I really dislike extreme weather. Hot weather is awful, cold weather is a little less awful. I figure there’s no limit to how much you can layer in the cold, but there’s absolutely a limit to how much a decent person can take off in the summer.
Either way, I’m not too fond of weather hot or cold. That is, until I have money on the line.
Let It Snow, Let It Snow
The funny thing about investing is that it forces you to root for teams you might not otherwise like. This year, I’m rooting for the bitterly cold team. I want months upon months of freezing cold temperatures.
Because natural gas prices need it.
Over the summer and into the winter I’ve been buying shares of Apache Corp., and oil and gas exploration company. I like it for any number of reasons – it’s cheap, people are worried about it (lots of cash flow comes from troubled Egypt), it has tremendous amounts of potential in its newly acquired assets, etc. Most importantly, I like it because it’s doing the opposite of what other companies are doing. It’s growing when all other companies are just paying out cash flow in dividends. So it’s a contrarian oil and gas play. The Street isn’t too fond of it, so I’ll love on it a little.
Anyway, one of the bigger problems for it now is the supply side problems in the oil and gas industry. In case you’re not aware, fracking is the best thing to ever happen to the United States. We have tons of oil and natural gas – and we’re stockpiling it quickly. Supply boom turned to bust as oil and gas prices have dropped precipitously.
Natural Gas Supplies
Historically, natural gas piles up during the summer, and then it gets used up during the winter because cold people like to have warm homes. So the trend is pretty seasonal. In 2011, though winter didn’t come. It just didn’t.
Check out the trend:
So natural gas built up. And it got so cheap this summer that it was used to make electricity because hot weather requires air conditioners, which run on electricity. Natural gas can be economically turned into electricity when its under $3. That trend started in April, when natural gas prices bottomed under $2.
Anyway, the long and short of this story is that sometimes when you make an investment you have to be willing to root for things you don’t necessarily like. For me right now, with a growing part of my portfolio in cash (I’m only buying one stock, and it’s a thinly-traded Pink Sheet), cold weather is my current desire.
Bring on the cold, baby! Let it snow, let it snow, let it snow!