Disasters Can Make You Rich!
It is strange but if you pay attention, nearly every year opens the door to disasters that affect companies and give windows of huge opportunity to several stocks and sectors on the stock market. Without further talk, let's walk... through the history of recent disaster:
September 11, 2001 - Everything - after the terrorist disaster; the entire stock market took a 10%+ hit.
August 23, 2005 - Hurricane Katrina - Fuel/Agriculture - affected everything from housing to agriculture to oil companies to retail sales.
November 2009-Spring 2010 - Toyota Recalls - TM - over 8 milllion cars are recalled after defective acceleration pedals; stock goes from over $90/share to $68/share over course of few month. It bounced back to $90+/share.
2010 JNJ Recalls - JNJ - J&J had more than a dozen recalls in 2010 including one for Rolaids Softchews on December 9; Tylenol Cold Liquid products on November 24, Children’s Benadryl Allergy Fastmelt Tablets on November 15, Junior Strength Motrin on November 15, Rolaids Extra Strength Softchews on November 15, Tylenol 8 Hour on October 18, and various Tylenol products plus Benadryl Allergy Ultratab Tablets and Motrin IB products on July 8. Stock seasaws throughout year from highs of $65+ to lows of $57. Because JNJ is so huge in value, stock doesn't get hit % wise as bad but for a stock that rarely moves more than a couple of dollars in share price, these were clearly affecting the stock.
April 5, 2010 - MEE - explosion on Massey owned mine kills 29 miners; stock goes from $54+ to $27 in 3 months; 50% drop. Today it is over $60/share and struck a buyout deal.
April 20, 2010 - BP - explosion of Deepwater Horizon caused tons of oil to flood Gulf of Mexico; stock goes from nearly $60 to $27 in 2 months; over 50% drop. Today it is near $48/share and dividend is coming back. Spill also affected RIG which also saw similar returns.
March 10, 2011 - TM - 8.9 earthquakes hit Japan; I expect significant drops to Japanese companies like Toyota. At pre-market today it is at $85/share and off nearly 3% from previous day closing.
There are definitely other disasters of the past few years that have affected companies one way or another. But if you just pay attention to the few mainstream ones like a BP or an MEE, you can easily make enough profits to cover a year of grinding it out on the smaller stocks. Of course I left out infamous 2008-2009 housing/financial bubble. But surely you can guess that it would be hard not to make money on the historic March 9, 2009 day.