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A Buy-Low, Sell-High Investment Methodology: The Case of Bulk Shipping

Author

Listed:
  • Henry S. Marcus

    (Department of Ocean Engineering, Massachusetts Institute of Technology, Room 5-207, Cambridge, Massachusetts 02139)

  • Maurice A. Glucksman

    (Pugh-Roberts Associates, Inc., 3 Worcester Street, Oxford, OX12BX, England)

  • Babis O. Ziogas

    (Bulk Ocean Services (USA) Corporation, 675 Third Avenue, 19th Floor, New York, New York 10017)

  • Karl L. Meyer

    (Universal American Ventures Corporation, 60 Arch Street, Greenwich, Connecticut 06830)

Abstract

Investment success in a cyclical market, such as the international bulk shipping market, can be dramatically enhanced by a cost-based buy-low, sell-high investment strategy. We developed an estimator of relative price level for a general asset using net present value techniques and publicly available information on costs and revenues. The estimator compares market price with a cost-based nominal price and thus identifies relative highs and lows in a market. As a test, we used the estimator on historical data to simulate how investment decisions could have been made in the bulk shipping market. Investment strategies using the estimator to time acquisitions and sales perform significantly better than a “blind” investment strategy (where ships are acquired and sold at fixed time intervals).

Suggested Citation

  • Henry S. Marcus & Maurice A. Glucksman & Babis O. Ziogas & Karl L. Meyer, 1991. "A Buy-Low, Sell-High Investment Methodology: The Case of Bulk Shipping," Interfaces, INFORMS, vol. 21(2), pages 8-21, April.
    • Handle: RePEc:inm:orinte:v:21:y:1991:i:2:p:8-21
    DOI: 10.1287/inte.21.2.8
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    Cited by:

    1. Gkochari, Christiana C., 2015. "Optimal investment timing in the dry bulk shipping sector," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 79(C), pages 102-109.
    2. Pantuso, Giovanni & Fagerholt, Kjetil & Hvattum, Lars Magnus, 2014. "A survey on maritime fleet size and mix problems," European Journal of Operational Research, Elsevier, vol. 235(2), pages 341-349.

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