aarc

Natural Gas ETF Suspends New Shares: Are There Alternatives?

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The author is saying stay out of UNG and better still natural gas futures and other etfs such the canadian's.

NG is a highly volatile commodity (pun intended). Just look at the monthly chart; every year, NG price fluctuates rapidly in massive percentages over very short periods of time. So if you cannot track NG on weekly or monthly basis; you may find yourself rich after several months and poor after less than a year's time or vise-versa.

NG is a buy low sell high or short high cover low for highly active speculators; definitely NOT a buy low/high sell high/higher investment that you can rely on year after year.

So buy UNG while it is being hammered to death or wait for the reversal and chase it up as fast as you can if you can.

As for UNG; either you buy NG futures and pay the extra price of contango spread yourself or let UNG does it for you. Just don't expect UNG to tract NG toe to toe because of the contango (or backwardation for that matter) effect. You will have the same price or P/L differential over an extended period of time if you keep rolling over futures contracts.

IAI: Were the Broker-Dealers the First Financials to Bottom?

Maybe, maybe not.

$XBD made 96% price appreciation trough to peak out of this recent rally while $BKX made off with 136%.

On the rally from 2002 to 2007; $XBD made off with more than 300% price appreciation. Is that not a bubble or what? That could mean excessive speculation on the brokers/dealers capacity/capabilities to generate income. Speculation with higher probability not based on fundamentals and then they suffered only 80% haircut in this downturn?

$BKX on the other hand made off with only 98% price appreciation on the same period. Is that a mania or not? Then they suffered 85% haircut since they are the center of this controversy.

Now consider this, since the electronification of trading, trading fees have substantially decreased with no other direction but down as competition gets stiffer. Likewise, with this stock market meltdown many traders and investors will be having lots of reservations entering the markets thus lower profits potential.

How about banking?

They can be considered dedo too with the fabled "American Consumerism" dead on the water.

One major factor not being considered for banks is that the government has sunk it's teeth too deep into the banking sector. If the banks don't make money and their problems got worse, the government will become the major casualty along with the banks.

I think the government will not allow that to happen. They left the Tech Sector to rot since 2001 when they proved to be nothing but hot air - and so they rotted in hell. Will the government shore up the $XBD members the way they do with the $BKX members or simply leave them on their own - let them rot if they prove to be nothing but hot air?

The government has the power to legislate that can favor one sector over the other such as making new trading protocols with China, India, Brazil, Russia, and the other developing countries including the Middle East and Africa.

Trading agreements that can considerably favor the major banks and thus shore up the $BKX into heights they can't possibly reach without a "lever" provided by the gov't.

There is still a big world out there. More than 2.5 billions of consumers in the BRIC and the developing countries that will require more infrastructures, roads and bridges, electrification systems, water supply systems, more brick and mortar housing projects to replace their mudhuts/bamboo houses, more shopping centers, more credit cards, more automobiles, washing machines, computers, etc.

They will also need a lot more agricultural and mining equipment, manufacturing plants, technological centers, and all those job creating industries needed to support billions of people as they become more hungry for material things that the western world has already taken for granted during the last 3 decades.

And they are still in their 20's to 40's unlike the few hundred million Western World's baby boomers who are going to enter their twilight years in the very near future.

Unless the brokers/dealers can make a foothold into the BRIC and the other developing countries and their stock markets, they will be left with what they have now.