurance claims & losses for insurers lead to a "hard" market and rising premiums. There are various listed insurance vehicles such as Lloyd's market brokers in London (not too many of them listed, now, I don't think). And of course Berkshire Hathaway is a big play on insurance rates (and takes big hits when there are catastrophes).

You can't really play this because you are unlikely to have a better estimate of probabilities than the market as a whole.

Timber is about something different. See GMO discussion of same. It has performed well as an inflation hedge.

Whilst there are some big structural trends here (and discussion of them is basically off limits under Forum rules) I would advise you not to try to "play" this as an investment theme. These things never work out the way you imagine they will.

desafinado
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Re: Speculating on natural disaster players/sectors

Post by desafinado » Sun Feb 18, 2018 4:11 pm

If you had an ISDA you could buy credit default swaps on cat bonds.

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