How I Learned to Stop Worrying About Cargo and Love the Index

Dry bulk investment during the recent boom has lately been driven by the indices. This was a consequence of the Baltic Dry Index (BDI) being labeled as a “very good leading indicator preceding movements in global stock markets.” Why not? On May 20th of 2008 the Baltic Dry Index had reached its peak of 11,793 points. And then six months later, being a “leading” indicator, it fell to its lowest point, 763 points. An indication of the coming financial crisis, a failing U.S. economy, Chinese iron ore disputes, and a rush to overbuild in the larger ship segments. Obviously the booming orderbook didn’t heed the “leading” indicators or we didn’t understand what drove the BDI.

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