Thursday, October 23, 2008

Shipping Stocks Sinking, So Let's Find a Floater

Take a look at the Baltic Dry Index chart from Bloomberg. (I'm too cheap to pay for membership in the Baltic Exchange. Always get a free source!) It's been dropping like a rock lately:

Lower rates for carriers of sea cargo are reflected in the decline of the Claymore/Delta Global Shipping Index ETF (SEA), which has lost over half its value since it debuted in late August this year. The decline in value of a security representing an otherwise indispensible industry doesn't necessarily make it a good buy . . . for me anyway. SEA isn't optionable, but some of its holdings are.

Shipping companies that will do well in Great Depression 2.0 should have market leadership and low debt. I've got a couple of candidates in mind, and I may add them to my portfolio by the end of the year.