Betting on snowfalls
We’re a tough, hardy, wintery crowd here in Wisconsin. The most recent snow storm slowed us down for a day or two, but we’ve got winter figured out pretty well and are able to get out and enjoy the snow.
Heck, we even have a football team that doesn’t let snow, cold, ice or frozen tundra keep them from winning the XLV Super Bowl. (What a great game! Hats off to the Steelers)
This winter many US cities, towns and entire states have broken long standing records for ice, snow, and arctic cold temperatures. From coast to coast many of us enjoyed more than a few days off due to extreme weather. The disruption in and cost to businesses can be staggering. Think back to the hundreds of flights delayed, diverted or canceled by the latest Midwest and East Coast blizzards.
Now businesses (and gutsy individuals) can hedge against winter. According to a story posted by CNN Money.com the Chicago Mercantile Exchange began offering snow futures in 2006 with just two contracts and now offers more than 6 locations. Investors can bet on snowfall levels in New York City’s Central Park, and at the Chicago, Minneapolis, Boston and Detroit airports.
Other contracts allow for businesses to hedge against either too much, or too little snow. Here’s one example: The owner of a snow removal company bet that Chicago would get more than the 37 inch average snowfall this winter. He bet the snowfall would total more than 49 inches. He bought a contract for $37,000 that would pay his snow removal company $16,000 for every inch above the 49-inch level.
During the latest blizzard, the contract settled for $130,000. Hopefully, this will help offset higher costs associated with his company having to clear that much more snow. The reverse wager could be profitable if he were to bet on too little snow next year.
Look for a wider array of winter and weather related contracts being used by more and more companies. While we can’t control the weather we can at least manage the financial impact of it. And hopefully, you’ll get out and enjoy winter.
Too good to put down
Could it be 2 years since the worst of the banking crisis began to engulf Wall Street and Main Street? I’ve just finished reading Andrew Ross Sorkin’s Too Big to Fail that offers a fascinating look at those frightening and chaotic days of the near collapse of our banking system.
The book isn’t light nor is the subject; it’s not a fast beach-chair kind of book. But I couldn’t put it down.
From the inside jacket cover it’s described as “A brilliantly reported true-life financial and political thriller that goes behind the scenes of the financial crisis on Wall Street and in Washington. TOO BIG TO FAIL vividly details the backroom deal making and secret alliances made in the rush to save the world economy from collapse.” This book is all that and much more.
I did come away with a much better appreciation of how money moves in this world and who the power brokers, politicians, players, and personalities behind alot of this chaos were, and in some cases, still are. I am very grateful that throughout this crisis we had some of the best and the brightest people working around the clock trying to solve this. Many of their names were not in the headlines, but their contributions were huge.
Let me know if you’d like to borrow my copy. I’d love to hear your take on this inside story of Washington and Wall Street.
