Apology on Irene

I was too bold in my prior statements on Hurricane Irene.  Though ordinarily forecast errors persist, as of early Thursday, the errors have straightened out and the path of the storm is clear.  That said, I think the risk of large insured losses are still not high.  The picture above is for 39+ mph winds over the next five days.  That won’t do much to most of the east coast.  Here, look at a graph of Hurricane force winds:

Not so much, huh?  There are a lot of insurers and reinsurers worth buying in this environment.

6 Comments

  • paolo.mcpaki says:

    David,

    A suggestion: assuming you know something about insurance, leave the intersection of meteorology and insurance to the big boys.

    • Thanks, will consider, though hurricane estimates don’t have a great track record, as far as I’ve seen.

    • Keith says:

      Paolo,

      I am interested in your comment given that this is an investment blog. I own about 25 stocks, and I am not an expert or “big boy” in any of the areas that these companies exist in. For example, I own oil stocks because I think that the financial community underestimates the future value of oil. However, I am not in any way an expert on the price of oil.

      In order to invest I must make judgments where I think the “expert” opinion is wrong. Otherwise, I am just following the herd, and its tough for a value investor to make money that way.

      I perceived that David was making a judgment, and that is what investors do. What is your opinion on this?

      By the way, when I lived in the midwestern US, there were often snowstorm predictions on the news. I found that the best prediction that I could make was to take the predicted snowfall and divide by 3. Hence, if they were forecasting 12 inches of snow, then I assumed 4 inches was about right.

  • FrankM says:

    At risk of piling on Paolo, that was an unfair comment that he made. And ultimately David was right, as buying on Friday resulted in a nice pop Monday.