H. T. Love's  Instablog

H. T. Love
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Spent over 30 years in computer systems work, many different functions. Owned my own business for awhile. Got tired of it (managing employees is not my baliwick) and stopped doing it professionally. Did other things, off and on, for some more years and finally bumped into this investing/trading... More
  • UNDER CONSTRUCTION NG: Long-term bull, short-term BEAN-O Redux 7 comments
    Jun 4, 2009 5:06 PM



    In all seriousness, this may have something of interest to you, so feel free. Just keep in mind that this is just a scratchpad right now.

    Hmm. Maybe I can find a convenient way to do this off-line. I hadn't recognized the potential confusion until Freya was kind enough to point it out to me. As soon as I get time, I'll try to find some appropriate software that will let me emulate what happens here. Then this entry will disappear until it is ready.

    In my first foray into exposing myself to public ridicule by having the hubris to publish my n00b assessments of the near-term outlook on natural gas here, I talked about the near-term bearish outlook I have and why.

    To recap that previous article, I'm bearish at this time due to:

    1. current fundamentals of supply and demand,
    2. a milder hurricane season forecast (reduced risk of disruption),
    3. a weak(ening) economy,
    4. reduced consumer spending,
    5. an administration "green" program that emphasizes liquefied coal and seldom mentions NG,
    6. a strengthening dollar (temporarily?) driving commodity prices down (at this point, a "one day wonder" 6/3 only - WHOOPS! Dollar up again Fri. 6/5 with similar results),
    7. chart analysis.

    My recommendation was for long-term investors, who may be driven by emotional support of "green" investments, to avoid NG at this time unless they treated it as a trade and possessed strong self-discipline, if they couldn't keep their emotions in check. I also suggested the use of options if they must get in now.

    As I stated there, I am long-term bullish on natural gas and stated I would discuss my reasons after more research and organization of my thoughts.

    1. Long-term economic recovery (google for forecast "economic recovery 2009" only turned up 506,000 english pages, so it was "Slim Pickins" (no relation to the cowboy actor). I selected the first few I saw that appeared to be non-country-specific for reading and to try and determine a most likely scenario.

      - Consensus Forecast: Economic Recovery Dr. Bill Conerly
      - CNN Money: UCLA Anderson School of Management Forecast
      - An ISM Survey of Purchasing Managers
      - IMF Survey Magazine, IMF Research
      - Ken Jepson Report on Economic Conference on blog.seattlepi.com

      I also tried to keep my personal biases out of the picture - one of the biggest risks when trying to make assessments based on the research of others and you enter with a pre-conceived notion.

      My conclusion from reading the above? To be determined after reading.
    2. Supply, Infrastructure: availability of North American NG fueling stations.
      - www.eia.doe.gov/
      - www.google.com/search
    3. Businesses/services use in transportation already on the rise.
      - General
        International Association for Natural Gs Vehicles
        Michael Fitzsimmons' "Westport Innovations: A Growing Natural Gas Engine Business"
      - Port authorities
      - Mass transit
      - Taxi fleets
      - Shuttle
      - Waste and recycling fleets
      - Long-haul (Class 8) trucking
      - Parcel Delivery Services
      - Fertilizer & other product manufacturing (thanks to one eye for reminding me of this)
    4. Stationary heating, cooling, power, manufacturing applications.
      - Industrial uses: www.naturalgas.org/ove...
      - High-rise buildings in high-density population areas
      - Data center conventional/UPS replacement applications
      - Residential heating
    5. Utilities, mandated "green" portfolios.
    6. Availability of proven viable NG personal vehicles.
    7. Depletion of crude oil resources: ever more expensive.
    8. Entries of "majors" into the NG industry.
    9. Legislative, The "Pickens Plan": creating political will to "do the right thing".
    10. Some other thoughts by other folks

    Ok. Now the "heavy lifting" begins. I hope I can do it in a couple weeks or so. Lots to look at.

    Using UNG may not be the best way to invest/trade NG. One needs to consider FuturesTrader's Comments in an article by Jim Letourneau: "Natural Gas ETF Jumps on No News - Turning Point. Do keep in mind that if you are trading in a tax-deferred account, some of the tax implications do not apply.

    Disclosure: long Capstone Microturbines (CPST), have been in and will get back into Clean Energy Fuels (CLNE) when the price and time looks right, no position in NG at this time, will be trading in and out as promising opportunities arise, plan to eventually be long as an investor.

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Comments (7)
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  • H. T. Love
    , contributor
    Comments (19563) | Send Message
    Author’s reply » On Jun 11 12:28 AM Freya wrote:


    > Geez Lueeze HTL.
    > You do not want a multipage thesis to start out. Keep the chart going
    > but add incremental sources, do not go the Tsunami route. There are
    > a lot of Traders here who will pick up on the Charts Usage and will
    > give commentary but they think for themselves and do not need to
    > be inundated with links.


    LOL! I see what happened. The page that is under construction is the *next* article and I was just using that one as a "scratchpad" to keep results of searches.


    The one that may be useful is the second one, without the "Redux" in the title. Let me go check my post fo the links and see where it takes me. I thought I had it right.


    Yep. You must have gone right to the instablog rather than using the link I provided.


