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Charles De Trenck

Thematic (Sector/Industry)

Hong kong Industrials / Thematic (Sector/Industry)

Most of us are following the relatively deep correction in stocks, which has been sparked by a change in psychology reacting to small rises in interest rates coupled to the US - China Trade War, some economic data rolling over, and some growing concerns over Trump thrown in for good measure. The market overall should be able to learn some lessons from the 10+ year bear market in shipping (our contention has always been to expect only a slow rebound in shipping, but the recent risk off has brought these names right back down along with many deep cyclical stocks).First, we consider the current trajectory of stock market corrections, learning from some behavioral excesses in shipping in the run up to 2008 – and what made the correction so deep for so long.Second, we look back at the 2006-07 Baltic (BDI) Shipping Index Boom and 2008 crash and contrast a few parallels and differences we see with the Bitcoin Madness of 2017. Maybe we should consider adding a quick comparison of Marijuana stocks, but we don’t yet have the same distance.In all cases, including Marijuana stocks recent rallies, the big boom came as supply was squeezed as demand went beyond physical, and developed a life of their own. With small market caps gaining a world audience, the game is easy to play initially, with those having the greatest foolhardiness or courage possibly getting to time exits or partial exits toward tops. Analytically, we usually see the madness way ahead, and the first tricks are to make up stories on why we should continue to buy. And then comes the brick wall.

Most of us are following the relatively deep correction in stocks, which has been sparked by a change in psychology reacting to small rises in interest rates coupled to the US - China Trade War, some economic data rolling over, and some growing concerns over Trump thrown in for good measure. The market overall should be able to learn some lessons from the 10+ year bear market in shipping (our contention has always been to expect only a slow rebound in shipping, but the recent risk off has brought these names right back down along with many deep cyclical stocks).First, we consider the current trajectory of stock market corrections, learning from some behavioral excesses in shipping in the run up to 2008 – and what made the correction so deep for so long.Second, we look back at the 2006-07 Baltic (BDI) Shipping Index Boom and 2008 crash and contrast a few parallels and differences we see with the Bitcoin Madness of 2017. Maybe we should consider adding a quick comparison of Marijuana stocks, but we don’t yet have the same distance.In all cases, including Marijuana stocks recent rallies, the big boom came as supply was squeezed as demand went beyond physical, and developed a life of their own. With small market caps gaining a world audience, the game is easy to play initially, with those having the greatest foolhardiness or courage possibly getting to time exits or partial exits toward tops. Analytically, we usually see the madness way ahead, and the first tricks are to make up stories on why we should continue to buy. And then comes the brick wall.

Manias, Booms & Bears: BDI & Shipping Vs Bitcoin… Lessons for Stock Markets