When a natural disaster strikes, as we recently witnessed in Japan, the demand goes up for building materials and life necessities.
That makes commodities and base metals worthwhile investments, says Jeff Sica of SICA Wealth Management. He favors iPath Dow Jones-UBS Copper Subindex Total Return ETN for copper (NYSE: JJC; Price: $53.95), iPath Dow Jones-UBS Aluminum Subindex Total Return ETN for aluminum (NYSE: JJU; Price: $32.69), PowerShares Global Water Portfolio exchange-traded fund for global water (NYSE: PIO; Price: $20.74) and oil for rebuilding, and precious metals to hedge against inflation. (An ETN, or exchange-traded note, is an investment product that’s based on debt notes and trades like a stock.)
Another place to invest is government bonds, where investors seek havens during tough times, adds Albert Gutierrez of Atlas Capital Advisors. In the big picture, he says, natural disasters typically affect local economies for two to three quarters. In other words, investors should ride out the bad period if they have a well-diversified portfolio, or they should add short-term bonds if they don’t.