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Old 05-25-2010, 07:21 AM   #241
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DOW futures off 209 this morning. I wish the markets would read your posts.
Difference of opinion (and panic, manipulation, over-reaction, gubmint intervention, space aliens,etc.) Makes a market.
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Old 05-25-2010, 07:25 AM   #242
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Originally Posted by brewer12345 View Post
Difference of opinion (and panic, manipulation, over-reaction, gubmint intervention, space aliens,etc.) Makes a market.
I was going to say crazy people, but I guess panic, manipulation, over-reaction and anything to do with the guvmint all fit just as well.

Brewer, thanks for the info on the BDI - I've been meaning to go back and look at the shipping stocks this quarter.
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Old 05-25-2010, 07:47 AM   #243
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Difference of opinion (and panic, manipulation, over-reaction, gubmint intervention, space aliens,etc.) Makes a market.
Agreed.

I keep looking for reasons to be scared but I don't see that much changing on the "real" economy front. This seems mostly to be a crisis of confidence with people still shaken by the sub-prime meltdown and even the "flash crash". Certainly some of Europe's banks are at risk, but the chain of events needed to cause major losses at U.S. institutions borders on far fetched. I guess it is "tail risk" that didn't seem to exist several months ago, but I'd wager on eventual stabilization and reversal of the current "fear trade".
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Old 05-25-2010, 08:49 AM   #244
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And it is still made up...

DD
Yep, and more so every day.

But DON'T need approval.

Was interested in ideas only.
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Old 05-25-2010, 08:53 AM   #245
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Agreed.

I keep looking for reasons to be scared but I don't see that much changing on the "real" economy front... .
I'm not looking for reasons to be scared, either. I'm just looking for ways to make money.
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Old 05-25-2010, 09:24 AM   #246
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I am keeping score at home

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And for anyone keeping score at home, I think that we have a self-sustaining recovery underway as long as the financial system does not come apart. BDI up another chunk yesterday and the freight futures market spiked even as equities dropped. Off in the background, containership rates have recovered in the last few months and continue to rise. PSVs in the North Sea have gone from laid-up ships (docked for lack of work) 3 months ago to a sold-out market as of yesterday. Yeah, the markets are dropping, but the real economy of moving "stuff" seems to be chugging along.
A little fact checking and historical basis
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05-22-2008, 01:02 PM #196 brewer12345
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Originally Posted by CCdaCE
Ran across this article on marketwatch. Summary is: A daily gauge of ocean shipping rates that serves as a widely-followed leading economic indicator has roared back to new highs after dipping earlier this year, highlighting both the resilience of the global economy and surging inflation pressures.

-CC

Idiotic article in many respects. The BDI reflects what is going on in the BRIC economies, the steel industry, and a shortage of shipping tonnage and port capacity caused by decades of underinvestment. The index is quite volatile, but the underlying causes will take years and a lot of capital to resolve, so it will remain at relatively high levels for the forseeably future. Unless, of course, the Chinese and the Indans stop building out infrastructure, growing their populations, and would rather sit in dark, unheated buildings in the winter.
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Quote:5/17/2008
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These stocks are up over 50% since March. I'm not thinking of selling all of them, just lightning up a little. I was adding when they were down and now wonder if they have gotten ahead of themselfs.

05-22-2008, 01:02 PM #196 brewer12345
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The stocks are way behind the surging fndamentals. I intend to hang on as the media alerts the retail rubes that things are great in the industry and then I will sell when the idiot crowd rushes in and bids up the stocks. Expect this to happen within a few weeks to 6 months
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5/18/2008Originally Posted by Texas Proud
And what is a target on NM
I believe it is worth $20 to $25. Having said that, let me give you an important caveat. There is currently a massive squeeze on for ships, to the point of a dire shortage vs. the cargos that need to be moved. If the squeeze goes further than I am expecting (think BDI north of 15,000), the stock may be worth considerably more.
As of right now the BDI (and NM) is 25% of where it was in May of 2008 and still below last November's high and has made no meaningful new high. The BDI has never confirmed the recovery in the economy as the stock market indicated may happen, it may in the future but it needs to get over 5,000 and hold it for an extended period to get to a prior much lower level.
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Old 05-25-2010, 10:08 AM   #247
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A little fact checking and historical basis





As of right now the BDI (and NM) is 25% of where it was in May of 2008 and still below last November's high and has made no meaningful new high. The BDI has never confirmed the recovery in the economy as the stock market indicated may happen, it may in the future but it needs to get over 5,000 and hold it for an extended period to get to a prior much lower level.
Be my guest to do as you see fit. The reality is that the peaks of the BDI north of 10,000 were unsustainable and heavily driven by some short term things (principally congestion). The smarter management teams (like NM's) knew this and locked in long term charters at the time even though they often got something like half or less of spot rates for doing so. I view BDI of 4000-6000 as the likely long term sustainable range and base my valuations of companies/assets on that. You are free to do as you wish.

