Eating Crow on my Dry Bulk Shipping Call
Thursday, January 17, 2008
I made a lot of good money playing the dry bulk shipping stocks on the way up, and have lost all of it on the way back down. As it should be obvious to anyone following the market at this point, the market is in an extremely foul mood and its tough to make money in any sector, but dry bulk shipping has been absolutely annihilated in the past few months.
At the end of November I suggested that Dryships (NASDAQ: DRYS) might be a buy because the market appeared to be pricing in a big drop in the Baltic Dry Index (BDI), even though that index was still near its all-time high. My case for dry bulk shippers was that in the event that the BDI held steady the shipping stocks could rebound strongly.
It turns out I was dead wrong and the market was correct to price in that collapse of the BDI. Looking at this graph is painful and probably what could be classified as a "crash".
Granted, dry bulk shipping rates are still higher than they were a year ago at this time, but for those who bought in too late (i'm guilty here too) the last few months have been horribly painful. Dryships, for example, has lost 60% of its value in only the last three months. If that isn't the definition of the house of pain, I don't know what is.
Posted by Rob Pitingolo 11:43 PM
Labels: DryShips Inc.
