Natural disasters as safe heaven from stock markets

Leonardo Da Vinci - Natural disaster

Betting on the likelihood of natural disasters has been one of the best investment since the financial crisis, after silver, gold, high-yield bonds from the US and EU countries. Catastrophe bonds are a fixed-income investements, but contrary to others, issuers do nothave to pay the full amount of the bond or the interest in the event of a natural disaster. 

Now get this: 

So why have cat bonds done so well in the last few years? Because they have practically no relationship to financial markets. This doesn't mean they're particularly safe: we've written before about the possibility of a bubble forming in the insurance industry. Then again, when the entire market can shift after a few comments from Federal Reserve chairman Ben Bernanke, as it did this week - or rests on the health of dubious bets from the financial industry - gambling on the likelihood of a natural disaster doesn't sound like such a bad idea. 

The stock market has become so unpredictable and so detached from economic fundamentals that natural disasters have become an alternative to it.