I think the market is heading south for the summer, and I want to take advantage of it. We are already about two-thirds in cash in the main portfolio and about half cash in the income portfolio. These recommendations are based on my belief that it will be hard to make money in the market for the next few years, and taking some risks may be expedient.

Our new long position is in natural gas. It may be a bit early, but I plan to accumulate a position over the next few months. Natural gas is at lows it hasn’t seen in many years. Spot natural gas at Henry Hub was going for $3.56/mcf [last week]. The historical average price for the last five years is around $7, and it was $13 as recently as July.

At its current price, it’s selling at less than its average finding cost; so producers are shutting in capacity. That will eventually cause a rebound in prices. I expect them to make a nice move by December and be back in the $7 range within three years. We’ll use the United States Natural Gas Fund ETF (NYSE: UNG). It seeks to duplicate one for one the performance of natural gas prices in America by buying futures contracts.

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UNG