What most people dont realize is that hedge funds and sophisticated investors spend millions of dollars researching weather patterns to determine where and when to invest. Thats because seasonality can have a huge impact on the bottom line, as Jeff has seen time and time again when analyzing his list of stocks.
But taking a wider view, weather causes billions of dollars in damages a year. In the winter of 2013 to 2014, severe winter weather caused 15% of all insured auto, home and business catastrophe losses in the U.S., and overall winter losses from winter-related disasters totaled $3.7 billion.
In 2013, Coca-Cola blamed weaker-than-expected second-quarter earnings on one simple reason: a colder-than-expected spring. As its chief financial officer, Gary Fayard, said on CNBC: “I hate to use the weather [as an excuse], but a lot of it was weather.”
And Compass Minerals, a leading miner and seller of road salt, said in an early 2015 conference call that it benefited from robust winter-weather demand and elevated salt prices.
The point is that when you know in advance if its going to be a cold or mild winter a dry or wet summer … you can make a lot of money in the markets because certain businesses are definitely going to feel the effects.