In the modern world, where information is freely available at the push of the button, we all, as investors, are prone to making the same mistake; we over-complicate things. The abundance of indices, insight and information available to us leaves us with the feeling that there is always something more... something we have missed. This causes us to look for ever more esoteric reasons to invest and ever more complicated strategies.

Pundits like me are guilty of propagating and perpetuating the belief that complicated is best; we have, after all, an interest in convincing everybody that that is the case. In most cases though, the old KISS (keep it simple, stupid) rule is still worth remembering.

To me, when it comes to long term investing in stocks, that means looking at a few basic things. The company should be in an industry that I believe will, in the grand scheme of things, have a decent couple of years, even if it is under short term pressure. I look for a reasonable forward P/E; the stock should be reasonably valued and I will get some reward for ownership, i.e. it will pay a dividend. For long term holdings, dividends are an essential. Research has shown that, over an extended time period, dividends account for over 40% of total stock market returns.

With the first of those criteria in mind, I am always intrigued when a whole sector comes under pressure. This usually means that, providing you think problems are temporary, some individual values can be found.

That is the case with shipping stocks right now.

A depressed Baltic Dry Index since the end of last year and pessimism about sustained Chinese growth are usually listed as among the reasons for shipping stocks' most recent declines, but the Baltic Dry has begun to recover lost ground and, as I have said many times, China is still growing even if it is only at 7.5 percent or so. Recovery from credit crises takes time and, while there will be bumps in the road, we are still in that recovery period globally. I cannot believe that trade is about to collapse. In that environment it is reasonable to expect the sector to do OK.

One would think that rapidly rising interest rate could be a risk to the highly leveraged sector going forward, but part of the reason for the drop in the Baltic Dry was oversupply as ships ordered and financed to take advantage of ultra low interest rates come online. This minimizes the effect of any future interest rate increases, at least from the increasing cost perspective. You still may see some weakness as the dividends paid become temporarily less attractive if this comes about, but nothing to damage the long term profitability of the holdings.