Tuesday, December 9, 2008

Value of Real Labor/Buy of UNG

The WSJ reported this morning that investment bankers have little to do now, and that was the most positive story that I have read this year.  WSJ.com  I would feel much better about the future provided the new administration undertakes a concerted effort to make it more difficult for investment bankers to blow up the financial system.  One story making the rounds is that a former Morgan banker was driving a forklift.  I hope that is true. It may teach him some humility. I remember back in high school, many years ago, I used to do labor work for my dad who was a home builder, making maybe $85 a week during my "summer vacation".  This kind of job does connect one to the value of a dollar and provides excellent aerobics and a free sun tan.  I would not have to worry about those excess pounds finding a permanent home around my belt either. Today, free Spanish lessons would be thrown into the perks. I thought that I was entitled to a raise, above whatever the minimum wage was at the time, possibly 2 bucks, nothing extravagant, and my father said that he was already paying me more than I was worth.  Maybe, I do think that I was worth $2.25 an hour and my wages were certainly closer to my contribution to society than the investment banker having to get by now on a mere 700,000.  

I was wondering this morning whether I should buy the ETF for natural gas (UNG). United States Natural Gas Fund It has been way too cold in Tennessee.  This ETF hit a high of 63.89 on 7/1/08 during the height of the energy mania and is now trading at 23.04 down about 23 cents today.   My last trade on that one was a sale near 40 earlier in the year.  My decisions to buy and sell this kind of security are based on a seat of my pants analysis.  It just seems that the current price may be too negative about demand.  While this judgment could easily be proven wrong, there seems to me to be more upside than downside at the current price going into the winter months.  So I just bought 50 at market, filled at 23.05.  I am at least confident that it will not go down to zero.  Natural gas was trading down a few pennies this morning to around 5.54 per MMBtu. This government web site has some relevant information. Natural Gas Weekly Update

I mentioned last night that I sold SMH last year and I just checked the price.  I sold it for close to 35 in early January 2007. The chip stocks are doing much better than I would have anticipated last night after reading their earnings warnings. 

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