Like a Hurricane


I’m not referencing the Neil Young classic, but the impact political events & weather have on stock markets globally. Typically, the two biggest positive or negative factors that impact global and domestic stock markets come from political events or mother nature. 

Here are some estimates on Hurricane Harvey that hit the Southern US recently.

·         Rainfall equivalent to more than 20 trillion gallons.

·         About 40 lives lost

·         Estimated $125 billion in damages

·         80% of Texan don’t have flood damage

·         Undeterminable personal tragedy, both emotionally and financially.

Couple this with the storm that has been brewing with North Korea, and Hurricane Irma on the heels of Harvey. Between the two, the world and the markets may be in for the perfect storm?

One of the reasons that I believe everyone should invest is because after there has been a major catastrophe, there is a time of rebuilding. This may sound callous, but the reality is that the world is in a constant state of building and or rebuilding. Either from progress or regress by man and/or nature.

In the US, Harvey has all but assured the allowable US Debt Ceiling will be raised. Sadly, Harvey may have come at a very opportune time for the Trump administration. Congress will likely have no choice but to approve higher government borrowing limits to support the victims and businesses impacted by Hurricane Harvey and other funding needs of the US government.

Thus, begins the great exchange of money; from governments (tax payer), insurance companies and banks through loans to fund the costs of rebuilding.  Whether it be a hurricane, war or any other form of chaos, we rebuild our lives and move forward. We do not have a choice, this is life.

Many of the companies that will employ the workers who will be contracted to rebuild the homes and infrastructures will be employed by public companies listed on stock exchanges.  They will buy their wood, metal, cement and any other products they need predominantly from other public companies.  

Whatever your reasons to invest, understand you are important.  Investors are a key component to making free & successful societies work. Without investors to help capitalize companies at various stages of their growth, our world would be very different. We see countries where there is very little industry for whatever reason. They are typically very poor. There is little to no opportunity for prosperity for the average citizen.

At the end of the day, we all shoulder the costs of rebuilding. Which may result in higher insurance rates, commodity prices, and higher taxes.  Investing gives us the opportunity to minimize the financial impact of the costs associated with rebuilding infrastructure, and possibly profit from these constantly reoccurring events. 

History has shown that it is often after major events when significant economic growth occurs. I can’t imagine an investor hoping to capitalize on anther’s tragedy, but tragedy does happen. Without sufficient capital when it does, the ultimate costs would be much higher, and the suffering would be much longer as we waited for relief from who knows where?