RE: US Stocks - Watchlist and Discussion
(2016-06-14, 03:09 PM)isatrader Wrote:(2016-06-14, 12:21 AM)barra Wrote: After oil, natural gas is rising again.
Is there an opportunity to buy a future long bull market?
Be careful with trading Oil or Gas ETFs as they suffer from contango, which causes the spreads of the ETFs to dramatially underperform the actual spot price over the medium to long term (see attched), and so you can end up losing even when the spot is rising. For example, the natural gas spot price over the last 200 days has fallen and then recovered to only down 4%, but the UNG ETF is still down 38%!!!! Wherea spot oil is currently up almost 14% in the last 200 days, whereas the USO ETF that tracks it for retail investors is down 15%!!! Which I think highlights the problem with energy ETFs. The better way to play them imo, is via stocks in the oil and gas sector instead which don't have these problems.
Here's the links to the stocks in the oil and gas sectors in the US market:
Integrated Oil & Gas sector
Oil Equipment & Services sector
Exploration & Production sector
Thanks for the reply. The differences beetwen ETFs and spot gas and oil are very impressive, indeed. I was aware of contago effects, but i didn't realize the scale of the impact. Done.
I'll find a stock linked to natural gas performances.
cheers
barra