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What this means is that while shipping rates should track the cost to ship something around the world, which actually in the long term should be declining on a real basis due to human progress (and has been), a company (when managed properly), or collection of stocks, ie. a stock market, should actually be increasing in value over time on a real basis due to human progress. If we want to think about the value of all the companies in the world versus the cost to ship a ton of ore around the world, in the long term the value of global business will be increasing while the costs to float ore will be falling. For shipping costs to rise in the long term, humans would have to somehow become less and less efficient at transportation over time. Unlikely.
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Baltic Dry Index as a Reliable Forward Indicator? Nonsense
My old co-blogger Vincent discussing the correlation (or lack thereof) between the Baltic Dry Index and shipping stocks. I found this line to be particularly deep.
