Just look at what's happening in the energy markets right now ...
Iran is cutting off shipments to some of its biggest European customers — just out of spite for the nuclear technology dispute. Who will get dragged into this squabble next?
Furthermore — and I bet you've noticed — it's costing more to top off your car's gas tank these days. We're almost back to the 2008 "super-spike" gasoline prices in some parts of the U.S.
The headlines simply prove Sean's point: Natural gas is set to be the next big energy boom. It's much more efficient than crude oil in many cases ... and the U.S. has its own ample supply. We don't have to depend on imports.
|Relying on imported energy is getting riskier.|
Why natural gas now and not a year ago? Because the situation has changed. Natural gas is relatively cheap, and the technology to produce more of it is developing quickly. The number of investor-friendly ways to get involved is exploding, too. You'll be hearing about some great profit plays from Sean.
For my part, I'm watching some natural gas-related ETFs. And I see opportunities in three specific areas ...
Opportunity #1: Natural Gas ETFs and ETNs
Not so long ago, the only way for an individual investor to get direct exposure to natural gas prices was through the futures market. This is complex and impractical for most people — even without the massive leverage.
As with so many other sectors, the ETF revolution brought a big change. Now several ETFs and exchange-traded notes allow you to participate in the global energy markets much more easily.
These have some drawbacks, though. Many commodity ETFs and ETNs still have very low volume. Some are even on my Deathwatch list.
Another problem is that futures markets, by their nature, are hard to track with any precision over the long-term. To learn why, see "What's All This Talk About Oil Futures and Contango?" The same applies for natural gas.
Yet another challenge: Complex instruments like these draw a lot of legal scrutiny, especially when they are new and unproven.Regulators have occasionally created roadblocks for commodity-based energy ETFs and ETNs.
Nevertheless, if you want to capitalize on quick moves in natural gas prices, take a look at these tickers:
- iPath DJ-UBS Natural Gas Total Return ETN (GAZ)
- iPath Seasonal Natural Gas ETN (DCNG)
- Teucrium Natural Gas Fund (NAGS)
- UBS ETRACS Natural Gas Futures Contango ETN (GASZ)
- United States 12 Month Natural Gas Fund (UNL)
- United States Natural Gas Fund LP (UNG)
- ProShares Ultra DJ-UBS Natural Gas (BOIL)
- ProShares UltraShort DJ-UBS Natural Gas (KOLD)
Opportunity #2: Pipeline Profits
|Natural gas travels by pipe.|
As you know, natural gas doesn't just appear out of nowhere. It's a useless resource if it can't get from the ground to your furnace.
Gas pipelines solve this problem nicely. They're a big business — and if Sean is right they're going to get bigger!
For tax reasons, energy pipelines are typically owned by "master limited partnerships," or MLPs. As I wrote almost two years ago, you can build a quick, diversified MLP portfolio with ETFs and ETNs. Individual MLP securities also have great potential if you pick the right one at the right time. I can't wait to see Sean's picks in this niche.
Opportunity #3: Small Cap Energy ETFs
Sean is very keen on small-cap natural gas stocks — and rightly so. The potential profits are enormous. But if you prefer a more diversified approach, ETFs may be a great answer.
Until very recently it was hard to find energy sector ETFs that weren't dominated by multinational conglomerates like ExxonMobil (XOM). Several new entrants make it easier to get involved in smaller energy stocks:
|Natural gas comes from surprising places.|
- Market Vectors Unconventional Oil & Gas ETF (FRAK)
- PowerShares S&P Small Cap Energy Portfolio (PSCE)
- Jefferies TR/J CRB Wildcatters Exploration & Production Equity ETF (WCAT)
As you can see, the biggest and best-known ETF players are moving quickly to get involved in natural gas. That should tell you something: This is a niche with huge potential!
I think natural gas ETFs will offer great opportunities over the next year or two. Do your research, get some help and good luck!
|< Prev||Next >|
Current Headlines - Finance
Christie defends Trump's immigration policy
How a fictional cop probes N. Korea mysteries
Did building code lapses boost Italy quake toll?
10,000th Syrian refugee reaches U.S.
Friends mourn slain Mississippi nuns
Fed could use reserves payments to stimulate U.S. economy - paper
The Federal Reserve could push banks to lend more by paying Wall Street smaller returns on money stashed at the U.S. central bank when inflation is low, according to an academic paper presented on Saturday. The proposal was one of several discussed at an international gathering of central bankers who are looking for ways to stimulate economies even after they have cut interest rates to near zero and flooded banks with money. In his paper, economist Ricardo Reis put forward a new way for the Fed to pay banks returns on the money they keep at the central bank, a tool that could potentially put the Fed's goal of keeping inflation at 2 percent on autopilot.
Jobs data to be a big deal for record-high stocks
Wall Street will fixate on a wave of U.S. economic data next week, crested by payrolls data on Friday that could sway expectations about the timing of future interest rate hikes and spark volatility in record-high stock prices. Fresh data about employment and consumer confidence could help investors solidify expectations for a December interest rate hike from the U.S. Federal Reserve, or lend weight to a minority of strategists predicting a rate rise as early as next month. Fed Chair Janet Yellen said the case for a rate hike is strengthening, but she left open the timing of what would be the first increase since December 2015.
Caesars must face $11 billion in lawsuits: U.S. judge
Caesars Entertainment Corp must face lawsuits from bondholders seeking some $11 billion in claims, a U.S. judge ruled on Friday in a decision the casino company had warned could plunge it into bankruptcy alongside its operating unit. Caesars Entertainment Operating Co (CEOC), which filed for Chapter 11 protection in January 2015, was asking for a third court shield from lawsuits against its parent to protect a multibillion-dollar contribution to its reorganization plan. The high-stakes CEOC bankruptcy has been plagued by a complex web of litigation pitting some of the most aggressive investors on Wall Street against each other.
Wall Street slips in wake of comments by top Fed officials
U.S. stocks ended modestly lower after a volatile session on Friday, having bounced between gains and losses as investors wrestled with the likely timing of a U.S. interest rate hike following comments from top Federal Reserve officials. The S&P 500 rose after Fed Chair Janet Yellen said the case for raising rates had strengthened but did not indicate when the Fed would act. Yellen told a gathering of central bankers from around the world in Jackson Hole, Wyoming, the U.S. economy was nearing the central bank’s goals of maximum employment and price stability but that future hikes should be “gradual”.
Clinton’s Coziness With Silicon Valley: More Troubling Than Her Wall Street Ties
The wealth of Hollywood has historically been a magnet for Democratic politicians, and it remains so; Hillary Clinton spent two days draining the pocketbooks of Justin Timberlake and other luminaries this ...