If you were feeling irrationally moody and upset on Monday, don’t worry you were not alone. Monday was Blue Monday, no not the ground-breaking song by New Order from the early 1980s, but the most depressing day of the year, at least according to Sky Travel, a UK company that released a press release back in 2005. The concept was backed up by science, apparently with an equation taking into account weather conditions, debt, monthly salary and the time since Christmas amongst other things, and this has since been disproven and indeed ridiculed by the scientific community. But like many of these things that have absolutely no measurable foundations, the concept of Blue Monday has struck a chord.
I was teaching online on Monday evening, and a more sorry and depressed bunch of students I have never come across, but to be honest their lecturer wasn’t in the most fluid of moods either. I think we all greeted the end of the lesson with a mixture of relief and exhaustion, and went off to find whatever comfort we needed. I can point to a number of extra reasons why Monday was particularly blue for me, which included COVID, the freezing weather, and frustrating and inconclusive negotiations, but I guess that was true of many people. It’s strange that whilst everything is happening to everybody, even so we end up taking it so personally.
We are creatures of sentiment, and we underestimate how much of what we do is affected by emotions. This is how it should be, because our feelings are usually sure-fire shortcut reactions to the truth. This was true, when we were out hunting and gathering in the forest or over the mountains, where the instinct to fight or flee when faced with danger was usually correct, otherwise our species would not have survived. Then we started settling down, living in villages, developing agriculture and industry, and it’s a few short skips and jumps through Plato and Spinoza, Marx and Sartre to where we are now, trying to find a meaningful fuller life through a small handheld screen that we can’t access because we are wearing a mask. No wonder our reactions are not as sure fire as they used to be. We can take refuge in reason, logic, numbers and science, but unless we can measure sentiment, life remains unpredictable, and thank God for that.
I am in the process of trying a thought experiment, and now is the right time to share it with you. I think you’re ready. Around this time last year I was thinking about – and this at least is predictable – about how we cannot see into the future, and the difference between forecasting and predictions. One of the problems with shipbrokers, or any market actors, forecasting what may happen is that their performance in the forecasting is not measured and tested, so they can resort to words like ‘may’ or ‘could’ which lets them off the hook if someone comes back to them challenging them. And when people try and justify themselves with statements like “well no-one could have foreseen COVID-19 coming”, then I am tempted to reply “well why did you enter in the business of forecasting anyway?”
So, I decided to test myself. Every month I value some standard ship sizes in the dry bulk market, as benchmarks. It’s not an exact science, but it’s helpful to show trends over a period of time. So in addition to this I decided to forecast what the prices would be at certain times in the future: three months, six months, one year and two years. My methodology was not exact, just based on my feeling and judgement on that day, if you want a heuristic punt on what the market was doing that day, and what I thought would happen in the future. It distilled all that I read, talk about, listen to and think about both inside and outside shipping.
So how have I done? Well the sample is too small yet, it’s too soon to produce the results; after two years perhaps. But not bad. Not surprisingly my predictions at the beginning of last year were way off, but since around June onwards the short term – three and six months – have been within an acceptable margin of error. However it is interesting that nowhere and at no time have I forecast that values would fall, even though they have in the last twelve months. Why is that? I suspect that there are two reasons for this. Firstly, every time I have genuinely felt that we were over the worst, and I have been proved wrong. Secondly, I have a severe case of confirmation bias. My forecasts reflect what I hope will happen, and what I hope becomes what I think.
The other thing I find interesting however is how cautious I am, or in other words how little of an optimist I am, even if I am one. If I think of the future, and I think it is going to be better (and I generally do), I cannot imagine it to be fantastic. So far I have been right (we live in cautious times), but if I think the market is going to fly – as I do – why I can’t I put this into numbers? Rarely are my future values 20% above where they are today; history shows that values trade in much wider bands. I suspect that this is because I cannot imagine those numbers from today, and this lack of imagination, being unable to put myself in a new world where money is falling out of the trees is caused by a valid fear of not misleading owners so that they lose money, and an equally valid fear of being made to look stupid. As I walk down the Akti Miaouli, people will point and mock me saying: “There’s the broker that predicted a fantastic market!” It will hurt.
But I suspect this is all natural. A fear of failure, a fear of social exclusion leads to a lack of imagination, and a low-risk appetite. Society doesn’t like surprises, and we conform. So I find myself an eternal optimist, but a cautious one. I’m not sure if that’s how I really picture myself, and I’m not sure if I like the look either.
But when we are in the depth of winter, and can’t imagine the summer heat, or sitting on a beach, or talking late into the evening outside it is because we are in the depth of winter. It is not necessarily a failure of imagination, but the success of winter. That’s the problems with markets, we live in them, not beyond them.
That said, Blue Monday felt real. And as I said we are sentimental creatures, and our behaviour is altered by our circumstances and how we feel about them. But the other thing we humans are able to do is learn from our mistakes. Looking over my attempts at forecasting, I think it’s time to go back to the drawing board with a fresh pair of newly opened eyes. But it is still worth remembering that our instinctive behaviour has ensured our successful – arguably over-successful – survival as a species, and we shouldn’t write it off completely in favour of logic, or numbers or science. We would lose the fun – and the point – of being human, and we would also lose that caution that in the end ensures that we live to see another day.