Long term investment of Natural Gas

Discussion in 'Commodity Futures' started by heispark, Nov 8, 2019.

  1. heispark

    heispark

    What is the best vehicle for long term investment of natural gas? Futures have roll-over cost and ETF is reset daily and not accurately following actual performance as far as I know. Please share your experience. I think I can safely buy whenever price drops to near $2 with stop loss below $1. Because it has production cost, it actually cannot go down that deep I believe. Looking back history, price recovery is relatively quick.....
    Thanks!
     
  2. Wheezooo

    Wheezooo

    Just buy a long-dated future.
     
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  3. bone

    bone ET Sponsor

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  4. Sig

    Sig

    Depending how long is long there just wasn't any volume there last I checked (I was trying to go out 10 years with exposure every year). I agree with @bone, and would add that you might want to look at the MLPs with gas exposure.
     
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  5. bone

    bone ET Sponsor

    I wouldn't recommend you buying a long dated future (or short dated for that matter) unless your account capitalization is such that you could basically ignore it and not give a flip. You would get a decent market for Dec '20 but the market for Dec '21 is shite.

    The ETF UGAZ tracks the NG futures quite closely, and it is by far and away the most liquid of the NG ETF's.
     
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  6. heispark

    heispark

    Why Leveraged ETFs Are Not a Long-Term Bet
    https://www.investopedia.com/articl...5/why-leveraged-etfs-are-not-longterm-bet.asp
    "If you’re a retail investor and/or a long-term investor, steer clear of leveraged ETFs. Generally designed for short-term (daily) plays on an index or sector, they should be used that way, otherwise, they will eat away at your capital in more ways than one, including fees, rebalancing, and compounding losses."

    How a 200% surge in a triple-leveraged natural-gas ETN can be a cautionary tale
    https://www.marketwatch.com/story/h...l-gas-etn-can-be-a-cautionary-tale-2018-11-14
    “important to remember that the way they are structured makes holding them for any extended period of time a sucker’s bet,”
     
  7. themickey

    themickey

    For those contemplating, 3 x leveraged so more volatility to be expected.
    Currently UGAZ ~ 16% below a MA200 with a mkt cap of $182M while ETF 'UNG' is ~1.5% above MA200 and mkt cap $229M.
     
    bone likes this.
  8. bone

    bone ET Sponsor

    I agree completely - I was offering an alternative for holding a futures contract

     
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  9. Zor_Champ

    Zor_Champ

    Time for some Mythbusting:
    There is a big myth about leveraged ETFs that has been recently propagated in the media. This article corrects the myth and explains the faulty reasoning that gave rise to it.

    The myth is:


    Leveraged ETFs are not suitable for long term buy and hold
    These claims are not backed up with mathematics and data. This article rectifies that deficiency and finds that the claims are false.

    http://ddnum.com/articles/leveragedETFs.php
     
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  10. themickey

    themickey

    Triple leverage creates triple volatility, if one is prepared for that, sounds easy in theory but practically is hard on the nerves for long term buy & hold, hence why most futures traders don't buy & hold.
     
    #10     Nov 9, 2019