Investing in Oil and Natural Gas Through ETCs E-Book

Simone Malacrida

• Herausgeber: BookRix
• Kategorie: Ratgeber
• Sprache: Englisch

Veröffentlichungsjahr: 2023

Beschreibung

This book outlines the basic concepts of investing in oil and natural gas through financial derivative products called ETCs. In particular, the following topics are covered: classification of financial products and general properties such as liquidity, availability, volatility, risk, derivative products, leverage calculation of simple interest, compound interest and percentage mathematics costs of financial products, taxes and profits characteristics, types, risks and costs of ETCs uses and markets of oil and natural gas parameters affecting oil and natural gas prices such as production, consumption, stocks, geopolitical factors, speculation, correlations portfolio management strategies examples of investing in oil and natural gas through ETCs Each topic is covered from a practical and operational point of view, going on to explicate significant numerical examples.

Leseprobe

Simone Malacrida

Investing in Oil and Natural Gas Through ETCs

BookRix GmbH & Co. KG81371 Munich

Table of Contents

Table of Contents

“Investing in Oil and Natural Gas Through ETCs”

INTRODUCTION

BASIC CONCEPTS

CHARACTERISTICS OF ETCs

PETROLIUM

NATURAL GAS

TREND AND PORTFOLIO MANAGEMENT

EXAMPLES OF INVESTMENTS WITH OIL AND NATURAL GAS ETCs

A HOLLYWOODIAN CASE

SOME USEFUL WEBSITES

“Investing in Oil and Natural Gas Through ETCs”

“Investing in Oil and Natural Gas Through ETCs”

SIMONE MALACRIDA

This book outlines the basic concepts of investing in oil and natural gas through financial derivative products called ETCs. In particular, the following topics are covered:

classification of financial products and general properties such as liquidity, availability, volatility, risk, derivative products, leverage

calculation of simple interest, compound interest and percentage mathematics

costs of financial products, taxes and profits

characteristics, types, risks and costs of ETCs

uses and markets of oil and natural gas

parameters affecting oil and natural gas prices such as production, consumption, stocks, geopolitical factors, speculation, correlations

portfolio management strategies

examples of investing in oil and natural gas through ETCs

Each topic is covered from a practical and operational point of view, going on to explicate significant numerical examples.

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Simone Malacrida (1977)

Engineer and writer, has worked on research, finance, energy policy and industrial plants.

ANALYTICAL INDEX

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INTRODUCTION

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I – BASIC CONCEPTS

Financial products

Definitions general i

Simple and compound interest

Percentage math

Costs, taxes and profits

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II – ETC CHARACTERISTICS

Introduction _ _

Typologies and quotations

Risks and costs

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III – OIL

What is ed u s i

Petroleum market _ _ _

Production, consumption and stock

Geopolitical factors _

COT and specula t i o n

Correlations _ _ _

Cruc i ali timetables

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IV – NATURAL GAS

What is it and where do you use it

Natural gas market

Production, consumption and stocks

Geopolitical factors

COT and speculation

Correlations _ _

Crucial times

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V – TRENDS AND PORTFOLIO MANAGEMENT

Performance of the underlying

Portfolio management _

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VI – EXAMPLES OFINVEST I MENTS WITH ETC ON OIL AND NATURAL GAS

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VII – A HOLLYWOODIAN CASE

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SOME USEFUL WEBSITES

INTRODUCTION

INTRODUCTION

In the panorama of financial products currently available to the general public, a particularly dynamic and certainly interesting sector is that of raw materials.

For an average investor with knowledge of both financial products and the mechanisms that influence the prices of commodities, this is a sector in which it is possible to diversify one's portfolio.

To date, it is also possible to invest not only in sector funds of companies related to commodities, but also in specific derivative products: ETCs.

Hence, a market reserved almost exclusively for professionals or those with enormous capital has opened up to (almost) everyone.

However, ETCs have peculiarities such that a careless investor can risk accumulating significant losses, even in a short time.

And this could happen not only to those who are new to financial investments, but also to those who are used to investing directly in other markets, such as the stock market for example, and have accumulated a lot of experience in their operations.

Thinking that you can replicate the same strategies and attitudes to ETCs that you can adopt by investing in bonds or shares is one of the best ways to squander your capital.

ETCs and commodities are, therefore, a market to know in depth before tackling an investment.

