The Rebuilding-Louisiana Portfolio

On Monday, investors focused on higher energy prices and insurance-company payouts in the wake of Hurricane Katrina. But as time marches on, attention will shift to rebuilding, the risks that hedge-fund and pension-fund investors took in buying supposedly low-risk "catastrophe" bonds and the effect of the storm on the fragile U.S. economy.

While the near-term result of natural disasters is naturally negative, they very often lead to infrastructure investments that end up looking like a net positive for their regions. Homes, roads, offices and industrial complexes need to be rebuilt, and the government usually provides tax relief, or outright grants, to pave the way.

Investors will be scouring the horizon this week for companies that will see benefit from the natural disaster. It may seem craven, but this is just capitalism's way of allocating financial resources at a critical time to the companies that need it from the sources that have it. Call it Katrina's invisible hand. ...