Drybulk shipping stocks have been pummeled lately. We all know that shipping is cyclical and is prone to over-building. Demand has been surprisingly resilient over the past few years- the question for investors now is whether demand will continue to grow at rates of 5%- 6% -7%. Both Doom and Gloom are now on the agenda. The European Union cut its 2008 growth forecast from 1.7% to 1.3%. As oil's price recedes (with the maelstroms of flood waters in Houston), "weak demand" is now cited as one culprit. Spot oil prices are now flirting with $90/ barrel.

As I've discussed, perhaps ad nauseum in my writing, the fortunes of many listed maritime companies are out of synch with widely followed spot indicators. In other words, company revenues that may be locked in over months, if not years. In cases where a port outage slows down loadings, or when ore buyers celebrate holidays, the spot market dips but roars back because nothing has really changed.

Yet, now, there is real concern about future demand- what if China does not "come back" now that the Olympics are over? Unlike earlier dips in the dry market, this time the forward rates have moved down in lockstep with spot rates. In the case of Panamaxes, the forward curve is virtually flat, meaning that what we see now is what traders think that we have in store for 2009 and 2010.

Another "different" aspect of the discussion now is the sharp pullback in the equity markets as a result of the ongoing crisis emanating from the near meltdowns of notable investment banks. Though shipping is still one of the "good" industries, benefiting from the robust movements of raw materials throughout the decade, it will be impacted, initially indirectly by the torrents of red ink throughout the financial markets.

I don't mean to give short shrift to the "supply side" of drybulk- I told one consulting client (from a prestigious money manager/ hedge fund) that I thought all the talk about a significant amount of delayed deliveries/ cancellations of vessel orders was "propaganda" put out there by owners to bolster their positions. Now, I hope readers will not blame the whole decline in the drybulk market on me telling a hedgie what he should do- these guys rarely listen to me, anyway. Unfortunately, we will only find out after the fact just exactly how many deliveries were cancelled or deferred.

So, what does the great prognosticator think? People who know me will say that I tend towards irrational exuberance, which means that I am often bullish in the shipping markets context. While sparing the readers all the macro-economic justifications, I would say that shipping is often out of synch with equity markets (shipping zigs while equities zag). If you accept that, or if you don't, I would also posit that shipping is a lagging indicator following behind the equity markets. They once quoted me in "The Economist" saying this, after the stock market Crash of 1987, which came just as drybulk was revving up. From a timing perspective- there is much more upside than downside at this point, so I would buy some shares in the usual suspects.