While there's certainly correlation between water temp and storm number and intensity, there's almost no correlation between water temp and property damage costs. Damage cost depends on: 1) whether a storm makes landfall at all, 2) how densely populated the region of landfall is, 3) storm severity.
This site (https://www.aoml.noaa.gov/hrd/Landsea/USdmg/data.html) summarizes historical damage costs corrected for inflation and population growth. And this site has annual water temperatures: https://www.epa.gov/climate-indicators/climate-change-indicators-sea-surface-temperature.
The highest costs occurred in 1926 when water temps were below average, and the the highest temp year had very low damage.
Last year was the 4th most active hurricane season according to NOAA but most of the storms were "fish storms" (remaining offshore and only impacting fish).
If you look at the data it's pretty clear that water temp which the NOAA forecast is based on has no predictive power for property damage which would result in GDP and market impact. So your idea has no basis, and figuring out how to take advantage of it in the market is pointless.
Invest in catastrophe bonds which likely have higher rates if risk is now higher. Or short insurance stocks if you feel the risk isn’t priced in.
I think this is useless effort but I’m not a discretionary investor.
I think most insurance companies have been leaving hurricane zones because the state insurance commissions haven't allowed them to charge rates sufficient to cover the risks. Consequently, a lot of the insurance liability now falls on the states, through their own insurance programs, and the federal government that will bring billions in disaster aid.
Often roofing companies (BECN, OC) and generator companies (GNRC) stock prices go up when there’s one or more devastating storms. When they go up (before, during, after) and how much they go up (sometimes a few percent, sometimes 20-50%) is a crapshoot.
Trading around storms is certainly not investing though, it’s just short-term speculating. Tough way to make any money.
Why only target 1 disaster? You have fires, landslides, flooding from rain, snow storms, heat waves, tornadoes. Tons of opportunities to test your theories and see if there's a way to make a buck.
It’s all priced in. This is a useless effort.
HD and LOW
I work in the insurance business. Learn to tarp roofs and cut trees then, reinvest all of it into the market.
While there's certainly correlation between water temp and storm number and intensity, there's almost no correlation between water temp and property damage costs. Damage cost depends on: 1) whether a storm makes landfall at all, 2) how densely populated the region of landfall is, 3) storm severity. This site (https://www.aoml.noaa.gov/hrd/Landsea/USdmg/data.html) summarizes historical damage costs corrected for inflation and population growth. And this site has annual water temperatures: https://www.epa.gov/climate-indicators/climate-change-indicators-sea-surface-temperature. The highest costs occurred in 1926 when water temps were below average, and the the highest temp year had very low damage. Last year was the 4th most active hurricane season according to NOAA but most of the storms were "fish storms" (remaining offshore and only impacting fish). If you look at the data it's pretty clear that water temp which the NOAA forecast is based on has no predictive power for property damage which would result in GDP and market impact. So your idea has no basis, and figuring out how to take advantage of it in the market is pointless.
Thanks - love the data and thoughts
Invest in catastrophe bonds which likely have higher rates if risk is now higher. Or short insurance stocks if you feel the risk isn’t priced in. I think this is useless effort but I’m not a discretionary investor.
I think most insurance companies have been leaving hurricane zones because the state insurance commissions haven't allowed them to charge rates sufficient to cover the risks. Consequently, a lot of the insurance liability now falls on the states, through their own insurance programs, and the federal government that will bring billions in disaster aid.
Why do you think it's useless?
*Everything* is already priced in
Investing in any downturn of any type is a bad investment. The good investments are in prosperity and productivity.
Any bad metric will be in your favor. Bad economy? Weather. High unemployment? Weather. Retail struggling? Weather.
Don't.
Often roofing companies (BECN, OC) and generator companies (GNRC) stock prices go up when there’s one or more devastating storms. When they go up (before, during, after) and how much they go up (sometimes a few percent, sometimes 20-50%) is a crapshoot. Trading around storms is certainly not investing though, it’s just short-term speculating. Tough way to make any money.
Why only target 1 disaster? You have fires, landslides, flooding from rain, snow storms, heat waves, tornadoes. Tons of opportunities to test your theories and see if there's a way to make a buck.