UNG Trading 101 74 comments
-
Font Size:
-
Print
- TweetThis
From trading upwards of $60 around 12 months ago, UNG now proudly rests around the $9 mark.
For those unfamiliar, UNG (United States Natural Gas) is an ETF that attempts to replicate the price performance of Natural Gas by investing in near month natural gas futures contracts traded on NYMEX.
A quick perusal around the trading bulletin boards indicates that this has caused a world of pain for some investors.
Some comments.
“I am so screwed, all my savings is in this POS, I wish I have never heard of UNG.
I did make around $9K in the month of June, then I got greedy.”
“I am long UNG and am down a lot with average buy 14.38 used up all margin money and above too no more funds left to buy more at the low prices even.”
“Put all my life's savings in one thing, which was a blunder which I now understand the biggest mistake of my life.”
“I own this pos from $35 – what should I do now?”
Ouch!
We won’t comment on the in’s and out’s of the UNG investment, others have done this far better than we ever could.
Hopefully the pain that the above investors are experiencing can become a timely reminder of the importance of a trading plan and having some trading rules.
We have 4 main trading rules that guide us:
1. Capital management – Risk no more than 5% of capital on any one trade
2. Risk management – Always trade with stop losses
3. Profit taking – A strict regime for taking profits and closing out trades
4. Asset allocation – A strict regime of balancing the assets that we invest in
Our trading plan is actually quite a bit more complex, but these are the 4 main rules that guide us.
Now we don’t always stick to every one of these rules, our UNG trade is a case in point (maybe we are suffering for that). We have no stop loss for this, as for us this is a long-term trade & we know that we will not have timed the market perfectly. While we have ignored rule number 2, rule number 1 has stopped us from suffering catastrophic losses as those above.
Just to remind ourselves, UNG has fallen by over 37% in the last 5 weeks. The cost of put to call options now stands 1.4x, & the trends all look, what can only be described as, bearish. To cap it all off... the fundamentals look as bad as the charts at the moment.
25 years of trading has taught us that situations like this have happened before and they will happen again. Our position is that, yes UNG is in a bad way at the moment, but in 2+ years things will be in our favour.
If you have the stomach for it, this could be fantastic contrarian investment. Just remember your trading rules.
Disclosure: Long Natural Gas Futures
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
David Fry
-
2
TraderMark
-
3
Don Dion
-
4
Cliff Wachtel
-
5
Mike Havrilla
Top Instabloggers » -
1
-
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
This article has 74 comments:
The rule about maximum position limits is good for the average investor, too. I read a book on the "secrets of Warren Buffet and George Soros." It advised making huge bets on perceived "winners" as the road to untold wealth. I suspect the real-world outcome of that advice is 1 or 2 more Soros/Buffets in the world and a large number of retirees visiting the local soup kitchen. But that's just my opinion.
"We have no stop loss for this (UNG).
sorry pal- you have zero credibility. you're in the catagory of babbling bonzo blogger boy
There needs to be some sort of hope for a demand catalyst. Could be dead money for many years.
"Butterfly with skip strike" All Oct Options, Use any multiple of contracts desired
Buy (1) $10 put,
Sell (2) $9 put
Buy (1) $7 put
Net cost $0.00 , ( or possibly small credit depending on fill )
profit zone $8.00 to $10.00
max loss $100.
max gain $100
( commissions apply )
A few things I like about this trade;
Only requires $100 in margin, possible to do in IRA, possible to execute trade for credit even after commission. Also the long $10 put is starting "IN the Money".
Understandably, you will not hit a home run with this strategy, but good risk/reward setup. And you can make money with any moderate move. Also possible to close the position early or "Roll" into later months.
Good Trading !
Most people do not realize how much they are gambling every day of their lives for as long as they live. Simply driving to the store in a car is major gamble but no one seems to realize it. And speaking of living, the fact that we exist is the result of 1 sperm of 350,000,000 +- happening upon one specific egg. The other 349,999,999 all lost big time, never to be.
When you really think about it the entire universe is a gamble and everything in it.
Forsake peceived certainty, embrace chance.
On Sep 05 08:42 AM azzkikr wrote:
> none of you are investors, you're all gamblers. Why don't you just
> go to Vegas and at least get some free drinks while you lose, lose,
> lose.
~Shawn
The last reason why this ETF is awful is that as of recently, they have hit their maximum and cannot issue more shares of the ETF as people buy them because they cannot secure any more futures contracts.
