Administration. So here’s a playbook for what traders will be looking at during this year’s hurricane season: INSURANCE/REINSURANCE: This is rather obvious because these companies are left with the catastrophic losses after the disaster. Last year, traders sold and got short home insurers tied to Florida when Irma strengthened into a Category 5 storm. Several stocks plunged before the storm ever hit the mainland. And the reinsurance companies, which provide insurance to insurers, also got hammered. OIL/GAS: Major refinery shutdowns aren’t good for business. So location is everything. And between imports and exports, the United States is responsible for about 8 million barrels of refined crude a day. So any interruption to production will cause stocks to sell off. Although it should be noted, sometimes hurricane season leads to the prices being jacked up. HOTELS: This is a tossup... Hotel operators see increased demand from the public when victims of the storms are forced to evacuate. But the downside is that some of their properties are caught in the eye of the storm and are affected, causing losses to expected revenue. TRANSPORTATION: Car-rental demand and freight rates surging are two plays that traders often like to trade before a storm hits. They know customers looking for emergency resources are willing to pay up – always good for revenue. And the demand for shipping increases, allowing companies to raise rates.
Turney Duff is a former trader at one of the biggest hedge funds in the world, the Galleon Group, where its founder and several Galleon employees were found guilty of insider trading. Turney rose through the ranks and then fell Note that these are trades – not long-term strategies. The action in these stocks lasts only for a week or two. But for the most part, natural disasters tend not to affect the overall market. Usually, these short-lived moves in stocks are exaggerated by disasters like hurricanes. And the traders who typically profit are in motion before the storms ever hit the mainland. REBUILD: Home-improvement stocks are always at the top of every trader’s buy list right before a disaster is about to strike. The amount of devastation and need for repairs are a direct link to stocks like Home Depot (HD) and Lowes (LOW). OTHER SECTORS: Traders looking for a quick pop in stocks explore companies who replace energy equipment, or other equipment replacement like communications and auto. On the downside, traders typically look at leisure and airline opportunities, telecom, and cable and industrials.
prey to the trappings of Wall Street: money, sex, drugs, alcohol, and power. Turney chronicles his spectacular rise and fall in his bestselling book, The Buy Side: A Wall Street Trader’s Tale of Spectacular Excess .
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