Whether financial investments are part of your job or you are in it for personal gain, when you consider investing in a certain industry or with specific companies you perform your due diligence, right? You check company financials, consider the competitive landscape and look for the growth opportunities. Nowadays you probably follow their official social media accounts and rely on news alerts relevant to your industry or company. In other words you do your research. Then a natural disaster strikes.
Whoa! Didn’t see that coming? Well just as you monitor news for M&A activity, earnings announcements or product releases as part of your research, you should add natural disasters to that list. Sure there are the obvious examples of natural disasters affecting certain industries. Hurricanes and tourism come to mind thanks to Hurricane Matthew currently wreaking havoc on the Caribbean. Airlines, hotels, and cruise lines are all subject to financial impact during hurricane season. To some extent, these businesses are aware of the likelihood of these events and can plan accordingly. What about those events that are not expected?
Over the summer we talked about using events in the news to your advantage. At the time the Brexit vote had just taken place. The business world was on high alert and the vote to leave the European Union sent the markets into a scramble. In this example, this geopolitical event was a known factor but the outcome could not be predicted. Investors needed a plan B or even a plan C that could be enacted as soon as the results were known. In the case of natural disasters or other unexpected events, you not only need to have a plan B but you need to know when to execute it. That is why real-time monitoring for the unexpected events that could impact your investments is critical.
At Acquire Media we offer Trading Impact filters. These include the usual suspects (mergers, earnings, regulatory announcements) but also those you might not expect such as natural disasters and terrorism. You may be looking to manage risk or look for new opportunities but the fact is that these unexpected events have a direct impact on the markets. You need to make sure these are part of your research as well as your ongoing monitoring efforts. It’s not only good planning, it’s smart investing.