Last year I wrote a post on how I evaluate municipal bonds that I own in my portfolio. I also wrote a post about what bonds to avoid. I like to think that I’ve been very thorough in my bond selection process but one key thing I left out was climate risk and that’s going to change starting today.
Palisades, California
If you haven’t seen what’s happened to the Palisades, California then you probably should. Below is a photo from the Los Angeles Times.
The city appears as if an atomic bomb detonated right over it. I don’t know if this city had issued any municipal bonds nor do I know if they will default on them now but it’s clear that it will take a decade for this city to recover. There won’t be any tax collection in this city for years.
Places To Avoid Municipal Bonds
My new current list of places to avoid investing now include California, Florida and most of the Gulf Coast. An easy way to ‘cheat’ on your avoidance analysis is to simply follow what the insurance companies are doing. Many insurance companies have pulled out of California and Florida and some have started to stop issuing policies in Texas.
Investing is often just about paying attention to what is happening around you and the climate risk continues growing over time. As I kid, I rarely heard of $100 billion disasters and now they seem to be a quarterly occurrence somewhere in the U.S.
I do worry that California will have a major earthquake in my lifetime and that will cause even more destruction. On the east and gulf coast there is talk of new category 6 hurricanes with winds so fierce that little may stand in it’s path.
Share The Wealth
Do the now seemingly endless disasters have you rethinking your portfolio? Let me know in the comments below.