You don’t need to become Warren Buffett to generate good returns in the stock market. The magic of compounding is such that even a small increase in your yearly returns can make a huge difference in what you end up accumulating. So it’s a worthwhile effort to learn how to improve returns.

Over the years of helping investors through my newsletters and seminars at The Arora Report, I have found that investors are much more likely to learn from real-life events. There is an important lesson to learn from Hurricane Irma and Apple’s AAPL, iPhone launch. Let’s first build the requisite background and then I will share with you a simple lesson that can significantly improve your returns.

Hurricane Irma

Ahead of Hurricane Irma, insurance stocks were being sold mercilessly. To help investors avoid making mistakes, I wrote “Hurricane Irma is distorting the price of stocks, including Universal Insurance.” I illustrated the point with the chart of Universal Insurance Holdings UVE, which does a lot of business in Florida.

Please click here for the annotated chart of Universal Insurance Holdings. For the sake of full transparency, this is the same chart that was provided to investors well ahead of Hurricane Irma; no changes have been made to the chart.

I wrote in the article: “From a trading perspective, if the damage is significantly less than anticipated, the stock may not only recover the entire loss, but may go even higher to the zone shown on the chart. The reason is that after the hurricane, insurance companies may be able to raise rates. Furthermore, if the stock starts moving higher, a short squeeze may propel the stock artificially higher than the fundamentals may warrant.”…Read more at MarketWatch

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