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K202

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  • More Weakness In The Australian Dollar Ahead [View article]
    adpedler - Good points and thanks for adding to the discussion. I did try to imply that there was a strong relationship between AUD and commodities, but did not mention the AUD bond rate and its implications. However, as Barry notes below, the bond rate may not be enough to support the AUD as demand from China continues to fall creating more downward pressure on prices. When Aussie exports fail to meet expectations in the future I believe that will put more pressure on AUD.

    The current equities bull market is getting very long in the tooth and needs a correction. As Barry mentions below, a significant correction in equities will cause a disruption of the carry trade (borrowing USD to buy AUD bonds for the yield spread). That will happen, no knowing when, but markets have never before gone straight up forever. When it does (and my opinion, for what it's worth, is that it is getting imminent) the AUD will fall.


    Finally, I don't think that AUD has completely ignored the fall in commodity prices. It hasn't reacted as severely as in the past but the trends still match up pretty well and if commodity prices continue lower (which I believe will happen) I expect AUD to follow. Thanks for commenting. It is good to have opposing views and I appreciate your sharing thoughtful insights.
    Mar 26 12:56 PM | 1 Like Like |Link to Comment
  • More Weakness In The Australian Dollar Ahead [View article]
    Barry - I think your conviction will pay off eventually at some point this year. Thanks for sharing your views.
    Mar 25 12:14 PM | Likes Like |Link to Comment
  • More Weakness In The Australian Dollar Ahead [View article]
    grmpienva - Thanks for the question. I could find only one reverse ETF for AUD. The symbol is CROC. It's name is ProShares UltraShort Australian Dollar.

    The only problem I have is that it is a double inverse ETF. Those reset each day and when the price of the underlying goes against you, your losses are exaggerated. Also, if the underlying asset (AUD) price trades in a range the
    price of the double inverse ETF will be eroded.

    But, if the AUD were to continue its fall without much interruption, CROC would be ideal. But you should be aware of the risk before committing to a double inverse. If any readers have found a single inverse ETF to hedge against the AUD weakness, please let us all know.

    Here is the CROC fund summary:
    The investment seeks to track the inverse (-2x) of the daily performance of the Australian dollar spot price versus the U.S. dollar. These Funds use the 4:00 p.m. (Eastern Time) Australian dollar/U.S. dollar exchange rate as provided by Bloomberg, expressed in terms of U.S. dollars per unit of foreign currency, as the basis for the underlying benchmark. The fund intends to meet its investment objective by obtaining long or short exposures to its benchmark through futures contracts on its underlying currency. It may invest up to 100% of its assets in any of these types of cash or cash equivalent securities.
    Mar 24 03:48 PM | Likes Like |Link to Comment
  • National Fuel Gas For Rising Dividends And Future Growth [View article]
    Jon - Since NFG has been successfully adding new production resulting from capex, I would interpret the increases as a positive. Drilling success and rising production with the expectation of future prices firming for natgas should be helping the stock.

    Thanks for the link and comment.
    Mar 24 12:11 PM | Likes Like |Link to Comment
  • National Fuel Gas For Rising Dividends And Future Growth [View article]
    I don't know if it will hold up here, but NFG is down only .03% while the S&P 500 is down .71% today.
    Mar 24 12:05 PM | Likes Like |Link to Comment
  • More Weakness In The Australian Dollar Ahead [View article]
    Barry - I agree that the USD is likely to gain against AUD in the next year or two for several reasons. Thanks for sharing your view.
    Mar 23 10:38 PM | Likes Like |Link to Comment
  • More Weakness In The Australian Dollar Ahead [View article]
    steve - It depends upon what your AUD investment is in: currency, equities, bonds, or some other form of income producing asset (real estate).

    If you own equities then it depends on how much exposure the company has to AUD; if it is globally diversified the risk is much less as profits derived in other countries will add positive fx gains to offset weakness in the AUD. If you have income producing assets that you want to hold onto, you need to hedge against the currency risk. If you hold AUD currency as a hedge against potential weakness in the USD or another currency if gets more complicated.

