The answer is blowing in the wind.                                                      

Trade of the Day: Buy Catastrophe

Mark Gilbert is a Bloomberg View columnist and writes editorials on economics, finance and politics. He was London bureau chief for Bloomberg News and is the author of “Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable.”
Read More.
a | A

Natural disasters inflicted economic losses on the world of just $54 billion in the six months to June 30, according to insurance company Aon Plc's Global Catastrophe Recap report. That's about half the 10-year average of $106 billion in the period, Bloomberg's Carolyn Bandel reported today.

So the Trade of the Day is to buy disasters, even if there is risk that mayhem will revert to the mean. As the chart below shows, you would have made more money investing in catastrophe bonds (according to Swiss Re's total return index) in the past decade than by entrusting your money to hedge funds (according to Credit Suisse's index).

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Mark Gilbert at magilbert@bloomberg.net

To contact the editor on this story:
James Greiff at jgreiff@bloomberg.net