Enjoy a perfect storm

The east coast has been hit hard by a strong hurricane and New York City was striked by a historical rain pour that has been the worst in over 170 years! My sincere sympathy for those who have suffered from the disaster!

Of course, I don't mean to talk about the natural storm here. Just saw a note from my friend talking about a perfect storm formed in a sector that nearly no one was interested in the recent past. Here is the excerpt:

The Baltic Dry Index (BDI) hit another new 12-year high yesterday and is up almost 1,000% since March 2020…It's not surprising, considering it's the most followed international measure of the price of shipping goods around the world.

And it looks like there's no sign that it'll slow down…

This is mostly due to the pandemic wreaking havoc at shipping companies and ports all over the world. Ports have had to shut down and ships have been particularly vulnerable to the rapid spread of the coronavirus. That's reduced both the capacity of ports and the number of ships available to run. At the same time, the global pandemic has created outsized demand for everything from furniture to appliances, homes, and vehicles.

There is less supply and more demand at exactly the same time, which has created the perfect storm…

I'm happy to say I really enjoy this storm which is indeed perfect for me😜💪

Who so? Well, if you read the following blog I shared with my Family about a year ago, you should be able to understand that I and my Family members have already deeply dived into this storm for quite some time. As such, we have been rewarded dearly so far, not only over 3 times return from the perfect stock we bought but also an amazingly strong dividend yield that has reached 12% even after the stock price has gone up so much!  With the storm is still ongoing with no end in sight, I don't think its business will shrink any time soon. Of course, I must say this is not a risk-free stock at all, especially at such a high level already. Buying from here may not be a good idea. But buying it at weakness may be prudent.

GOGL- Buy the most hated stock

Right now, there is hardly anything more hated than the shipping industry, which is highly cyclical. It is pure supply and demand play. Currently, there are pockets of the shipping industry where you can buy ships at an 80% discount to their market values. You can buy modern ships trading near their scrap values.

It's the most hated, ignored, depressed industry in the stock market. This is where you can truly find some beautiful bargains, drastically different from chasing highs in other hot stocks where you have to pay huge premiums! 

There are three main categories of shippers: energy, containers, and dry bulk. I have already got the oil tankers (the energy sector) like NAT (a quick double) and FRO. Today, I'd like to introduce a stock for the dry bulk segment, which is  mainly concerned with hauling iron ore from Brazil to China. It's getting absolutely hammered…

 From the FreightWaves magazine:

After plunging 21% on Monday to $3,842/day, which was awful enough, Capesize drybulk shipping rates have just crashed down another 25% on Tuesday, to $2,893/day.

Can you imagine being able to rent a giant bulker for $3,000 a day?  

If inflation returns, ships will do extremely well. A recovering economy should also provide a positive stimulus to the shipping industry. Golden Ocean Group Limited (GOGL) is one of the dry bulk stocks I like. Its 6% dividend is a nice plus! GOGL is trading around $3.19 today.