This book has the express purpose of introducing the investor to the world of ETCs and commodities, going to dissect, even with numerous numerical examples, the characteristics and peculiarities of these financial products.

In detail, the following topics will be analysed:

The basic concepts that every investor should possess such as financial mathematics, the costs of financial products, the different types of financial products and some general definitions.The characteristics, risks and costs of ETCs.The dynamics of prices and quotations of oil and natural gas, the main raw materials of the energy sector.Portfolio management strategies and examples of investing in oil and natural gas ETCs.

Therefore, this writing is characterized by being addressed not to professional investors, but to those who want to profitably undertake a way to benefit from the ETC market.

Precisely for this reason, space will be given in the first two chapters to a series of concepts which, too often, are taken for granted (except then having to change their mind in the face of the concrete experience of significant losses).

The setting of the contents and the way of addressing the topics will be very practical and concrete, leaving behind the formal rigor of an ex-cathedra treatment.

This derives both from the desire to allow the average investor to immediately put the concepts expressed into practice and from an operational vision learned "in the field".

This book was conceived after several years of first-hand experience investing in oil and natural gas ETCs (which itself was preceded by a decade of trading in equity, bond and fund markets).

This also explains why the book focuses not on all commodities, but only on oil and natural gas.

At the date of publication of this paper, the Author had direct experience with these two raw materials, not with the others (it is not said, however, that this situation will remain the same in the future).

Rather than writing concepts not supported by real experiences, we preferred to focus the discourse only on what was operationally "experienced".

However, some chapters in the book are much more general than investing in oil and natural gas through ETCs.

In particular, the first and fifth chapters can be applied to any form of investment, while the second chapter is valid for all ETCs.

Always to remain faithful to operations, the book is characterized by an analysis of the fundamentals of the raw materials in question (production, consumption, correlations, geopolitical factors, speculation) and not by an analysis of the graphs and their possible interpretations in as these were the methods used in the past by the writer.

Those who search the pages of the book for concepts of technical analysis or methods, more or less historical and innovative, to predict quotations based on past facts will be disappointed.

All of this is reflected in the belief that there are at least four conditions necessary to invest profitably in ETCs:

Know the basic mechanisms of financial instruments (costs, profits, quotations).Know the characteristics of ETCs.Know the raw material in question.Know the possible portfolio management strategies.

It should be noted that these conditions are considered necessary (according to the Author, without one or more of these conditions the profit of an operation is to be attributed more to chance than to knowledge and, as we know, chance is changeable and therefore it is rather unlikely to set up an operation that contemplates continuous earnings), but certainly not sufficient.

That is, it is not enough to know what has just been mentioned to be sure of a continuous profit.

This knowledge must necessarily be combined with an approach to operations suited to the personality and way of doing of each investor.

At that point, once the right balance has been found, an investor becomes aware of what he is doing and can equally bear both good gains and acceptable losses.

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BASIC CONCEPTS

BASIC CONCEPTS

This chapter will deal with various basic concepts of economics and finance useful and necessary to understand the functioning of any financial instrument.

These concepts should be an essential baggage for every investor; therefore, these arguments have much wider validity than what is quoted in the title of the book.

On the other hand, since this is not the purpose of the paper, we will not go into detail about every single notion.

As already mentioned in the introduction, rather than formal rigour, the definitions and thoughts expressed below are characterized by a concrete and operational approach.

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Financial products

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At the beginning, we try to classify the types of financial products on the market.

What follows is not an exhaustive list of all existing financial products (an entire book would not be enough just to mention the names of financial products!) but is an attempt to group them into logical macro-categories following operations more than economic theory- financial.

Liquid products market

This category includes all deposit accounts, repurchase agreements and, in general, the current accounts themselves.

Bond market

This market includes bonds issued by private entities or public institutions. So government bonds are also part of the bond market.

Stock market

The stock market includes all types of shares relating to companies listed on the various stock exchanges.

Currency market

In this category there are products that allow you to negotiate the exchange rates between the different world currencies.

Fund market

The funds market includes all investment, real estate and savings funds linked to particular sectors, indexes, geographical areas and compositions.

Commodity market

This market includes all the financial products through which it is possible to invest in commodities.

Market of options, certificates and rights

This category includes those financial products that allow options or rights to be exercised on other financial products (such as shares or reference indices).

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General definitions

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