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THE PROBLEM OF TIMING IN DECISIONS TO BUY OR TO CHARTER A VESSEL

Alexandros M Goulielmos and Marcos A Goulielmos

Articles, 2009, vol. 36, issue 2

Abstract: This paper dealt with the concept of timing in reaching decisions, especially in connection with freight markets and sale and purchase of second hand ships. Timing is “the calendar time we accept as right just before we take a decision”. First, an extensive literature search has been attempted in such disciplines as Management, Decision- making and Decision Support Systems. Unfortunately, traditional disciplines have frequently offered the excuse for not dealing with timing of decision- making due to ‘lack of information’ and to ‘limited predictive techniques’. Moreover, modern disciplines (in particular chaos theory) also excuse themselves from addressing the question of timing on the grounds that real phenomena are ‘inherently unpredictable’. The concept of time in finance has been presented here as applied by Mandelbrot (1997) [and Albert Einstein (in 1905)] and stressed that time is flexible. Moreover found that time series have a speed and a long-term memory. A non-parametric method called ‘Rescaled Range Analysis’ applied which indeed deals with cycles and long term memories. The research directed also to the discipline of modeling and forecasting, both classical and chaotic (fractal). This brought us to address the question : should ARIMA (random) or ARFIMA (fractal) models be here and in similar applications employed ? The final conclusion was that Rescaled Range Analysis was the most appropriate for the analysis of both freight market and second hand ship price market. Additionally, the normality test by Jarque-Bera test (33>5.99) for freight market has shown the absence of normality and the existence of excess kurtosis (-1.51) as well as excess skewness (0.21). Moreover, a strong memory in freight rates of H=0.92

Date: 2009
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