And FWIW, I think that the BDI is a lousy economic predictor. I merely mention the action in the dry bulk and other shipping sectors as a contrast to what is going on in the markets. The market action would have you believe that the world is grinding to a halt. I do not see that in the real-world industries whose fundamentals I follow closely.
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Old 05-25-2010, 10:09 AM   #248
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And for anyone keeping score at home, I think that we have a self-sustaining recovery underway as long as the financial system does not come apart. BDI up another chunk yesterday and the freight futures market spiked even as equities dropped. Off in the background, containership rates have recovered in the last few months and continue to rise. PSVs in the North Sea have gone from laid-up ships (docked for lack of work) 3 months ago to a sold-out market as of yesterday. Yeah, the markets are dropping, but the real economy of moving "stuff" seems to be chugging along.
You're right about the transportation sector. I deal with imports and have seen container rates skyrocket in the last 45-60 days. Containers are being left at the shipping port because the ships are full.

I wish I could say my industry was in self-sustaining recovery but it doesn't appear that way in building materials. We had a nice run in March & April but somebody turned the switch off in May. Seems as if everybody let their inventories run down to bare floor and then all restocked at the same time getting ready for a hoped for spring rush. Sad to say there has not been much of a rush.
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Old 05-25-2010, 10:16 AM   #249
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Be my guest to do as you see fit. The reality is that the peaks of the BDI north of 10,000 were unsustainable and heavily driven by some short term things (principally congestion). The smarter management teams (like NM's) knew this and locked in long term charters at the time even though they often got something like half or less of spot rates for doing so. I view BDI of 4000-6000 as the likely long term sustainable range and base my valuations of companies/assets on that. You are free to do as you wish.

And FWIW, I think that the BDI is a lousy economic predictor. I merely mention the action in the dry bulk and other shipping sectors as a contrast to what is going on in the markets. The market action would have you believe that the world is grinding to a halt. I do not see that in the real-world industries whose fundamentals I follow closely.
The container lines also mothballed a lot of ships and let a lot of crews go in order to reduce capacity and give them room to raise rates.

Inland trucking rates are also going up dramatically for the same reason. Over a hundred thousand trucks were parked during this recession and all it took was a little uptick in demand for shippers to see a huge change overnight. Sixty days ago I could take an order first thing in the morning and often get the truck loaded late that day. Now it is taking 2 to 3 days and the rates have gone up 20%.
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Old 05-25-2010, 10:17 AM   #250
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(...panic, manipulation, over-reaction, gubmint intervention, space aliens,etc.)
Speaking of space aliens, this guy is apparently suffering from an alien abduction hangover. I'm always amazed at his constant message of gloom & doom, but this time old Paul has taken it to a new level:

Crash is dead ahead. Sell. Get liquid. Now Paul B. Farrell - MarketWatch

Quote:
Think bear, think crash, think end of capitalism, think Great Depression II ...
Whaddya bet he's buying on the dips?
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Old 05-25-2010, 10:25 AM   #251
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Old 05-25-2010, 10:34 AM   #252
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The container lines also mothballed a lot of ships and let a lot of crews go in order to reduce capacity and give them room to raise rates.

Inland trucking rates are also going up dramatically for the same reason. Over a hundred thousand trucks were parked during this recession and all it took was a little uptick in demand for shippers to see a huge change overnight. Sixty days ago I could take an order first thing in the morning and often get the truck loaded late that day. Now it is taking 2 to 3 days and the rates have gone up 20%.
Oh, agreed, most certainly. I think one of the gripes people have had about the container lines is that they have been somewhat slow to bring ships out of layup so as to let rates keep climbing. Not sure that is a fair criticism, since I very much doubt there is anything like a cartel there.

