- Monday: Poll: Federal Reserve Meeting
- Thursday: Poll: Bernanke Twists, Market Tumbles!
- Thursday: Portfolio Update: Fertiliser Investments Stopped Out
- Friday: Stocks: Crisis Still To Come
It has been a very interest week to say this least. If you have been long Treasury Bonds or the US Dollar, you have done well. However if you shorted any of the metals and especially Silver, you should be over the moon! Out of the major currencies, Aussie and Kiwi Dollars really felt the force of gravity as well. Finally, the Portfolio Page has also been updated.
Enjoy the rest of your weekend!
Hi,
ReplyDeleteWhat is your opinion about Natrural Gas?
Thank you.
Mariusz
Natrual Gas is down 16% this year, which is not bad compared to some other risk assets like European equities. The reason for this is that Natrual Gas has been sold off very badly since early 2008 and has not recovered since.
ReplyDeleteObviously the problem lies in excess supply, which suppressing the price. However, that is presicly when one should be buying - during bad news, and selling during good news. I remember Cotton and Sugar had excess supplies in late 2006 and early 2007. If you bought then, over the next couple of years you had made a fortune.
While owning certain stocks like banks can lose you all the money, buying Natural Gas right here is a good long term investment, because commodities NEVER go to zero. Therefore when they fall to very low historical levels, like Cotton or Natural Gas is today, you have very very limited down side. The funny thing is so many clueless investors do not buy low and sell high, instead they are buying Treasury Bonds, which are making 30 year new highs... totally clueless!
Having said, the market seems to know everything I have said here and therefore it is discounting in much higher Gas prices in the future... seen by the forward curve being in very large contango. Therefore, your profits get eaten into by rollover costs, and you could maybe look at playing this whole eme another way.
For me, I am very bullish on Energy and Gas is part of that view. My way to play such a theme would be to buy global Gas producers. For example, worlds biggest Natural Gas producer is Russian Gazprom. It has an unbelieveblly strong balance sheet and a great consumer on it's door step - China. This company is completely depressed like the Gas prices and currently trades at 3.5 times earnings!
I'm pretty sure if you buy that company, which is 80% lower since 2008 when Gas prices peaked, you will make a fortune in five years from now. The problem is, most investors do not do long term strategies. Instead thy speculate non stop, buying and selling, like they run a short term highly leverage spec hedge fund. And we know how that story usually turns out... just look at 2001 or 2008!
http://pragcap.com/the-hyperinflation-meme-turns-into-a-nightmare
ReplyDelete