...Fund is going to liquidate, and its trading 20percent over nav..
...CTFC looking into UNG??
....Is contango a factor for long term hold??
I like ng as a investment, but its the other chatter, re ung, that worries me...
Very interested in comments...
Mark
But the point being that the guy who put all his savings into UNG was not diversified and did not have the leverage to get the government and the privately owned Federal Reserve bank to take hisUNG holdings off his hands and make him whole again.
I have bought a position, doubled down when it dropped, and seen it fall some more. Twice to zero. But they were just small segments of my overall holdings - so I survived and learned that stop loss orders preserve capital for another day. And diversification is better than nothing.
On Sep 04 11:18 PM bear_mkt wrote:
> Bravo. The 4 trading rules are very good and will help assure the
> long term survival of the average investor. Strict asset allocation
> saved my skin in 2008 and 2009, although it drew a lot of jeers from
> message board posters who preached 100% stock plus maximum leverage.
>
>
> The rule about maximum position limits is good for the average investor,
> too. I read a book on the "secrets of Warren Buffet and George Soros."
> It advised making huge bets on perceived "winners" as the road to
> untold wealth. I suspect the real-world outcome of that advice is
> 1 or 2 more Soros/Buffets in the world and a large number of retirees
> visiting the local soup kitchen. But that's just my opinion.
Watch out for USO next.
Retail investor does not have a good way to participate in these other than stocks in drilling.
We have no stop loss on UNG.
Too funny, typical of so many pro traders and investors always speaking out of both side of their mouths.
But you guys always win anyways, right?
Buying UNG as long as the market is over supplied and people are bullish is simply losing money at every roll over. When the October contract expires the positions will be rolled over into the November contract at $1 higher. If the market still remains over sold in about a month that contract will trade down $1 and then you will rollover into Dec with the same effect. In other words anybody who is buying UNG is making a short term call on the price of natural gas- that doesn't sound like investing more like speculating.
On Sep 04 03:34 PM zman785 wrote:
> With those four trading criteria I would be surprised to see a long
> term positive track record. For UNG in particular the savvy long
> term investor is BUYING the fear NOT selling it. I averaged in all
> the way dow with my best fill price (so far) at $9.25 and an average
> price of my entire position at $11.32. The price of the underlying
> future of natural gas sitting in the $2.50 range cannot be sustained
> long term as its below production cost. The long term investor sees
> that, no to mention an oil to nat gas price ratio in the mid 20's
> (long term average is 6-12) that everyone is ignoring. That ratio
> simply cannot be sustained either. All of these factors point to
> UNG being substantially higher 6-12 months out. With your trading
> advice the long player would have been knocked out of the game and
> will miss the ride up or will buy back in on a ´breakout´ trade much
> farther up from here and be absent for the bulk of the rebound.
> It strikes me as ironic that those that praise investors like Warren
> Buffett but pay no heed to his advice - buy the fear, sell the greed,
> nuff said.
I've avoided UNG because it was obvious it would be eaten alive by contango... Nat Gas had to rise MORE than expected for it to show a profit.
Strange, I'm sitting on top of the Barnett Shale, and I see the rigs are still drilling, even tho they've tapped into more supply than we can go thru in a decade.
On Sep 05 09:27 AM Dukk wrote:
> Why pay a premium for UNG? There are way better ng plays out there...
That said, this commodity rewards patient money and no margin. Margin players can get wiped out long before the deal turns positive. Instead of all the fancy calcs around how to play costless spreads, track Feb and go long when the time is right.
On Sep 05 09:27 AM Dukk wrote:
> Why pay a premium for UNG? There are way better ng plays out there...
Thanks for the encouraging news. As a real beginner, I bought UNG quite a while ago... with no stop, and yes I know, it was incredibly stupid. (winter was approaching, I thought "how low could it go ??" ha ha ! ) Live and learn. I am underwater pretty bad. I have made some $$ selling covered calls, so it is not a complete disaster. I am willing to hold onto it for years, but not willing to sell now and take a huge loss. Any chance that Nat. Gas autos might make an appearance in the USA within the next few years ? I doubt it, but have to ask..
Another Q : do you think the UNG will eventually find its way back up to the mid-$20's or so ?
Have a great Labor Day weekend.
Today morning, my gas heater turned on. I'm in sunny CA and it usually never gets this cold this time of the year. Seems to be pointing to a colder than normal winter. I think the pros are bringing the prices down to accumulate shares, just before taking them a lot higher from here. JMHO.