It has been interesting watching the North Sea PSV market. Rates held up there long after every other shipping sector got pulled down and then finally the North Sea market dropped to very low rates and low utilization. Over the course of 6 or 9 months, a bunch of shipowners took their boats out of the North Sea and put them on long term charters in other markets (mainly off the coast of West Africa and Brazil), which had the effect of quickly reducing supply in the North Sea. Then the Icelandic volcano spewed and what had been a slow rate climb rturned into a huge spike/frenzy as all the helicopters that were being used to ferry stuff to/from the drilling platforms were grounded and PSVs were the only way to make the runs back and forth. That market appears to remain pretty tight, no doubt exacerbated that a lot of supply was taken out of that market.
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Old 05-25-2010, 10:55 AM   #253
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Actually, I don't necessarily disagree that we may be in a depression of sorts. Some will say that we don't have soup kitchens and 25% unemployment like they did in the 30's. But they didn't have SS, Medicare, Medicaid, food stamps, public housing, unemployment insurance and unemployment insurance extensions to keep people off the streets in the 30's. They didn't have wild public spending to prop up the economy either (at least until later in the great depression). As I wrote before, a lot of people in my family would be queuing at the nearest soup kitchen if it wasn't for SS. As for unemployment, the "real" unemployment rate is close to 17%, really not that far from 25% (I am not sure how they counted unemployment in the 30's and whether it bore any resemblance to the way we count unemployment nowadays). Also, the great depression was not uniformly dreadful. It was peppered with periods of recovery that just fizzled out. I guess, it must have felt like you could finally see the light at the end of the tunnel, just to get sucker punched before you could reach the exit. But there were also some great market rallies in the 30's for those who could bear playing the game...

On the other hand, MIL just called. She wants to liquidate her portfolio... Bullish sign?
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Old 05-25-2010, 11:09 AM   #254
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Old 05-25-2010, 12:19 PM   #255
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Old 05-25-2010, 12:36 PM   #256
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As of right now the BDI (and NM) is 25% of where it was in May of 2008 and still below last November's high and has made no meaningful new high. The BDI has never confirmed the recovery in the economy as the stock market indicated may happen, it may in the future but it needs to get over 5,000 and hold it for an extended period to get to a prior much lower level.
I can't find a chart (that I can cut and paste here) that shows the entire history of the index, but here is one from its inception to sometime in late 2008.



Maybe I'm looking at this the wrong way, but it seems to me that the BDI at 4,000-ish reflects something closer to long-term normal than the historic high of almost 12,000 or the low at 700-ish. In fact, 4,000 may be just a bit high.

My guess is that the demand for iron ore by China still has a lot of impact here in the shorter-term. Still, I'm not sure comparing the index at its current level against a high that was way outside its normal trading range is the right way to look at it.
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Old 05-25-2010, 12:46 PM   #257
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Maybe I'm looking at this the wrong way, but it seems to me that the BDI at 4,000-ish reflects something closer to long-term normal than the historic high of almost 12,000 or the low at 700-ish. In fact, 4,000 may be just a bit high.

My guess is that the demand for iron ore by China still has a lot of impact here in the shorter-term. Still, I'm not sure comparing the index at its current level against a high that was way outside its normal trading range is the right way to look at it.
That is more or less my view. My long term assumption for a number of years is that Capes will earn $50k/day, Panamaxes earn $30k/day, and Supras earn $25k/day. More than that is likely to be short-lived gravy. Less than that is not likely to be a long term phenomenon. Naturally in the short term things can move far from the long term averages.
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Old 05-25-2010, 07:17 PM   #258
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I've had a large percentage of my savings in gold and gold funds since 2001, and the rest in foreign currencies. At that time it was easy to foresee what was going to happen economically.

Sorry if someone has already asked this. Please explain to me why it was easy (for you) to foresee in 2001? If you could foresee then, why can you do it now?
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Old 05-25-2010, 07:23 PM   #259
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I've had a large percentage of my savings in gold and gold funds since 2001, and the rest in foreign currencies. At that time it was easy to foresee what was going to happen economically.

Sorry if someone has already asked this. Please explain to me why it was easy (for you) to foresee in 2001? If you could foresee then, why can you do it now?
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Old 05-25-2010, 08:50 PM   #260
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Speaking of space aliens, this guy is apparently suffering from an alien abduction hangover. I'm always amazed at his constant message of gloom & doom, but this time old Paul has taken it to a new level:

Crash is dead ahead. Sell. Get liquid. Now Paul B. Farrell - MarketWatch

Whaddya bet he's buying on the dips?
REWahoo, I read this guy today and I think if he has any money at all, it is invested in ammunition, canned goods, bottled water, chain link fence, surveillance cameras, land mines, pit bulls and a mountain top. Oh yeah, and he's single too!
I hope everyone realizes that "a blog is a blog etc.etc." Everyone has an opinion and he gets to publish his. I hope he didn't get paid for that.
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