The use of technical analysis in sale-and-purchase transactions of secondhand ships

摘要

Sale and purchase (S&P) of secondhand vessels is a key source of profit for dry bulk shipowners, and profitability of such transaction depends on timing decisions. Using a sample of ship prices from June 1986 to 2014, this study applies four technical indicators to identify optimal trading timing for dry bulk ships. Some simulated results are found in the study. Firstly, among four technical indicators, Bollinger bands were found to be optimal for capsize and handysize vessels. Moreover, technical strategies outperform a benchmark buy-and-hold strategy, and they could be more effective in the markets for larger ships (implying lower market efficiency). Thirdly, the investment performance of technical strategies in most vessel sizes is superior to that of the stock market. Finally, delaying a transaction due to market illiquidity can result in shipowners missing ideal timing, thus incurring significant losses, particularly in the case of smaller vessels.