Rhubarb Amongst Other Fruits: The Sale and Purchase Debate

by Thomas P, Mayr, London

When I read the article in the June issue of Marine Money entitled Apples and Oranges, I did not know whether to feel pleased or displeased. The thought that an article I wrote for the Lloyd’s Shipping Economist

- “How to Recognize True Value for Money” (March 1997) – stirred someone to perhaps think critically about the sale and purchase market for a while was indeed flattering. Yet Mr. Levine’s comments indicate that he so failed to grasp the point of my article, that it dampened my enthusiasm for his critique. So, for the benefit of Mr. Levine and the rest of the readership of Marine Money, I would like to attempt to make myself more clear.

First of all, the topic of my article was the vessel sale and purchase market and the overused catch-phrase ‘buy low, sell high’ which is often used to justify asset play. I suggested that to understand the contrarian’s investment behavior, one first must have working knowledge of how ships are valued and an appreciation for the range over which vessel prices fluctuate. Furthermore one must appreciate that second-hand prices are inextricably entwined with their operating cash flows, which paradoxically calls into question the whole notion of pure ‘asset play.’

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