Baltic Dry Index, from Jeff Watson

September 28, 2011 |

Has anyone noticed the Baltic Dry Index as of late? Although well off its highs, it's come up well off its bottom on Feb 4 of 1043 and is at 1928 today. Has anyone done any statistical work on the BDI or found any correlations that might be interesting?

Lars Van Dort writes: 

I didn't, but I once referred to an article on dailyspec of someone who did (this was after the Baltic Dry Index caught the attention by falling 34 days in a row).

The link to the article mentioned there is now broken, but I got it back using the Internet Archive. Perhaps you will find it useful. Of course, it never replaces doing one's own work.

Baltic Dry Index as a Reliable Forward Indicator? Nonsense.

05/18/2009 by Research Reloaded

In finance, be cautious of anyone who uses historical correlation to back up their argument. In shipping, just flat out run from them. Shipping's notorious Baltic Dry Index, which is an index of spot rates for shipping dry bulk commodities such as coal and iron ore around the world, achieved death defying heights and then, well, death-causing lows, in the course of 2008, falling 90% from its peak, and attracted a lot of attention in the process both on the way up and down. The BDI meme is still alive, especially given a recent rally, and we have quite a few people claiming it as a quality indicator, or even the best indicator (sheesh) for the direction of stock markets or the world economy. Unfortunately, a lot of smart people misunderstand what the BDI represents.

Full article linked above.


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