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Strategies & Market Trends : Waiting for the big Kahuna

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To: Real Man who wrote (88810)	7/17/2009 11:11:37 AM
From: gregor_us	Read Replies (2) of 94695

Well, I won't defend the CFTC since they are quite problematic. However, there isn't anything the regulatory bodies did to make UNG and USO flawed instruments. They were flawed on the original flotation. I first warned about USO on SI over 3 years ago. Otherwise there is nothingflawed in tracking front month futures. Yes and no. Depends on your perspective. USO has been crushed twice now on the contango. UNG is so poorly correlated to NG that it might as well be some other financial instrument. An investment mandate to follow front-month futures is, in fact, deeply flawed because it can't be done. It can't be done when you are rolling each month into a contango'd futures curve, as all the traders pound your bum by selling what you're selling, and buying what you're buying. I will stick with my basic view, which I have held for years: USO and UNG are not investible instruments. G

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