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
No survivors in hot air balloon crash
Senate urged to vote on SCOTUS nomination
Don't shun Florida over Zika, officials say
FBI: Woman robbed bank to return to prison
US agencies subpoena Goldman Sachs in 1MDB Malaysia probe
US regulators have issued subpoenas to Goldman Sachs for documents related to the investment giant's dealings with the 1MDB Malaysian state investment fund, a source close to the probe told AFP on Friday. The investigators also want to interview a Goldman Sachs employee over the bank's role, according to The Wall Street Journal, which first broke the story. The US officials, who base their authority on the Foreign Corrupt Practices Act, want to know why Goldman Sachs did not report transactions deemed suspicious that involve funds raised by bond offerings worth $6.5 billion (5.8 billion euros) for 1MDB, the source said.
U.S. authorities subpoena Goldman in 1MDB probe - WSJ
(Reuters) - U.S. authorities have issued subpoenas to Goldman Sachs Group Inc for documents related to the bank's dealings with scandal-hit Malaysian state fund 1MDB, the Wall Street Journal reported late on Friday. Goldman received the subpoenas earlier this year from the U.S. Department of Justice (DoJ) and the Securities and Exchange Commission (SEC), the Journal reported, citing a person familiar with the matter. The Department of Justice and the SEC declined to comment.
Data in focus as market struggles for direction
Wall Street, seeking direction as the S&P 500 has been stuck in a narrow trading range for 12 days, will next week shift its attention from second-quarter corporate earnings reports to economic data. Investors will be looking for signs of economic strength to reinforce the positive direction hit Friday, when the S&P 500 hit an intraday record high. The overall tone will be of an economy that is getting better at a reasonable pace," said John Manley, chief equity strategist at Wells Fargo Funds Management in New York.
Suspect arrested in killing of San Diego cop
Oil rout erodes second-quarter profits for U.S. majors Exxon, Chevron
By Ernest Scheyder HOUSTON (Reuters) - Chevron Corp posted its worst quarterly loss since 2001 on Friday and Exxon Mobil Corp reported a 59 percent slide in profit, as the long crude price rout and tumbling refining income inflicted pain across the energy sector. "The key is to manage the cash flow as best they can and continue to execute on projects, which they do appear to be doing." Exxon, the world's largest publicly traded oil producer, shocked Wall Street as its quarterly profit missed expectations, sending its shares down as much as 4.5 percent on Friday. In the United States, where Exxon is the largest natural gas producer and a major oil producer, the company lost money.
Tech shares and muted GDP growth push S&P 500 to record
Wall Street rose on Friday, with the S&P 500 index hitting a record intraday high for the seventh time this month as gains in technology heavyweights Alphabet and Amazon more than made up for losses in energy shares. Alphabet contributed the most to gains on the Nasdaq and the S&P 500. Aggregate second-quarter earnings of S&P 500 companies are now expected to fall 3.7 percent, worse than a 2.8 percent decline predicted on Thursday, according to Thomson Reuters I/B/E/S. U.S. gross domestic product in the second quarter grew at a 1.2 percent rate, coming in below expectations for a rise of 2.6 percent and fuelling arguments the Federal Reserve may not need to raise U.S. interest rates anytime soon.