wearmanyhats

Thanks to the Once and Future Farmer who pointed out the  Baltic Dry Index .  Marketplace on NPR had a guest speaker who discussed the BDI as the most stable indicator of how the economy is doing.  Economist Susan Lee explained how this index follows the ocean shipping, available credit, and raw materials.

This blog has explored the merits of the Baltic Dry Index in the past.  It was a great feeling that any reader could say that we discussed it here before a national discussion brought it up.   However, the really great part is that the BDI dropped badly in May 2008.  Since February, however, this indicator has begun to turn around. It’s bit like missing the car accident, the victim clean up and seeing the accident scene return to normal.

The five year chart provides a dramatic visual account of just how drastically awful the economy tanked in 2008.  In fact, other drops in this index have been mere burps compared to the cratering of this most recent drop.  It is heartening therefore that there is upward movement now.

If freight is moving again, if credit is finally loosening for shipping to occur, transportation issues should begin to move upward again within the next six months.  Buy on dips for issues like Frontline (FRO),  Teekay (TK),  Euroseas (ESEA), and Nordic American Tanker (NAT).

Teekay is especially a good grab right now because this is the largest shipping company in the world. This stock is normally an aggressive growth stock, but its dip from the down market has made it a grab because of dividends, too. Normally you would be getting a paltry 2 or 3%.  With this correction, the dividend payout is now listed at 7%.  We’ll be following it here in the next couple of months to buy when we feel the time is right.

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