What we can learn from Hurricanes Harvey, Irma

Dressel 150 x 150Ryan Dressel, Investment Analyst

Over the past few weeks, Hurricanes Harvey & Irma grabbed our collective attention as we watched the fury of mother nature unfold in Texas and Florida. While images of the damage can be jaw dropping, what’s more amazing is the strength of communities coming together to assist those affected. In today’s digital age, acts of heroism, generosity, and courage were on display via social media for the world to see. Examples included neighbors forming a human chain through floodwaters to help a woman in labor make it to a fire department truck; drones that located stranded families on roof-tops; a Delta Airlines pilot who flew into the violent, outer bands of Irma to pick up one last group of passengers desperate to flee the island of Puerto Rico; and Houston Texans star J.J. Watt, who single-handedly generated $30 million in aid (and counting).

The financial impacts of the two storms will no doubt be meaningful. Fortune estimates the loss could be as high as $180 billion for Harvey[1], while estimates for Irma range from $30 to $60 billion. This includes damages to property, infrastructure, crops, natural resources, small businesses, transportation, and unemployment. Political hurdles stand in the way, but the United States has the resources to rebuild.

As an investor, these events remind us that storms can be unpredictable, no different than financial markets. Government officials have many tools at their disposal to handle the unexpected, such as communications, shelters, curfews, utility companies on standby, rescue vehicles, and storm monitoring to name a few. Money managers and fiduciaries also have tools, such as asset allocation, diversification, performance analysis, or monitoring financial conditions including interest rates, liquidity, political risks, valuations, and corporate growth rates among many more.

The emotional mindset of an investor is no different than that of anyone awaiting a hurricane. Prepare for the worst, hope for the best, and expect to be surprised. Or, as Benjamin Franklin said, “by failing to prepare, you are preparing to fail.”

The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Brinker Capital, Inc., a Registered Investment Advisor.

[1] http://fortune.com/2017/09/03/hurricane-harvey-damages-cost/