I just learned about what's going on in East Palestine, Ohio.
A train with multiple tanks full of toxic chemicals derailed. In order to minimize the risk of explosion, the authorities decided to burn the chemicals in a controlled manner, releasing huge amounts of highly toxic chemicals into the air. The ecological damage and damage to the health of the people who live there are still unknown, but dramatic effects have already been seen, with fish dying in large numbers, and experts (other than EPA?) agree that the situation is going to bring some nasty long-term consequences.
The company responsible for this is Norfolk Southern Railway ($NSC). The Ohio mayor has promised that he will make sure Norfolk in held accountable. It is bad all around incident – and certainly very expensive.
So I went to check out the ticker to see how much it had collapsed… And I see that it almost hasn't. It went down about 3%.
This situation clearly brings a substantial increase in risk to this stock – we still don't know the extent of the damage to the environment nor how much they will have to pay, but, if held accountable, the company would be making substantial payments in order to clean up and pay the locals for their lost property and potential health issues.
So, why hasn't the market responded?? The only logical conclusion I can make is that the market does not consider this situation to pose a risk to the stock. So the market expects that Norfolk Southern Railway will simply get away from this without being held accountable. And that is awful to think about, because it reinforces the idea that big companies have so much power that they can get away with this kind of thing.
But maybe there is a better reason? How is it possible for a company's stock to be almost unaffected by such a catastrophic disaster?
Disclosure: I have no position on $NSC nor do I plan to have one.
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