    I prefer using options to hedge positions. Some people do not. It is a preference issue. I consider it to be like insurance, a necessary evil. You could lose the entire amount, but the amount is limited. But the upside potential is excellent when you are right. I like the Jan 2015 put option contract with a strike price of $90 selling for a premium of about $4.00 (as of the close of last Friday). If AUD falls to $80 by expiration or before this option should be priced at $10 (or more depending upon how much time is left to expiration). I expect that there could easily be 20% downside in AUD which would bring it down below $73. At that point your gain would be about $1300 per contract ($90 - $73 = $17; $17 x 100 = $1700; $1700 - $400 original cost).

    If your investment is worth $10,000 and you want to be able to protect against a 20% drop in AUD you would need protect $2,000. One contract would provide 65% coverage against a 20% drop.

    If the AUD drops less or more the coverage changes. If AUD falls only 10% your put should be worth about $8.00 providing a $400 gain which would only protect against 40% of your potential loss on your asset. But if AUD were to fall by 30% your gain would be about $2,200, or 73% coverage of your loss on the asset (for a $10,000 asset).

    If you prefer to not hold onto your assets, there are few places that will be completely safe. You may think me crazy but I believe that the USD will fare well in a global collapse. AUD was one of my favorite currencies until I notice the cracks developing in China. Possibly one of the better places to consider is the Swedish Krona. It's not just the chart that I like for FXS. The economy and government are solid and likely to remain above the fray. I like the work ethic in the Scandinavian countries, too. Something to consider.

    Thanks for the comment.
    Mar 23 10:36 PM | Likes Like |Link to Comment
  • Protecting Your Equity Portfolio For Less - Part XII [View article]
    ctomso - Thanks for commenting and the links!
    Mar 22 06:19 PM | Likes Like |Link to Comment
  • Protecting Your Equity Portfolio For Less - Part I [View article]
    Time and compounding are your greatest allies in investing.
    Mar 22 06:18 PM | Likes Like |Link to Comment
  • Protecting Your Equity Portfolio For Less - Part I [View article]
    Belegde - Thanks for sharing your investment ideas. You are even more diversified than I am! I rarely hold over 40 positions at one time. Nothing wrong with it, but I think I'd have trouble tracking them all. But, then again, too much tracking can lead to needless short-term reactions. So, boring can be a good thing. Thanks again for commenting.
    Mar 22 05:31 PM | Likes Like |Link to Comment
  • National Fuel Gas For Rising Dividends And Future Growth [View article]
    SenBiden - Thanks for commenting and sharing a recommendation. I'll need to take a look at NI.
    Mar 22 04:31 PM | Likes Like |Link to Comment
  • National Fuel Gas For Rising Dividends And Future Growth [View article]
    Palm - OXY had a drop from over $97 on Tuesday to below $92 on Thursday, but then it popped back up a little to end the week over $94. That seemed to be related to a spin-off of its California operations the company plans to do citing the adverse regulatory environment. It is only a fraction of the company's assets similar to NFG CA. ops. But I suspect there is something more, possibly some non-public info. that will surface later. But I don't think it will be anything devastating to NFG operations or future profitability. It is probably profit taking by one or more large institutional holders. Volume on Friday was about 5 times the 30-day average.
    Mar 22 12:24 PM | 1 Like Like |Link to Comment
  • National Fuel Gas For Rising Dividends And Future Growth [View article]
    David,

    You may be right about that. It is a very logical assumption. I am looking beyond 2015 and see good value. I am actually selling puts below the market here in hopes of getting the stock a little lower still.

    Thanks for the comment.
    Mar 22 10:21 AM | Likes Like |Link to Comment
  • National Fuel Gas For Rising Dividends And Future Growth [View article]
    I didn't like the loss posted by POM and I like the growth component potential of NFG relative to PPL. However, if income is the focus PPL does have some appeal. But PPL is trading at a trailing PE of 18.4. I realize that looks better but I don't see EPS increasing in 2014 so the forward PE doesn't change. that the growth potential of NFG is better and like a balance of growth and income. That is not to say that NFG is the better investment for every investor. We each need to find what fits our needs.

    Thanks for the comment and alternatives.
    Mar 21 07:03 PM | Likes Like |Link to Comment
  • National Fuel Gas For Rising Dividends And Future Growth [View article]
    Palm - I haven't found anything either. Since the stock price for NFG was basically treading water until the broader market turned south I suspect it was hit with a round of profit taking. But I think that the timing on this particular issue is bad unless there is some insider trading that hasn't shown up yet.
    Mar 21 06:54 PM | 1 Like Like |Link to Comment
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