In the past couple of weeks we have seen an explosion in many of the shipping related stocks. The dry bulk index has shot higher and is up over 100% in the past several months, and investors have been piling into shipping stocks.
This has been a horrible sector for the past few years as the industry was at record capacity in 2007, just as the credit crisis caused a global recession. Shipping rates and booking plunged dramatically and most shipping firms were losing big money. Several were forced into bankruptcy liquidation. Now there’s solid reason to think that as the global economy continues to grind towards a sustainable recovery the industry has turned the corner.
The important thing for investors to keep in mind as they approach the shipping industry is that fundamentals matter even more than usual in this sector. Many of these companies s are actually in very poor financial condition, and even though they may rise with the short-term pop in the sector, the fundamentals could easily cause them to crash back to earth. It looks like there’s a lot of money to be made in shipping stocks, but it is also very easy to lose a lot of money if you bet on the wrong stocks. By using Portfolio Grader, you can find and buy the very best stocks, minimizing your risk and maximizing your potential gains.