FinTekNeeks

From Minimalism To Tech

Is It Time To Buy Natural Gas?

Posted in Trading on February 1st, 2016

The following article came from A.P. at the same time it was written. We’ve reposted and changed some of the material here, while removing many of the arguments as they may or may not hold true. Note that the time context is different: we would not write this content after its date, as it was only appropriate for the time in which it was written. [REMOVED] in the article indicates points, arguments or statements that may or may not still be valid or points that were for readers eyes of the original article only. We do not reward later readers with these points.

The following article covers trading financial securities, such as stocks. The world of trading often comes with rises and declines of securities, and most things do not rise or fall in a straight line. By the time this article is published, circumstances involving what we mention may h ave changed. Often, changes in securities can be to the detriment to the traders – seldom is it beneficial. A person should only trade with money that they’re willing to lose because losses are guaranteed. By reading this post, you agree that you’ve read our disclosure.

Introduction

As a consumer of natural gas, I’ve observed its fall lately and am considering it from an investment perspective. In this post, I walk through some reasons why I think natural gas is a good and bad investment choice currently.

Natural gas.

The Case For Natural Gas

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The Case Against Natural Gas

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  2. Some companies are avoiding the sensible thing: cut your dividends to $0, pay off all your debt, lay off all your workers, idle all your wells, and completely cut off the supply. If several large companies did that, the price of natural gas would soar within a month and the company could rehire the workers it laid off and begin making a profit again. The reason companies don’t do this is because they’re heavily in debt and fear losing investors, which “dividend-slashing” tends to do. [REMOVED]
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  4. What am I missing? What am I not looking at? [REMOVED]

Positions I’m Considering

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Physical natural gas wells. These require a lot of money and will be the riskiest move of all of these. Still, using some of the techniques I listed above this, these will be the most profitable in the long run.

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FCX. I own quite a few shares of Freeport-McMoRan at less than $4 since I like it from the copper and gold mining angle. When it comes to natural gas and oil? [REMOVED]

Russian stocks. Russian stocks are currently the cheapest in the world and since most emerging markets ETFs have exposure to Russia (and are cheap as well), this provides another route for exposure, though one should be careful about what they select. [REMOVED]

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Final Thoughts

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Updates: almost all of the trades have beat the S&P 500 at this point. Some have absolutely crushed it. I can only think of one that has performed poorly, but being a junior producer, I’m not surprised.

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