I blogged about it too:
joeshareholder.blogspo...
Feels like February-March 2009 again.
This time around it is UNG instead of the major indeces.
I started buying more than 100 badly hammered companies in February such as AA, Citi, BAC, STT, F, GM, DAN, TEN, OMX, CROX, etc; as their prices plunged from something like $40 to $4 in a matter of 18 months.
Can't help it, when the price discount is more than 80% and many of those companies still got enough cash to survive more than 2 years; you've got to buy them while panicked investors were forced to sell them at bankcrupt prices.
Problem was, they kept going down up to March; buying $4 to $2 in late Feb and a few days or weeks later they dropped like rocks to less than a dollar in many cases.
A very painful experience with the only consolation they came not from $4 or $2 but from $40 or more. The only option was to double down as much as possible with diminishing cash position.
After March 9; those same "dead" stocks were bouncing up $4, $8, $12 and some cases up to $16/18 from their less than a dollar bottoms.
UNG had fallen 86% already from it's high of $64 in 2007. You are paying 14 cents to a product used to cost a dollar. what is it there to complain about?
Are you investing or trend trading? Stop loss is a must when you are trend trading?
But investing is a different game. If you try to invest at the highs, then use a stop loss since stocks are much less volatile at the top. But at or near a bottom and volatility going like crazy, what for?
More likely, you will be stopped out several times and will be trying to buy them at much higher prices than your initial stopped out prices. Or much more likely be too afraid to hit the buy botton again in an effort to preserve severely damaged capital.
Stock/ETF prices tend to become extremely volatile after going down by more than 80% and the share price can easily get halved in a matter of days or weeks with no warning at all. And then get halved again and sometimes again and again in a matter of few days and sometimes in a matter of few hours or minutes as panicked investors try to sell them at any price. I've done it myself countless of times before. Fear is an extremely hard to control emotion.
The technique is to buy initially at 79% discount or more then wait if it kept getting worse (or better?) then buy some more at a lot lower than your initial buy price possibly doubling your share buys with the same capital amount as the first buy.
After that, wait some more or a lot longer for the big bounce since not all of them can immediately bounce right after hitting bottom; then buy the pullback out of the big bounce with the last 1/3 to 1/2 of capital allocated for such dastardy stocks/ETFs.
I know, I've been there more than a hundred times.
A very rewarding experience in most cases.
1) Discipline - make a plan before hand and stick to it; keep doing more of what is working and less of what is not
2) Hard Work - the only way to make money is to put in the neccessary time to read as much as you can about anything you can related to stocks, commodities, politics and finance; one of the best traders I know on the NYMEX reads over 5000 pages a week
3) Never, Ever Add to a losing position - the fastest way to the poorhouse is by adding to a position that is moving against you (this is unless you had planned to do this from the beginning, which means you placed only half of your intended position on);
Cheers and happy trading, and I welcome all comments.
Can't thank you enough for answering a simple question.
This is the same reasoning behind how you can have crude oil go to $80 and the USO ETF remains unchanged. USO and UNG are pretty much worthless as long term investments.
On Sep 05 02:05 PM jk trader wrote:
> Help. again. I have read that UNG does not really even reflect the
> price of Nat gas anymore.. So, to further screw UNG holders or future
> buyers, I have read that even if the price of Nat Gas does rise,
> UNG might not !!! Can this be true ? I will never again use ETF's
> to buy commodities.
On Sep 05 07:42 AM Thomas MacLeod wrote:
> Thanks for your comment.
>
> I'm sorry that the article was a little too complex for you.
>
> You might like to read something a little more appropriate to your
> intellect level.
>
> My children have some Little Golden Books you are welcome to borrow.
>
>
> On Sep 05 01:48 AM mn33 wrote:
Thank you for providing a real answer and in civil fashion.
Do you think UNG will EVER again make its way to the
lower or mid $20's ?
Does anyone think UNG will EVER again make its way to the
lower or mid $20's ?
Can anyone just answer a simple question instead of
trying to obnoxiously impress people (who do not care one iota)
how smart you think you are ?
I'm not sure why (less contango in the nat. gas market, perhaps?), but UNG seems to do a much better job of tracking nat. gas spot than, say, USO has done with tracking the spot price of oil. Over the same time period, USO has fallen 57% while the spot price of oil (WTI) has only fallen 37%.
So, at least compared to investing in oil (futures), you'll have one less thing to worry about with UNG. The premium does make it somewhat unattractive now, of course.
