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Market Efficiency in the Second-hand Market for Bulk Ships

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  • Aror O S Ådland

    ([1] Agder University College, School of Management, Service Box 422, N-4604 Kristiansand, Norway. [2] Clarkson Research, London, UK.)

  • Steen Koekebakker

    ([1] Agder University College, School of Management, Service Box 422, N-4604 Kristiansand, Norway. [2] Agder Research, Kristiansand, Norway)

Abstract

According to the Efficient Market Hypothesis (EMH), the use of technical trading rules, where buy and sell decisions are based on past price patterns, should not consistently yield an economically significant excess profit. This paper evaluates the validity of the EMH in the second-hand market for bulk ships based on the out-of-sample performance of technical trading rules. We evaluate a large number of different parameterisations of three of the simplest and most popular trading rules in the financial markets: filter rules, moving averages, and support and resistance levels. The empirical results suggest that trading rules are generally not capable of producing excess wealth over the buy-and-hold benchmark when accounting for transaction costs and the potential price slippage in an illiquid market. The results in this paper therefore support the validity of the EMH in the second-hand markets for bulk vessels. Maritime Economics & Logistics (2004) 6, 1–15. doi:10.1057/palgrave.mel.9100092

Suggested Citation

  • Aror O S Ådland & Steen Koekebakker, 2004. "Market Efficiency in the Second-hand Market for Bulk Ships," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 6(1), pages 1-15, March.
    • Handle: RePEc:pal:marecl:v:6:y:2004:i:1:p:1-15
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    Cited by:

    1. Alexandridis, George & Kavussanos, Manolis G. & Kim, Chi Y. & Tsouknidis, Dimitris A. & Visvikis, Ilias D., 2018. "A survey of shipping finance research: Setting the future research agenda," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 115(C), pages 164-212.
    2. Papapostolou, Nikos C. & Pouliasis, Panos K. & Kyriakou, Ioannis, 2017. "Herd behavior in the drybulk market: an empirical analysis of the decision to invest in new and retire existing fleet capacity," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 104(C), pages 36-51.
    3. Alexandros M. Goulielmos, 2015. "The Multi-faceted Character of Risk in Maritime Freight Markets (Panamax) 1996-2012," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 65(1-2), pages 67-86, January-M.
    4. Kokosalakis, George & Merika, Anna & Triantafyllou, Anna, 2021. "Energy efficiency and emissions control: The response of the second-hand containerships sector," Energy Economics, Elsevier, vol. 100(C).
    5. 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.
    6. Alizadeh, Amir H. & Nomikos, Nikos K., 2007. "Investment timing and trading strategies in the sale and purchase market for ships," Transportation Research Part B: Methodological, Elsevier, vol. 41(1), pages 126-143, January.
    7. Keun-Sik Park & Young-Joon Seo & A-Rom Kim & Min-Ho Ha, 2018. "Ship Acquisition of Shipping Companies by Sale & Purchase Activities for Sustainable Growth: Exploratory Fuzzy-AHP Application," Sustainability, MDPI, vol. 10(6), pages 1-13, May.
    8. Heng-Chih Chou & Dar-Hsin Chen, 2019. "The use of technical analysis in sale-and-purchase transactions of secondhand ships," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 21(2), pages 223-240, June.
    9. Amir H. Alizadeh & Roar Os Ådland & Steen Koekebakker, 2007. "Predictive power and unbiasedness of implied forward charter rates," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 26(6), pages 385-403.
    10. Photis M. Panayides, 2006. "Maritime policy, management and research: role and potential," Maritime Policy & Management, Taylor & Francis Journals, vol. 33(2), pages 95-105, May.
    11. Alizadeh, Amir H. & Thanopoulou, Helen & Yip, Tsz Leung, 2017. "Investors’ behavior and dynamics of ship prices: A heterogeneous agent model," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 106(C), pages 98-114.

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