Chapter 5. Weather and Natural Disasters


“A merchant’s happiness hangs upon chance, winds, and waves.”

 --Japanese proverb

A Tale of Two Natural Disasters

Shortly before 8:00 A.M. (local time) on Sunday, December 26, 2004, a magnitude 9.0 earthquake occurred off the west coast of the island of Sumatra in the Indian Ocean.[1] The powerful earthquake induced a tsunami that quickly spread across the Indian Ocean. The Boxing Day tsunami killed tens of thousands of people from Aceh, Indonesia to Phuket, Thailand; to Tamil Nadu, India to Sri Lanka; to the coasts of Somali and Kenya in Africa; and caused billions of dollars in property damages.

Financial markets were closed when the earthquake and subsequent tsunami occurred. This gave market participants ...

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