However, there was zero analysis on the focus of the trade (UNG).
Is this vehicle so flawed that even in a rising NG environment, prices would be reflected in futures not yet owned by UNG, and thus make UNG severely lag the actual spot price?
We in Europe are having to use more and more of this commodity so it wont be too long before you lot start to do so as well.
Law of supply and demand will then take over.............
In terms of the fundamentals of NG, I learned a little bit about it this summer. All the NG in the US arrives as liquid natural gas (LNG), which means the ports that handle it require special facilities. Currently, the largest one is Henry Hub in Louisiana, and once processed it is distributed to the rest of the US. Therefore, NG prices are very subject to the intensity of the hurricane season. Also, El Paso Corporation (EP) is currently building a natural gas pipeline from Texas to California, which will make NG more accessible on the west coas, which may increase the demand for it. The last fundamental issue right now is there is just too much natural gas. There is a large over supply, which means the price of NG will not be significantly rising any time soon.
On Sep 05 06:59 PM jk trader wrote:
> I asked a simple question :
>
> Does anyone think UNG will EVER again make its way to the
> lower or mid $20's ?
>
> Can anyone just answer a simple question instead of
> trying to obnoxiously impress people (who do not care one iota)<br/>how
> smart you think you are ?
Thank you for the sane educational answer / advice. As someone once said "never trade what you don't understand." Ouch!! I got it.. The UNG fiasco has been incredibly painful and embarrassing, but also educational. The only reason I could think of why Nat Gas would go back into the $20's would be of course an imbalance in supply & demand. However, after I read that UNG could still go down if the price of real Nat Gas goes up, that's when I reached out for help from the folks who know a whole lot more about this than me. Thanks again ! have a good labor day
Dear JK trader, I'm very new to trading/investing, and I'm guessing so are you. One thing I've learned through my limited research over the last one year or so is, it is more important to learn to make a good decision than to make a profitable decision one time based on a remark/suggestion/blog etc made by someone else. You want to be profitable on a long term, and not hit the jackpot once. So asking what somebody thinks about UNG hitting $20 is irrelevant, you should rather try to understand what made it fall from 60 to 9 and then what may cause it to rise to 20 again. Think about it, would you blindly risk your hard earned money on UNG if I (or somebody else on this blog) said “yes, UNG will rise to 22 by December this year”. I wont.
1. Capital management – Risk no more than 5% of capital on any one trade
2. Risk management – Always trade with stop losses
3. Profit taking – A strict regime for taking profits and closing out trades
4. Asset allocation – A strict regime of balancing the assets that we invest in"
I would go further, mainly because I don't know what I don't know, and what I think I know could be wrong. I mainly trade forex, I risk no more than 1% (most of the time 0.25-0.5%) capital and the position is scaled so that my hard stoploss enforces this.
Risking 5% on a trade (given a theoretical $100 account) allows for a string of 180 losing trades before zero, assuming no friction for commissions or fees.
Risking 1% on a trade (given the same theorectical $100 account) allows for a string of 917 losing trades before zero, assuming no friction for commissions or fees.
Without doing the math, I would assume that the probability of 917 consecutive losing trades is much less than the probability of 180 losing trades. This also reveals the importance of letting winners run. The cumulative loss from a string of losers could be recouped (and then some) by the winner that is allowed to run.
Being ruled by emotions, as is normal, and entirely impossible to avoid, it is hard and quite possibly physically detrimental to asorb a large string of losses while waiting for the large winner.
To avoid making this comment my doctoral thesis on trading philosophy/psychology, it is my humble (and perhaps uninformed) opinion that this trading vehicle is biased negatively in its complexity, it is a derivative of a derivative, which makes it that much more difficult to engineer a winning strategy other than hope and prayer, -- there's easier ways to make a profit.
Thank you ! I enjoyed your response and thanks for writing clearly
and sensibly.
I work for a company that, amongst other things, sells compressor to Bechtel Corp. for their new LNG plants. This business has not fallen off a cliff like the other services ( a lot of other petrochemical projects have been canceled, or are on seemingly terminal hold )
I foolishly got into UNG on a purely technical signal ( a perfect ADX back-tested BUY signal) along with the thought ( last Fall) "Winter is coming, of course Nat Gas prices are going to go up) I know veteran traders reading this are laughing and scoffing, but I would ask them to recall if they ever made a trading mistake in their lives.
Thanks again Artanis for shedding the light of reason on this and for NOT having an ego bigger than my UNG loss.