    Give this one a try and see if your opinion of my first effort doesn't improve a bit. :-)


    > Meanwhile, the uninitiated need to hear your views, not the facts
    > provided by a Sundry of links, in plain words like Overbought/Oversold
    > or good weather forecasts and Supply/Demand etc. Don't go overboard.
    > For weather, I do not use CSU, I use Accuweather and Joe Bastardi.
    > Beause of this, I view this season as particularly vulnerable, not
    > because of Atlantic Hurricanes but because of Pop Up Gulf Hurricanes,
    > a new but increasing phenomenon.


    *That's* going to be useful. I'm adding those to my tool kit.


    11 Jun 2009, 06:13 AM Reply Like
  • H. T. Love
    , contributor
    Comments (19563) | Send Message
    Author’s reply » OOPS!


    11 Jun 2009, 06:14 AM Reply Like
  • H. T. Love
    , contributor
    Comments (19563) | Send Message
    Author’s reply » On Jun 11 06:41 AM Freya wrote:


    > I purposely came to this site but didn't realize that the last insta
    > was the pre-draft, usually, its the other way around.


    Yeah, being new I didn't realize that I couldn't move them around. My "Raw Commentary" one, luckily, was the first one I did and it ended up at the bottom. When I got enough for an article, I did the "final" one and then started on the next.


    > Think of it this way, Your first Article may or may not be read extensively
    > if no one knows it exists in the first place.


    Yep. As mentioned, I'm going to find the time somewhere to move the drafts off-line and then post (near-)final version only. I'll leave the raw one up too. Someone may spot something I miss.


    > I've put you in my following list, not as a continuing Mea Culpa
    > but because I'm interested enough to see "something new", a fresh
    > perspective.


    I noticed last night that you were in the list. I didn't take it as a "mea culpa", but as a (potential? :-) compliment. I added you also since your comments have provided some of the stuff I drew on for my analysis. I hadn't considered that I could so easily access so much information from others by just clicking on the icon once I had added them to my follow list.


    That's a "neat" feature.


    > Believe me, if you do provide insights which others miss, you will
    > gain recognition through your followers. The InstaBlogs will be read.


    Well, I don't really expect that I can contribute so quickly to the more experienced community in the "missed" area. I think I may mostly help newer folks like myself (I still have the POV, ignorance, uncertainty, ... that a newer investor/trader might have) and maybe help the experienced group though the "manpower". I have X time, they have X time, in aggregate we have X+X+X+... time and we just catch a piece of pertinent information that another just didn't have enough time to follow/notice or it was buried in the "noise"


    > Oh, take a look at FCG, as a counter to weakness in Nat. Gas.


    Looks almost like an ETF. I try to avoid those, for now, because it would be too easy to just invest in that sort of thing and if it paid off well, I might get lazy (a common male affliction :-) and stop learning so much. Since I'm happiest learning new stuff (took lots of years to realize why I enjoyed certain things so much) I don't want to make it too easy. As I continue to age, I know that will change, but I'll be darned if I'm going to give myself a tool that makes it easy. I even split my firewood by hand - there's some kind of perverse enjoyment in that.


    The ones that I would consider are the ones that track foreign co's. Many don't have ADRs here and those ETFs may be one of the few ways to get exposure to them, ignoring FX. But I haven't done that yet - too scared that I'm too ignorant to pick the right one(s), right time(s), etc. Time and confidence will cure that - then I'll really be at risk! >8-O


    But I have added that to my list. There should come a time, if I'm successful, where that same convenience may be a necessity - time should limit my options I guess.


    HTL (I'm thinking about it!)
    11 Jun 2009, 07:57 AM Reply Like
  • H. T. Love
    , contributor
    Comments (19563) | Send Message
    Author’s reply » Thx - I'll check that out w/my broker.




    On Jun 11 01:56 PM Freya wrote:


    > Foreign ADRs are listed on more places than just the Big Boards.
    > There are a ton of them on the "Other OTC". Reputable firms which
    > do not have to meet the reporting requirements and, therefore, the
    > costs of doing business on the NYSE and Nasdaq. Due Dilligence is
    > much harder but when you find a good one, you will be rewarded.<br/>
    > Check out DMYDY and LNCGY. There are others. Back in the 80s, the
    > only place to purchase Nestle (just a Memory) was as an ADR on the
    > Pink Sheets.
    11 Jun 2009, 04:16 PM Reply Like
  • one eye
    , contributor
    Comments (645) | Send Message
    Your Broker better have been in the Biz for at least 35 years.


    Mine died a few years back, he was 80 and had been at it for 50 years.


    Most of the brokers out there are newbees. They have spent most of their careers in a Bull market and didn't have any idea how to cope with a Bear.
    12 Jun 2009, 05:29 AM Reply Like
  • H. T. Love
    , contributor
    Comments (19563) | Send Message
    Author’s reply » Thanks,


    Being new, I'm in the same boat - but I don't know how to cope with a bull either! :-) A lamb would be nice. I could handle that.


    But I'm a hard worker and (slowly) learning.




    On Jun 12 05:29 AM one eye wrote:


    > Your Broker better have been in the Biz for at least 35 years.<br/>
    > Mine died a few years back, he was 80 and had been at it for 50 years.
    > Most of the brokers out there are newbees. They have spent most of
    > their careers in a Bull market and didn't have any idea how to cope
    > with a Bear.
    12 Jun 2009, 06:32 AM Reply Like
  • harammph
    , contributor
    Comments (98) | Send Message
    Ah, what the Hell. I'm along for the ride. I don't know why, don't care why. Just want to make sure, I keep up with the Smiths.
    13 Jun 2009, 12:39 AM Reply Like
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