Nobody knows anything
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Trying to figure out the markets is as hard as predicting whether a movie will be a blockbuster or a bomb. So this quote from famous Hollywood screenwriter William Goldman is apropos. Despite two Oscars and a slew of other awards and movie credits, Goldman wrote, “Every time out it’s a guess, and if you’re lucky, an educated one.”
Farmers aren't stupid
Our surveys consistently rank marketing as the hardest task most growers face. But if farmers were really bad at it, most of you would be out of business. Clearly, you’re not.
You can learn this
Marketing sometimes seems like a dark art known only to members of a secret magical fraternity. You can learn this. After all, my previous job was writing children’s books. That’s actually true. My credits before joining Farm Futures in 1987 included a series about He-Man and She-Ra. I was lucky to have a couple of good teachers. While you may not sit across the aisle from two guys with master’s degrees, farmers have plenty of other resources — from commodity groups and Extension classes to online courses. And, to paraphrase He-Man, “You have the power!
I’m not an economist (and I don’t play one on TV)
I did take Econ 101, but only after years of writing about unemployment and inflation as a newspaper reporter in the mid-1970s. I’m still not an economist. My graduate training is in mass communications. But I learned statistics along the way. Numbers are numbers, whether you’re talking stocks-to-use ratios for corn or reader preferences for story topics.
Correlation doesn't mean causation
Two sets of numbers may have a correlation. But as a professor pounded into us, correlation does not equal causation. Just because the numbers look related doesn’t ensure one variable is actually influencing the other.
Correlation doesn't mean causation 2
“If corn prices rise between Sept. 1 and the election, history says Trump should win,” I wrote in August. Corn went up, and Trump won, keeping the string intact. But corn prices didn’t determine the election. At least the connection between corn and elections is statistically significant.
The market is always right (even when it’s wrong)
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On any given day the price of a commodity is what the market says it is. Most days that price may be too high or too low compared to fundamentals of supply and demand, maybe by a lot. But blaming the market won’t do any good.
You can be wrong for all the right reasons
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For the last two years, my price forecasts were fairly accurate, even if the logic turned out to be wrong.
There is no silver bullet
Traders have a pack mentality. The herd moves together, just like everyone loved the emperor’s new clothes. But when these patterns fail, they fail just as fast as a naked king.
You can’t keep these speculators out of the market, anymore that you can keep money out of politics. But watching what the fast money is doing can help you spot opportunities.
Past performance is no guarantee of future success
Just as no trading system seems to work for long, there’s no evidence anyone can truly beat the market. Many will claim success, even though the fine print accompanying their pronouncements always carries a disclaimer. Nassim Nicholas Taleb, who coined the term “black swan,” is a mathematician, trader and author of the book “Fooled by Randomness.” Taleb believes much of what we call skill is really just luck, the result of random chance.
Have a Plan B — and C
Having a written marketing plan is a hallmark of successful farmers. But even many of these producers don’t have a backup plan in case their initial road map hits a detour. It’s crucial to expect the unexpected, and to prepare for it. What will you do if your price targets aren’t hit? Do you have triggers for drawing a line in the sand to force sales if the market falters? What if your crops are hit by drought?
Options aren’t for everybody
Options are one way to give your marketing plan flexibility. But they’re still frustrating for many farmers 30 years after the contracts began trading again. One of my first big projects at Farm Futures was a special issue devoted to options. We were enthusiastic, but cautious. Our editor, Claudia Waterloo, passed on the opinion of her father, who traded stock options at the time. He was skeptical about whether farmers would use them effectively. My research didn’t disprove that view.
USDA isn’t the enemy
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What other agency — or company, for that matter — invites the users of its products to a meeting every year to find out what they’re doing right, and wrong? Yet USDA’s statistical arms do just that every fall, and the complaints have been growing fewer and fewer as a result.
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