JP Morgan's Tom Lee Explains Why Stocks Rally After Hurricanes

tom lee

Photo: CNBC via Yahoo

Traders and investors are anxiously waiting for the stock markets to reopen so that they can make their post-Hurricane trades.History tells us that markets usually rally in the wake of hurricanes.

“On balance, there’s a lot of short-term turmoil,” said Lee to CNBC’s Maria Bartiromo.  “It’s the end of the month. We’ve already got a lot of anxiety out there.  And we’re in the middle of earnings season.”

Lee thinks Hurricane Katrina is one example of a costly storm that was followed by a comeback.

“But on the other hand, if we look at markets in 2005, there was an initial sell-off, but markets really started gaining traction as people started to see past the short-term effects and started to see the lift coming from spending.

This point is controversial, as many people find it unpalatable to believe that destruction of property is a good thing, even if it spurs spending.

Following up, Bartiromo then asked if we should expect stocks to fall on Wednesday or the next time markets open because of the various short-term selling pressures.

“If you do see something like that, then investors have to ask themselves, ‘Is this a short-term effect, or is this changing the thesis?'” Lee responded. “I would actually view that as a pretty good entry point.”

SEE ALSO: Hurricane Sandy Devastation From Haiti To Maine [PHOTOS] >

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