Republished in 2006 by Wiley Investment Classics the book was originally written in 1940 by an American (with a name like that I might have guessed!) who had been a professional trader; he packed it in after the 1929 Wall Street crash. The book is a fun read and as relevant today as it ever was: The Trader recommends.
"The stock market, which, not being a physical thing, is not subject to Newton's laws of propulsion or inertia. Unfortunately most of us unconsciously credit this false analogy, thus we are not tempted to buy unless they [stocks] are 'going up' or to sell unless they are 'going down.' But when the market is 'going up' like fury, there is no reason to believe that the very next 'tick' is more likely to be up than down." Random Walk theory in the making.
"If the basic investment-trust idea is even half as sound as it appears to be, the average investor has virtually no excuse for buying any securities but investment-trust shares. Thus far in our history there has been little evidence that there exists a demonstrable skill in managing security portfolios." I could go on as there are plenty of aphorisms and good one-liners in his book.
Cowes Week, starting around the Isle of Wight tomorrow, set me thinking about boats and sailing. Something like 8,500 participants at all ability levels, and an expected 100,000 spectators will be enjoying a UK sporting success that has been running since 1826.
Italians currently build the most metres of luxury sporting boats, and Pietro Riva's Aquarama is considered the Ferrari of the boat world. But British names are ranked right up there too - Camper & Nicholsons of Gosport, founded in 1782, was hit by 2008's financial crisis, while Laser Performance and Sunseeker focus on the mass middle market.
Camper & Nicholsons
Unfortunately most of the great shipyards of Belfast, Birkenhead, the Clyde, and Grangemouth have gone the way of the dodo, with defence contractors and a couple of others hanging on. Cruises though continue to grow in popularity, mirrored by the size of these waterborne monsters and Carnival's share price.
Carnival of the US
The same cannot be said of the global cargo industry. When tighter regulations were introduced in the decade up to 2005, a building frenzy ensued anticipating the scrapping and retiring of thousands of single hulled ships and unseaworthy wrecks. Coinciding with a boom in commodities trading and coupled with low interest rates globally, the tonnage added was spectacular.
Baltic Dry Index
Freight rates at London's Baltic Exchange reflect the boom and bust, the main Dry Index surging to a record high in the first half of 2008 and now bumping along at some of the lowest levels of the 1980's and 1990's. For Panamax vessels (maximum size that will fit through the Panama Canal) and Capesize (so big these beasts have to sail around South Africa), the same story. However, another behemoth, Denmark's Maersk though has pulled through.
Denmark's Maersk
With commodity prices in the doldrums and global economic growth anaemic, the outlook is for more of the same.
