No. 2 - The Mother Nature Trade

Today's Forecast Sees 75% Chance of Major Hurricane Hitting Coast. What's Your Hurricane Trade as Mother Nature Roars This Summer?

Trish Regan joins the guys in Times Square to explain today’s report from the Tropical Meteorology Project that predicts a “very active” 2007 hurricane season. The report says there is a 74% chance of a major storm hitting the U.S. coast – but that is the same number they predicted last year which ended up being a “less-than stellar performance,” Trish says. The report says that the decrease in major storms last year from the year before was due to the El Nino weather pattern, which blocked storms from getting into the Gulf. But this year, El Nino is being replaced with La Nina – a system that will do the opposite and facilitate storms coming into the region.

Eric Bolling says forget the predictions. The NOAA was wrong last year too, he says, and the wisest investment strategy isn’t to predict the storm – it’s to react as soon as you hear about it by buying names like Home Depot (HD) and Lowe’s (LOW).

Excluding Katrina, insurance and energy stocks always overreact when it comes to hurricanes, Tim Strazzini says, and the chance of another Katrina is “infinitesimal.” He recommends trading against the overreaction.

Guy Adami’s got his own philosophy with regard to predicting a hurricane trade. He says the best bet is to buy a stock that will do well regardless – but will ramp up ahead of a major storm. His play is Jacobs Engineering (JEC): a great stock that will do even better if, God forbid, there are destructive hurricanes this year, he says.

Jeff Macke is going with the class B shares of Berkshire Hathaway (BRK:B) - last night’s winner in Fast Money’s March Madness competition.

So even though the predictors got it all wrong last year, “one bad year does not a bad predictor make,” says Dylan, and their reports will still be widely read on Wall Street.

Questions? Comments?

Trader disclosure:
On APR 3, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders:
Bolling Owns (DIS), Gold, Silver Strazzini Owns (VZ), (YHOO)