Most of us have done it before. You observe a sector being torn to shreds, you conclude that it couldn't possibly grow any weaker, and you hop in with a confident strut. My hands are still injured by a couple of the falling knives I picked up during the epic commodity sell-off of mid-2008.
My concern for dry bulk shippers at the moment is that several of the best-known operators may be exposing their hands to fresh cuts as the vessel oversupply condition facing the global fleet continues to intensify.
Take Genco Shipping & Trading
To be sure, vessel prices have fallen dramatically since the perfect storm battered the sector: At $33.8 million per Supramax vessel, Genco is paying less than half of what Star Bulk Carriers
Roughly speaking, then, the industry's vessel acquisition costs have been chopped in half as oversupply has stunned the market and charter rates have run aground. Naturally, operators perceive bargains in these prices and have moved aggressively to grow their fleets.
Genco even launched an IPO in March -- called Baltic Trading
But, you see, herein lies our collective dilemma. For investments in this industry to bear fruit, we rely upon these operators to expand their fleets at or near a bottom in this dreary dry bulk business cycle. But while aggressive growers like Eagle Bulk Shipping
Only hindsight can discern a bottom from a falling knife. Here's hoping we can all keep our hands safe. How confident do you feel that the sector has found a comfortable bottom in the cycle? Please sound off in the comments section below, and vote in our Motley Poll.
Fool contributor Christopher Barker can be found blogging actively and acting Foolishly in the CAPS community under the user name TMFSinchiruna. He tweets. He owns shares of Baltic Trading and Diana Shipping. The Motley Fool's disclosure policy can hold its breath underwater while a cargo ship passes overhead.