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The blizzard trade: Making money in bad weather

Jeff Macke

In case you missed it winter storm Juno has shutdown most of the Northeast this week. I'm kidding. Of course you've heard about it already. This is the media capital of the world and apparently the natives don't know how to shovel. When it snows schools, public services and just about everything else comes to a screeching halt. The only things that stay open are the retailers and media outlets reporting on the weather.

Things may be sunny and cozy where you are right now but at some point you'll be hit by some sort of extreme climate hiccup that closes down your town. While most folks will take that as an excuse to slack off, I've got three tips for profiting from weather extremes:

1. If you can get to a big box retailer do it. Not to stock up on supplies; you should have done it already. What you're looking for is how well a chain responds to extremes. Good retailers will have bad weather gear at the front of the store and near the aisles today. Storms don't just pop-up. This thing has been coming for days. Good retailers don't blame the weather, they use it to sell what's left of their winter goods and encourage you to stock up on discretionary gear like batteries and canned food. Any retailer taking advantage of this mess is probably pretty well managed. The ones with empty shelves and hostile shoppers are signalling some problems under the surface.

The storm may have been less potent but there's still money to be made if you look in the right places
The storm may have been less potent but there's still money to be made if you look in the right places

2. Don't short transports, retailers or other companies that are going to have a tough go of it this week. One lesson we all should have taken from the Big Freeze of 2014 is that the market is willing to look past Acts of God if they're legit. Airlines have cancelled more than 4,600 flights already. This storm is going to cost them millions, but the stocks simply don't care. That's because it's a legit excuse. You'd be amazed at the number of genuinely concerning fundamental problems a company can hide under the umbrella of a huge storm. Sure, distressed operators could get hit, but for most companies bad weather events are ultimately bullish.

3. Go out and play. If you're stuck at home because your school district cancelled or your bus is in a ditch it's a hassle, but also an opportunity to get your mind right. Take a little vacation. Go sledding. Build a snowman. The world will still be here when the storm ends. As usual, the better rested you are the better able you'll be able to handle any real emergencies that might come your way.

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