Many believe that monster snowstorms, such as the "snowpocolypse" that hit the Eastern U.S. this week, bring with them financial opportunity. This week, personal finance website SmartMoney.com debunked five money myths involving snowstorms.
Three days have passed and people all over the country are still feeling the effects of the Great Blizzard of 2010 -- a storm so fierce Twitter users quickly dubbed it the “snowpocalypse.”
Like most major snowstorms, the economic aftermath has been played out all over news: Stranded travelers, empty retail stores, public employees working overtime digging out streets. But many believe that snowstorms bring with them other economic fallout that could translate into opportunity — or not – for those who seek to capitalize on them. This week, personal finance website SmartMoney.com debunked five money myths involving snowstorms:
1. Light Traffic Makes for a Buying Opportunity for Stocks.
Really big market declines are usually accompanied by heavy trading volume, but the reverse isn’t always true, SmartMoney says. Light trading can lead to large swings in individual stocks, but the broader market generally benefits in the post-Christmas trading week. The S&P 500 gains an average of 1.24% in the last five trading days of the year, SmartMoney reported.
If you make any changes to your portfolio this week, focus on year-end portfolio rebalancing -- buying and selling securities to bring your overall portfolio mix back to where it should be so you’re not too heavily invested in one area. Learn more about portfolio rebalancing here.
2. Your Homeowners Insurance Will Cover Any Damages.
Frozen pipes? Compromised roof? Basement flooding? Most homeowners buying insurance and expect that all weather hazards are covered, but that’s not always the case. If your insurer determines the snowstorm-related damage was due to your own negligence or lack of maintenance -- for example, your roof was in disrepair long before a single flake fell -- you may be out of luck, SmartMoney says. In most cases, flooding isn’t covered unless you have flood insurance.
While it’s too late to change make changes to your policy after the storm, check your policy to see what types of damage is covered. If you’ve had a significant flooding event, talk to your insurer about buying flood insurance so you’re covered next time. And if any damage has occurred even though you have taken preventative steps, document the event with photos and keep receipts of all supplies purchased to correct the problem, SmartMoney advises.
3. The Cost of Your Disrupted Air Travel Will Be Cheaper.
While airlines generally offer the lowest fare when rebooking stranded passengers, they also keep the most-expensive seats open in case passengers are willing to pay up for the opportunity to get where they’re going more quickly, SmartMoney says. Bottom line, if you need to travel this time of year, it’s unlikely you’ll find a cheap fare. To get the best rate, SmartMoney advises, if possible wait a few days to travel, when more economy-class seats become available.
4. It’s a Great Time to Buy a New House.
With home prices falling over most regions of the country, it’s a good time to be shopping for a home no matter what the weather. Still, SmartMoney points out, you may not get a bargain if you’re shopping for new construction. Construction of new homes has been down in general among the broader housing market slump, and the bad weather will only delay the few projects that are already in progress.
If you are in the market for a new home, existing homes will be where the bargains are to be had. Shopping now may also get you a better deal than if you wait until the before the traditional Spring homebuying season, SmartMoney says.
5. After the Shovels, Retailers Break Out the Bargains.
Though the Northeast blizzard curtailed consumers’ ability to hit the stores for post-season bargains, it’s likely to only be a brief delay. Retailers are coming off a strong holiday shopping season, so many will be reluctant to resort to the deep discounts we’ve seen in the last few lean years. And since retailers expect shoppers to pick up where they left off before the storm, you may even find prices higher than you expect after the holidays on weather-related apparel and goods, SmartMoney says.
Waiting a few weeks to burn up your holiday gift cards might yield you greater discounts. To find the best prices, SmartMoney advises shoppers to stick with online retailers, which have to compete more fiercely on price than brick-and-mortar stores.