Some of my most regrettable trades are ones I never made.  I saw the opportunity and just got afraid that I had already missed the move.  I’m not talking about “I should have bought GOOG on it IPO” or  ” I had the limit order in for APPL @ $100 but I canceled it”   I could list hundreds of hunches I’ve had over the past few years, that turned out to be coulda-shoulda-woulda opportunities. But like I mentioned earlier, I’m not talking about those, because I never trade on hunches and therefor I realistically would have never made those trades anyways.  What I am talking about is seeing legitimate opportunities and failing to capitalize on them because I thought that by the time I was getting slapped in the face with it, I was too late.  The real money had already been made, right? 

I remember making that mistake on Dry Bulk stocks a few years back.  After many of them had already made double digit gains, I was afraid to go long, although all the fundamental numbers said demand from China ( Olympics build out ) was real and that a short supply of ships and Port congestion would drive rates for the Capesize/Panamax vessels  above their current $30,000/day spot rates.    Fear told me, “Rates have already doubled, there’s no way there going higher, I don’t care what the fundamental are”.  Boy was I wrong!  Within months spot rates for Capsize vessels were $150,000 and Panamax were  close behind at over $100,000/day.   Stocks such as DRYS, EXM, TBSI, GNK ( to name a few) saw ten fold gains in the matter a year.  And while I did scalp some profits from day trading these stocks a few times, based on scouring online forums to be in the know on the next BDI ( Baltic Dry Index) reading, I missed the real opportunity to make the trade months before.

 

Having said that, the once high-flying DryBulk Sector has definitely seen brighter days than it sees today. The industry over-ordered immensely during the boom days and now is stuck with an  oversupplied dry bulk fleet, and is in the process of clearing an order book that  likely won’t occur without some serious damage to the more vulnerable leveraged operators. Fundamentals tells us ( Existing oversupply of ships, slowing economic growth outlooks, new ships coming on daily, current ship asset values plummeting, and rising operating cost…just to name a few) that if they are not already there, daily operating revenues will go below operating costs for a period time, serving as a jump start the inevitable, survival of the fittest battle.

So, am going to be afraid to make the trade, Short the Shippers, even after EXM has gone trading at $80 to now $3,  TBSI $65 to now $1, GNK $85 to $6, and tell myself “The move has already been made”?  Hopefully not.  With even the most conservative shipping companies, those that lock in long term charters and insure them against default, like DSX, recently stating that business is only going to get tougher for them, there is bound to be a few of these heading toward “$0” even from their current single digit share prices.  ( Reason to “$0”:   defaulted loans, no financing thier new builds, de-listed, diluted…ect )  The one thing nice about a short trade,  its the same return going form $100 down to $5 = 95%,  and going from $5- $.25 = 95%.  So there still money to made made, even despite the move that we already seen.  They key is going to be to I identify the weakest , shorts the rallies, and lurk like vultures waiting for them to die.  

 

Special Thanks to Mike K ( Mike’s Trades ) for all his shipping insights and encouraging us who are on  Shareplanner trader network to “Know the Fundamentals, Trade the Technicals” and to not be “Afraid to make the Trade”!