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Thursday, July 20, 2006

Trend: "Don't Panic": The Fear Premium

"Don't Panic", but a heightened state of fear has become the new normal in America...see the signs all around us here, here, here, herre, and here.

But look at the bright side and you'll see that certain stocks and commodities are reliably up during recent hurricanes, tsunamis, earthquakes, wars or any other catastrophe. These stock values are so reliably up that you may invest - even bet odds with your bookie, on an event's effects. Death and destruction in the forecast? Hot tips suggest buying shares on Tropicana, Home Depot, and even Big Oil to reap some profitable returns on human suffering and destruction.

This speculative effect is something that politicians, economists and traders call the "Fear Premium". From what I deduce, Fear Premium is the bonus boost in sales or stock valuations before, during or after a big calamity. If you're a retailer or distributor, you can gauge the additional supplies and rations required to ship to opportunity danger zones, and turn a slow sales season red-hot. If you're Joe E-Trader, you can plot pending war strikes and buy low oil shares early before the fear spikes oil prices and sparks runs at the pump.

The strangest thing about Fear Premium is that news commentators and economists constantly refer to the Fear Premium in news articles and interviews...yet noone ever fully explains Fear Premium. Seemingly, the first rule of Fear Premium is that you just don't talk about Fear Premium.

So, don't talk about Fear Premium, but certainly profit from Fear Premium!

If stock trading is too complicated for you, then keep it old school and put a few lunch bucks down on the latest Hurricane odds betting sites and like Powerball, you just may be a winner!

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