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Is rain a good investment?

The rain soaked pavement outside Liverpool Lime Street Station reflects the colours of an illuminated advertising hoarding as commuters make their way to work on October 26, 2010 in Liverpool, England. After the recent cold spell heavy rain has returned to the UK, bringing back normal temperatures.

TEXT OF STORY

JEREMY HOBSON: The futures market at the Chicago Mercantile Exchange is getting a little bigger today. And as Tony Arnold Reports from Chicago Public Radio, today's changes give new meaning to making the most of a rainy day.


Tony Arnold: The Chicago Mercantile Exchange is known for selling agricultural commodities and futures, things like corn, wheat and hogs. But starting today -- there's a new game in town.

Rain.

Anyone can now bet on a rainy day. Literally.

Tim Andriessen is with the Mercantile Exchange.

Tim Andriessen: There's really no science or art in terms of long-term forecasts so that uncertainty is actually what makes an opportunity for products like this.

Andriessen says any business affected by weather -- from farms to concert venues -- could find rain futures beneficial. If that concert is rained out, the organization running the show could still make money.

The mercantile exchange already sells futures for temperature, frost, snow -- even hurricanes.

Gilbert Sebenste: There's just about nothing that you can't make money from anymore if you really want to.

Gilbert Sebenste is a meteorologist at Northern Illinois University, but he doesn't plan to start buying rain futures. He says even weathermen can't predict the weather months in advance.

In Chicago, I'm Tony Arnold for Marketplace.

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Wow, what an exceptional idea and for some insider information may I suggest never betting on rain falling on Palestine because as was written they would never receive any. Deut. 11
Amazing

Hmmm, is it going to be Manganeze with a dash of EDB for cloud condensation nuclei -- or Aluminum dioxide/barium nano particles acting as a desicant to deprive land owners of rain?

If I had dibs on what was to be sprayed into the advancing weather front that day, I too would be surf'n the scam. I am sure the geoengineering "stakeholders" are intending on fleecing allot of the sheep by offering this new exchange. May even want to consider crop production hedges as well?

You think it has anything with all the "Geo Engineering" going on??? They make it rain...and then make money off it. That is what is going on.

Don't be so quick to poo-poo the CME for this one. The "rain future" is simply a hedge against an unforeseen rain event when you're counting on a sunny day.

Let's say you're organizing a big outdoor concert event, investing millions of dollars in building the venue, booking the acts, hiring security, etc. Then you end up with a major rain event just before the first act goes on. Ticket sales are half what you expected and you stand to lose millions of dollars. But wait - you purchased just enough rain futures so that now that it rains the lost revenues are made up for - everybody wins.

This is just another example of the investment community losing sight of long term investing for short term gains from "gambles". How is this any different than going to the track and betting on the ponies?

Yes, Gene you are right. This is just one more piece of evidence to support the contention that our financial markets have turned into little more than gambling casinos. The day of Financial professionals is over. We no longer believe in making a profit by producing something of value. And then we a surprised that our economy is in such bad shape? The economic condition of the country is directly proportional to the willingness of the average individual to do an honest day's work.

Seems to me that the investment markets used to be designed to steer capital toward investments in additional productivity.

Now, much of that capital is being steered into "bets" that are designed to mitigage or capitalize on losses.

Could this perhaps be one of the factors that's hindering economic growth these days? Just wondering...

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