Have a good Labor Day
More on this:
oiltradersblog.blogspo...
Have a nice weekend
The 4 rules above are great advice.
He's pretty open that he does not follow them all the time.
I suspect that most traders who have been in the game for more than a few years would have similar guidelines.
On Sep 05 10:41 AM Nyetnichevo wrote:
> Alway use a stop loss.
>
> We have no stop loss on UNG.
>
> Too funny, typical of so many pro traders and investors always speaking
> out of both side of their mouths.
>
> But you guys always win anyways, right?
Buying something simply because it is low is never a good reason to own something. It seems like that is what many are doing.
First you tell us to hold on to UNG and then you argue about long term view.
UNG or anything else that rolls monthly can be very poor long term vehicle. All you need is a strong contango for a couple of months and you are done. And if that isn't enough to destroy your position, think of what would happen if for one reason or another tracking became an issue. Oh wait, it already is an issue.
If you believe NG will be higher 3 years from now, take a look at 3+ year futures and you'll find that many other traders believe so too. Let's even say for the sake of the argument that you are all correct about this. I think so too.
So what? You and I can't profit from this by holding UNG.
On Sep 05 12:18 PM vegastrader------ wrote:
> Hold onto UNG. People are in too big a hurry in America. It is all
> about supply and demand. Economics 101. We have huge supply of natural
> gas and very light demand, especially industrial demand in this recessionary
> period. Get your time horizon out about 3 years. With the growth
> poised to happen in Brazil, Russia, India, and China in the coming
> years, commodites will skyrocket and you will make money. It is about
> patience. The time to buy is when there is blood in the streets.
> The price won't stay down here forever. This too will pass.
I like the medium long & long term prospects for NG, but buying UNG is the worst. (I own a tiny amount regrettably.) You are not buying the actual gas, nor are you buying long term futures contracts. You are buying a really badly managed amalgam of short term contracts.
1) On three days every month UNG rolls over its contracts. Contango means that your fund value will go down even if the spot price stays constant.
2) UNG is now so big, that they crowd the trades on these rollover days making it difficult to get good prices even in good market conditions.
3) But the futures market conditions are not good on these rollover days because all of the big, smart NG traders know when this happens and ensure that the pricing of contracts is especially bad for UNG. (Like taking candy from a baby.)
4) The tracking error for the UNG ETF is horrible (as high as 20%) because they recently hit their share creation limit. I believe that they did get permission recently to create more shares & think they haven't done it. Why, I don't know.
UNG would have been a terrific short a year ago, other than that; just stay away.
As dumb as our political leaders are, I have some hope that we will get some sensible legislation helping NG demand soon. (For example, a lot of homes in the eastern half of the US still burn fuel oil in their furnaces. Simply insane.) Add another year or two for demand to actually increase substantially.
My recommendation on how to get long nat. gas? Buy Chesapeake convertible preferred stock CHK-D and collect 6% yield while we wait for demand to recover and legislation. It is priced at a 27% discount to par now, but the CHK common would have to appreciate by more than 50% to make a conversion profitable.
NG contract for Oct 2010 has dropped significantly from more than $8 (if my memory serves me right) to $5.50 for the last 4 weeks or so.
Either they believe NG will not be able to reach $8+ in one year time or they simply panicked due to the massive selloff during the last several weeks. Or both.
If the former, then NG will drop some more and may reach $2.27 to $1.73 which are the 1.62x and 2x fibo extension supports on the weekly chart. The $2.76 which was the
1.27x fibo extension support almost worked 2 weeks ago toward a reversal but failed anyway. Now, it is bouncing off $2.40 which is the 1.5x fibo extension support.
It is uncanny (almost unbelievable, but look at the chart to verify anyway) how those fibo extension supports provide almostpredictable bounces/reversals in many cases.
The hard part of the equation is which major fibo extension support will finally work, or none at all?
In most of my TAs regarding fibo extension supports; a re-mounting of the 1.27x fibo which is $2.63 (or a significant break above) usually results in more than 50%
probability of a reversal. A significant break above the 1x fibo or $3.15 has more than 70% chance it will go back to the last lower high price of $4.57. There is no statistically significant probability whether it will stop at $4.57 and either form a time consuming inverse Head and Shoulders pattern or simply break above that level and continue well beyond that major resistance.
