International Shipping in cargo ships have replaced railroads as the main form of international Shipping. As the world globalizes large amounts of the Shipping has been transformed into cargo ships and Shipping lanes. What better way to invest money than the actual way people receive their products and send out their exports.
Shipping Borrowed Time
To invest in the sector of Shipping you have to make sure to fully diversify your portfolio in your investments. There are too many Shipping stocks that are based on companies that have no track record in Shipping and are literally running on borrowed money. When the Greek financial crisis arrived there were many Shipping companies that had to be docked because they were running on debt and couldn't afford to pay off their bills.
Gladly after the recession many Shipping companies barely squeaked by and will survive and continue Shipping products around the world. What does this mean for an investor? If you're interested in investing directly into Shipping then you need to choose a Shipping ETF.
One of the most popular Shipping ETFs is SEA. One of the problems with SEA is that most of its portfolio is tied to American and Chinese Shipping companies. Also SEA does not hedge its portfolio by investing in oil companies as the rising price of barrels makes Shipping by cargo ship more expensive.
Hedge Shipping With Oil
If you're going to invest in a Shipping ETF also make sure to invest in oil commodity, either through futures or options. The reason you also want to invest in oil is because if the price of oil skyrockets then your ETF will take a major hit. When looking to hedge against Shipping ETFs make sure to pick an oil stock that also pays a dividend.
There are many oil ETFs that are royalty trusts and will pay you huge dividends. If you know anything about swing trading then you know that transportation is one of the last things to recover after a recession and as the bull market begins to peak again. Keep in mind that Shipping is completely dependent on oil and geopolitical situations of the Shipping lanes.
Make sure to not allow the fluctuating price of of a Shipping ETF scare you. The best way to remove the investment fear and potential risk is by also investing in oil dividends. You can also pick different sectors when investing in ETF Dividends. Just make sure to hedge your transporation investments.
Plan out your trade ahead of time when trading in the Shipping and transportation sector.
As of September 2011 there seems to be lots of action going on in the Greek Financial Markets. If you can spot a good buy in their transportation sector you could make a real score by leveraging it with options. Don't be afraid of pulling the trigger on an investment that will not come around for another 100 years.