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| Big Dog. Your comment triggered a memory. Maybe, sort of along your line of thinking. 37 years ago, this fellow came in to see me having been referred by another client. He was a large livestock operator. Owned a bunch of good land, leveraged but not dangerously. He wanted me to watch for an opportunity to buy corn. Several months passed & think it was September the CCC announced a big “out of condition” sale and sent the trade into a short panic & I called this fellow & told him I’d buy corn immediately. He agreed..I think the price was (futures) $1.12 ¾…bought the limit. It was a nice trade for him & about a year later he came in again & we spent two days together as he wanted to work up a plan of action in regard to cattle, feeders, hogs & corn. No hedging. Only wanted to be a buyer of hogs, cattle, feeders or corn whenever the prices were below his replacement costs. He wanted to feed more hogs, but felt his management was limited and feared disease …in other words, he wanted to use futures to create a synthetic farming enterprise but only when prices were cheap enough to justify. We formalized this idea & followed it for several years.. he must have shopped a dozen or more banks before he found the right mix..intelligent banker & borrowing capacity. He and I became very good friends over the years, sometimes attending industry meetings together..this fellow had an 8th grade education but was so knowledgeable about livestock, price history and some of very unique small risk variables few people think about, he would “blow away” some of these experts at meetings –he was a lone wolf type operator—never would consider hedging…no one in his home area knew of his synthetic farm operations ….was always a bull ..as he had to be bullish..but had the discipline to stay away from the futures when the time was wrong..he passed away at a much too young age..but the last time we sat down he’d worked his farming equity up to almost $35 million…he’d started with zero at 18 years of age. If prices were what I considered pretty high…and if together…I’d casually mention hedging…he’d smile..”don’t even bring it up..you know better.” was always his answer. | |
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!973 joke that I remember& one true story
