With the most densely populated region in the country getting battered by 100-year storms on what feels like an annual basis, it would seem insurance companies of all sorts would make for dangerous investments. Not so according to technical analyst, Paul Desmond of Lowry Research.
Desmond notes that the strongest sectors of 2012 have been Consumer non-cyclicals and Financials. Of the latter the insurance companies, both property and life, are the strongest subset.
This outperformance begs a lot of questions, not least of being "how on earth could companies on the front lines of statistically improbable, if not impossible, natural disasters be rising at all, let alone faster than other sectors?"
For an answer you'll have to talk to someone other than Desmond. He's a technician and his is not to question why when he sees positive moves in stocks. "We don't know why people are buying as aggressively as they are, but they are sure buying aggressively," he states.
Desmond is quick to add that insurance stocks are hardly impervious to the market as a whole. Reminding us that we're in a very old bull market, he has a grim outlook for stocks as a whole, particularly after the end of the first quarter.
It may not look like it on the calender, but March certainly feels like it's years from now. Desmond thinks the tape could get ugly by the start of Spring "but for the next several months" he's looking for further gains in the insurance sector.
Most investors would be happy to take it.
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