There are some days in the life of a shipping analyst when I don't know whether to laugh at some news item, cry about it, or applaud it. Today's launch of an Exchange Traded Fund (ETF), the Claymore/Delta Global Shipping Index ETF (with an NYSE symbol of "SEA"- why didn't one of the real guys get that one?) elicited a little bit of each emotion. I had not heard of Claymore, apparently a big packager of ETFs and closed end funds- though I had heard of fellow blogger Delta Global Advisors, Claymore's partner in the new instrument. I was impressed that Claymore's press release was penned by Edelman, a top flight PR house.

The problem I have with this new ETF is perhaps one of frustration- a CNBC piece on the subject (see the picture) was vividly flashing a graph of the  Baltic Dry Index, CNBC style. That's right- the BDI in lights. A recurring theme in my analysis, and also in the conference calls and interviews of the listed shipping companies, is that individual companies' fortunes have very little to do with short term movements in the BDI. The index czars over at the Baltic Exchange, on St Mary's Axe, in the "City" of London, are probably loving this free publicity.

Another recurring theme on my grumpy list has been the investor confusion where container stocks, drybulk and tanker issues are all lumped together by investors. It's a boat, right?

The major holdings for "SEA" are as follows:

Name       Weighting
EUROSEAS LTD     4.60 %
SEASPAN CORP     4.32 %
PARAGON SHIPPING INC    4.07 %
OCEANFREIGHT INC    4.07 %
DIANA SHIPPING INC    4.05 %
GOLDEN OCEAN GROUP LTD   4.04 %
DHT MARITIME INC    4.00 %
STAR BULK CARRIERS CORP   3.94 %
DANAOS CORP     3.93 %
NAVIOS MARITIME HOLDINGS   3.91 %
HORIZON LINES INC    3.89 %
TEEKAY TANK-CL A    3.76 %
FRONTLINE LTD     3.75 %
KNIGHTSBRIDGE TA    3.68 %
TSAKOS ENERGY NAVIGATION  3.64 %
GENCO SHIPPING & TRADING   3.55 %
SHIP FINANCE INTERNATIONAL LTD  3.50 %
GENERAL MARITIME    3.49 %
TEEKAY LNG PARTNERS    3.43 %
EAGLE BULK SHIPPING INC   3.30 %
ALEXANDER & BALDWIN INC   2.79 %
NIPPON YUSEN KK    2.53 %
DRYSHIPS INC     2.47 %
OVERSEAS SHIPHOLDING GROUP  2.37 %
EXCEL MARITIME CARRIERS   2.35 %

I was struck by the rainbow like diversity of the sectors- Alexander & Baldwin should perhaps be the bright blue colour of the container sector (why aren't the guys with the blue ships on there, anyway?) and NYK is into numerous sectors so I didn't fill it in. Thinking about the guys who called into Cramer last December (I heard this with my own ears), and were advised to fade their shares of one of the large container guys (it was either DAC or SSW, not sure which) because the BDI was in free fall, I cringed when I saw this mélange of names. The one big guy which does actually track the BDI was conspicuously absent from the top half of the list.

Being a shrewd and sought after analyst, I much favour the Dahlman Rose (DR) approach, where they split off drybulk from tankers and you can play a sector, rather than an all-encompassing Philadelphia style strategy. To my knowledge, DR has not yet launched their version of shipping ETF's- perhaps the "SEA" may force their hand.

I could prattle on about correlations with the BDI, with equity indices, and how you can use Barry Parker-style regression analysis to throw strikes by aiming at the corners of the strike zone. But I will skip all that- after all, that's what clients pay for. My advice to fund packagers or financial advisors who might put their clients into "SEA" would be to assert loudly that movements of shipping rates, a great economic barometer, cannot be divined by looking at the short term movements of the BDI like the announcers on CNBC want you to do.

Upon reflection, my dominant emotion in the triumvirate of laugh-cry-applaud is actually the latter- this ETF effort should be applauded. In the minds of investors, who will likely never decompose and reverse engineer the BDI (as my team of analysts is doing every day), shipping is a barometer of the world's economic pulse. Many investors see the entire shipping sector is a play on world economic growth, especially in China and India. Perhaps the launch of "SEA", just as the Olympics were closing down, was not merely a coincidence. Things are expected to begin popping, again. And, a rising tide will likely lift all boats- including those of container stocks with revenue visibility stretching out into the next millennium, well almost.

So, the facts are less important than what the masses of buyers think the facts are. As an analytical corner thrower, I am not happy about that, it flies in the face of all those facts and data points. But, good shipping analysts get it right about as many times as the best hitters get on base- less than half the time. I am reminded of the quote by John Maynard Keynes, the John Fredriksen of economists.