Matthew Bradbard

Today in Commodities: Living Up to Expectations

Hammer
Did someone hit you in the head with a hammer? I am long $1 call spreads not futures so though clients are down they are still in expecting a move higher. See previous posts. Clients that listened to me are down in this trade but most are also long sugar and silver from much lower levels. It is called diversification.


On Sep 03 05:41 PM hammer wrote:

> "There was a new 7 1/2 year low in natural gas today as prices are
> currently down 20 cents. LET ME SAY THIS LOUD AND CLEAR: WE MAY BE
> WRONG BEING LONG FOR THE NEXT 60 DAYS BUT WE WILL KEEP A PORTION
> OF OUR CLIENTS' COMMODITY PORTFOLIO LONG NATURAL GAS AS TO BE THERE
> WHEN PRICES GET BACK IN LINE, whether that be two, three or four
> months from now."
>
> Long and terribly wrong. A week ago you were long NGV09 at $3.20/mmbtu,
> now its $2.50/mmbu. A mere 22% loss. The initial and maintenance
> margin for 1 NYMEX NG contract is $10,575. You would have lost $7,000/$10,575
> or 71% on your initial investment. Hopefully your audience has ignored
> your bad advice.
>
> Ask yourself why NG is at $2.50 and you"ll realize why simple technical
> analysis and historical analogies of crude:natural gas are inane
> and misguided.
>
> NGX09 has another 10% decline and NGZ09-NGF10 have even more. The
> contango is unprecedented and WILL come in. Commodities are zero
> and Matt is trying to convince you it is an investment. It isn't,
> its a trading asset.