Fair Weather Flying

Pilots and market advisors have a lot in common in today's skies

If you fly commercially a lot, or even occasionally, you want to rest assured that your pilot knows what he's doing – that he's been trained and equipped to keep the plane in the air and land it safely in any situation and condition. The same goes for finding a trusted advisor for your farm.

It's easy to look like a great pilot when there are excellent weather conditions and a jet that has all the latest technology and safety devices. But if the plane suddenly loses an engine during take-off, you'd better hope your pilot already has an action plan in place. You'd certainly expect that he isn't rifling through the plane's manual, searching for the section on engine failure, while the plane spirals down.

Hopefully, he's already gone through flight simulator training on what to do in such a situation, so that he's ready to take immediate action. Pilots must complete systematic checklists before take-off. Likewise, a good advisor has been through rigorous training and can apply it immediately, even in the midst of a tense situation. For example, someone advising you on the markets should be checking off and considering all of the factors that impact the markets - fundamentals (weather, world politics and crop conditions), technical signals and outside markets. 

Great growing conditions and a steady market are like clear skies for a pilot. Volatility is the storm for a market advisor. That's when he needs to keep calm and make wise decisions under stress. This is something to consider when selecting an advisor and evaluating that advisor's effectiveness. When it gets stormy, are you still getting regular phone calls? Is he hiding out in the cockpit, or connecting with you regularly to explain what's going on and calming your fears? As an airline passenger, a sharp drop in altitude can feel pretty threatening. As a farmer, a sharp drop in prices feels the same way. An experienced calm pilot can talk you through what just happened and ease your fears. An experienced calm market advisor can do the same thing for you in market turbulence. This prevents you from grabbing a parachute and jumping out of a market position that could be just fine and on strategy. 

I think we're probably not going to see a lot of turbulence-free flying in the markets for a while. The thing that's different about this environment is that the farmers who are holding the competitive advantage are the ones who are not afraid to board – to fly – to hedge and manage risk with the tools available. You just have to feel comfortable with your pilot.  

Hide comments

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Publish