In Hurricane's Aftermath, a Blowout Portfolio

Investors betting on a multibillion-dollar construction rally in the western Florida hurricane zone have been putting a large number of chips on building materials, landowners, truckers, makers of mobile homes and banks. With Hurricane Charley damage estimates ranging from $8 billion to $20 billion, it is a theme that will not blow away quickly.

Rock-mining stocks seem to be among the most compelling, as the disaster comes at a time of a global shortage of cement, the most basic of construction materials. But several other commodities, including lumber and steel, are proving to be in short supply as insurance checks are cut and money begins to flow.

Why bother thinking about the Florida rebuilding effort? It's because every now and then, investors need to take a breath and ask themselves, "What's obvious?" The investment racket is tough most of the time because we often make it more difficult than it needs to be. We try to forecast the demand for wireless phones in Western Europe when maybe all we need to do is call a friend in western Florida and ask what's going on outside the window.

The answer appears to be a fast whir of activity, with waste companies bulldozing and picking up hurricane debris, municipalities condemning hundreds of damaged properties in an effort to take advantage of the situation by remodeling their cityscapes, mobile homes arriving by the hundreds to house the homeless, and land-development companies subtly encouraging residents of southern Florida to move north, out of the path of the next big storm.

Huge Damage, Huge Demand

The hurricane damaged almost half the homes in Charlotte County, a coastal community on the Gulf Coast. About 25% of them, or 17,000, were destroyed or had very serious damage. Whole neighborhoods were wiped out.