Michael Pascoe: Trading disasters.

What was it with the March quarter? No season of mists and mellow fruitfulness this one – just a time of escalating disasters and death, leavened only by the hope of North African revolutions.

I’ve never considered disasters to be competitive, but it began to seem that way with the Queensland floods quickly topped by the Christchurch earthquake and that then dwarfed by Japan’s triple-crown of quake, tsunami and Fukushima. Enough already.

While the main focus was on the terrible and worsening human suffering and loss, there was also a sad but fascinating byplay in the markets as players attempted to ride disaster and revolution trades.

Perhaps the worst of it was a newsletter that touted for subscriptions with the offer of hot tips about which companies would do well out of Japan’s calamity. Tacky. Traders and investors need to consider news and shifting fundamentals, but trying to flog a tip sheet on the promise of making money out of tragedy is just a touch insensitive.

And it was more than likely wrong anyway. Serves ‘em right. From a market-watching point of view, that has been the most bemusing aspect of the welter of opinion about the impact of natural disasters and revolutions – how wrong it generally was...

Excerpted from an article originally published in the May/Jun 2011 issue of YourTradingEdge magazine. All rights reserved. © Copyright 2011, Your Media Edge Pty Ltd.
If you are a subscriber to YourTradingEdge magazine, you will receive this article in your May/Jun 2011 issue of YTE. If you are not a subscriber, click here to subscribe, or to purchase this issue as a single back issue, click here.