Yesterday there was fireworks for the US celebrated another birthday. In real life the fireworks are from volcanoes. An interesting book to read about volcanoes is No Apparent Danger – The True Story of Volcanic Disaster at Galeras and Nevado Del Ruiz by Victoria Bruce, HarperCollins, NY, 2001. In this book, the volcanoes are in Columbia and centered around two eruptions during 1985 and 1993. People live nearby volcanoes because some of the earth is extremely productive to grow crops and while volcanoes are active, they do not erupt every year. In the book, it was amazing to think how little we know and how little monitoring there was among active volcanoes in the world. Hopefully, times have changed and we as a society actively monitor volcanoes. There are two types – one that have glaciers on them and some without. In the case of Nevado Del Ruiz, there was a glacier on top, the volcano became active, pressure built up from inside the earth and was finally released. The heat melted the glacier and the water rushed down the mountain, picking up mud and trees and plowed through a city before the forces slowed it down. In this case the city of Amero was buried in mud. In the case of Galeras went it erupted it threw rocks and ash into the air and if people were close they were injured or killed.

In reality, people did not know when a volcano is going to erupt, which lead to problems. If the volcano service says the volcano is becoming more active, then national banks stop giving loans. The farmers survived season by season on short term loans – what were they to do? In addition, tourism is stopped for safety; and companies who deliver goods will stop delivering. If the volcano does nothing, everyone near the volcano suffers economically; if the volcano erupts then the right call was made and people are safe.

Linking to dividend paying stocks, the volcanos illustrate the effect of natural disasters and there are plenty of them around the world. When one happens, from a corporate point of view you want the company to be diversified so it can continue to make money as well as contribute to the cleanup. In many ways one would like quick warning signs, but usually the time frame is hours or day(s) not weeks. Often times the best corporate response is seemingly nothing happens over a long period of time – the company continues to do its thing to make money to pay its shareholders. Sometimes no news is good news.

There are more questions than answers, till the next time – to raising questions.