For now, there are those 4 high probability scenarios in which only one can work. The 1.27x has the highest probability of reversal in most cases but did not work this time. The 1.5x has the least probability. The 1.62x to 2x are equally unpredictable and highly speculative but once 1.27x support breaks down, I usually wait for either 1.62x to 2x supports to double down or triple down.
There are worst case scenarios but they are low probabilities and so are not worth speculating since the probability of getting them wrong gets a lot higher of price plunging below the 2x fibo extension.
In worse cases and in almost hopeless cases; a minimum retrace of 27.2% to 38% of the total plunge from the top to the bottom happens in more or less the total amount of time price took to get to the bottom.
In better/best cases; it takes more or less the total plunge time to recover at least 79% of the total loss from the last high.
A slow initial rally from the bottom discourages most investors thus further preventing the stock/etf to recover in less time. While a strong vertical rally immediately restores confidence among investors and encourages them to support the rally thus enables full recover of the high and in the best cases in less time than it takes to go down.
It is just a matter of time measurements vis-a-vis prior price events which is more important than where the price is at any given time or how much rally off the bottom had been achieved in a given period of time. There might be 100% to 500% and in some cases 2000% rally off the bottom but if the time it takes to get back to certain price level took more than it takes to go down, then the probability of full recovery goes much lower. PALM, TEN, and BCS for example. PALM and TEN have a better chance of reaching their highs in more or less the same time they went down; while BCS is more likely to spend a lot of time below the last high before finally making a full recovery, if ever.
Worse case scenario is that NG keeps going down to $1.73 in the next 3 months or more. Assuming total 18 months of plunge; then a slow initial recovery will only enable it to go back to $4.98 - $6.30 range levels.
A better but not the best case scenario is that NG starts a massive rally from the last low of $2.40 or even break $2.40 immediately and go down further into $2.72 to $1.73 range but makes a massive bounce; then higher probability it will recover back to $11.18 - $13.69 range in more or less than 18 months.
There are many other probabilities but it is not possible to quantify or qualify them at this stage. The initial rally off the bottom, in most cases, determines the final outcome. Until then, the only choice is to either speculatively buying at the fibo support levels mentioned above or wait until at least NG goes back to $4.16 minimum then measure the time it takes to get there to get a preliminary handle of future probabilities.
At any rate, even if UNG goes close to ZERO but as long as UNG don't go bankcrupt; there is a higher probability it can go back to $17 to $24+ in less then 5 years after the final bottom had been reached. Not bad at the current price of $9. The lower, the better - if it gives me a chance to buy at lower prices.
Your view baffles me totally.
HardToLove
On Sep 05 10:43 AM p church wrote:
> An author who reads his followers comments makes me nervous....no
> confidence?
On Sep 05 12:04 PM receipt wrote:
> A far better way to go long natural gas is to buy Horizons BetaPro
> NYMEX Natural Gas Bull Plus ETF (seekingalpha.com/symbo...).
> After fees etc. it's designed to correspond to two times (200%) the
> daily performance of the New York Mercantile Exchange (seekingalpha.com/symbo...)
> natural gas futures contract for the next delivery month. This escalator
> is going UP! Enjoy the ride.
"hold UNG for 2+ years and you will be fine"
HAHAHAHAHAHA x 2
really,
what kind of idiot holds an ETF ?
ETF, the new cocaine in town.
came to replace and relieve the pain of the late 2008 crisis.
the only one who will(and are making) money on this things are~
1. the issuers
2. the (AD)visers
and thats all.
3x inversed
3x reversed
shorting, put options, call options..
HAHAHA
no pal.
ETF is NOT a SALVATION (unless you short all of them)
and neither is natural gas.
AMERICA IS ADDICTED TO OIL and so it will be.
sorry,
I AM REALLY SORRY.
case closed.
1. The natural gas market is much more driven by regional rather than international issues, which is to say, Americans will consume primarily American Nat Gas and Peruvians will consume theirs. Alaskan oil, however, might be shipped to Japan while Venezuelan petroleum is refined in New Orleans.
2. The only way cheap nat gas can be used to replace oil is if the USA starts converting their gasoline cars to burn nat gas. Due to the politics of "conservatism", which is to say "lobbyists controlling the Congress", America is not making the conversion. (But if one visits countries as diverse as Peru and Australia, you will see that nat gas pumps are built right alongside gasoline pumps at petrol stations.)
Thus the nat gas to oil price ratio is irrelevant. It would make more sense to compare nat gas to the price of coal, since a coal-fired power station can be (relatively) quickly and cheaply be converted to nat gas.