By Doug Friedenberg

While waiting for the power to go out (which it did a couple of hours later) as we sat at home in Connecticut and Sandy approached, we read this comment by Elizabeth Kolbert in the New Yorker Blog ('Watching Sandy, Ignoring Climate Change'):

As with any particular "weather-related loss event," it's impossible to attribute Sandy to climate change. However, it is possible to say that the storm fits the general pattern in North America, and indeed around the world, toward more extreme weather, a pattern that, increasingly, can be attributed to climate change. Just a few weeks before the Munich Re report appeared, scientists at NASA's Goddard Institute for Space Studies, in New York, published a study in the Proceedings of the National Academy of Sciences on the apparent increase in extreme heat waves. Extreme summertime heat, which just a few decades ago affected much less than

While the East Coast braces for the perfect storm, exchange traded funds that follow the insurance industry are already taking a hit as investors anticipate billions of dollars in damages.

Hurricane Sandy had headed toward the Mid-Atlantic and Northeast, and is expected to merge with a winter storm and arctic air in what forecasters are dubbing "Frankenstorm."

"With the angle that it's coming in, it'll just pile up water right up against the shoreline," Henry Margusity, senior meteorologist with AccuWeather, said in a MarketWatch report. "We're still trying to assess the surge of water from the storm. There could be flooding up the Hudson River all the way to New York City."

"There will be school closures, travel will be messed up for days and major airports will be closed," Margusity added. "This could be a disaster of biblical proportions -- a multi-billion-dollar disaster."

Consequently, insurance company stocks are reeling

This is the 18th piece in our Positioning for 2012 series. Readers can find the entire Positioning For 2012 series here .

David Merkel is the founder and chief of Aleph Investments, LLC, through which he manages stock and bond portfolios for clients. He was an early presence in the financial blogosphere through his site The Aleph Blog. Prior to founding Aleph, David was Chief Economist and Director of Research of Finacorp Securities.

Seeking Alpha's Jonathan Liss recently spoke with David to find out how he planned to position clients in 2012 in light of his understanding of how a range of macro-economic and geopolitical trends were likely to unfold in the coming year.

Portfolio Construction

Seeking Alpha (SA): How would you generally describe your investing style/philosophy?

David Merkel (DM): I’m a value investor. I buy companies that are either relatively or absolutely cheap. I tilt my investing toward sectors that