Got a quarterly report in the mail from a utility company. It had the usual balance sheet, statistics on gas and electricity usage by their customers, an income statement and miscellaneous data.
However, on the inside of the pamphlet, there were two curious notes about weather in their service area – northern-midwestern U.S.
“Earnings rose as the company experienced a 16.9% increase in gas sales reflecting higher customer demand, primarily due to colder weather in April.”
Before we could crow about the item that bolstered our confirmation bias, we saw at the other end of the page this note: “July 2011 was the fifth hottest month in [our city’s] recorded history. During this month, [our] power reserves met a new peak electric record.”
To us, this just confirms our notion that weather can set records in the hot or cold direction. Also, that the earth’s atmosphere may help moderate those changes. And, the earth’s weather contains a self-correcting mechanism, using rainfall, among other things, to bring about a change in whatever is happening.
Investment lesson: “… a trend in motion is more likely to continue than reverse. A trend will continue until it changes course,…” is a well-known saying in investment technical analysis, which is far too complicated for us, but we love the lesson.