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JimMeade
Veteran Advisor

Can You Handle The Truth?

There is a Wall Street Journal article that says that the efficient market theory is based on the idea that all the information is considered and priced into the market.  What if some information is ignored?  The article suggests that some people can't handle the truth so they ignore it or disregard it.  

 

For example, they check prices less when prices are down.  They are less likely to sell at a loss, because that makes realizing the loss unavoidable.

 

Does this behavioral science stuff have any place in farm marketing?

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34 Replies
sw363535
Honored Advisor

Re: Can You Handle The Truth?

Yes. It provides entertainment when market patience is required.
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BA Deere
Honored Advisor

Re: Can You Handle The Truth?

Talk about "handling the truth", Tomm Ptizenmaier was on M to M and he was so animatedly bearish, we pert near thought he had a few drinks before the show  Smiley Happy   He just went on the laundry list of why corn beans and wheat rallies will be extremely limited. You just gotta watch him, I`m not saying I disagree, but at least he`s a bear with a comical delivery.

 

http://site.iptv.org/mtom

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JimMeade
Veteran Advisor

Re: Can You Handle The Truth?

I saw Tomm and agree with you 100% he is a true believer.  He did get animated.  Smiley Happy

 

I agree with him 100% in the longer run, that is, into harvest.

 

My question is will we get a rally this summer to sell in to?  Unlike last year, this year I have some sell orders on the book if we do get a rally.  (I sold in the rally last year but not nearly as much - too much deer in the headlights for me, I'm ashamed to say.)   On the other hand, what is there to create a rally this summer?  Weather?  OK, maybe.  Trade, possibly.  Or some Black Swan event.  But while we should always be ready to handle a black swan event, we can't make a living counting on one (or they wouldn't be black swan).

 

Maybe we'll get Sue Martin on next week for the whipsaw effect.  Smiley Happy

 

 

 

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Slim123
Senior Contributor

Re: Can You Handle The Truth?

Watching this Tom guy is like  losing twenty minutes of my life that I will not get back. 

WCMO
Senior Advisor

Re: Can You Handle The Truth?

Efficient market theory likely also assumes that all the information is available, that everyone has the same information, and that there are no delays in translating that information into prices.  

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sw363535
Honored Advisor

Re: Can You Handle The Truth?

Jim doesn't Tomm need to be a "doom & gloom /the end is near" guy to take those positions?
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elcheapo
Veteran Advisor

Re: Can You Handle The Truth?

Perhaps, we need to ask the question......do you know the truth ?

folks, anymore I don't believe anything people say.....either they don't know, they are just talking to be talking, or what they are saying

is for self profit.

it amazes me, how we keep finding "more" of a commodity....the crop might have been cut 6 to 9 months, but that much time later

we find even more !!

a few months back, we were told, by the elevators, they could not get rid of the grain, piles of everything.......a couple of days

ago I had to do some traveling.......the piles are gone......where did they go ?       and......the basis has went back down again !!!

it's amazing, the "trade" has not a clue, they are just going by what someone is saying, who have been demonstrated time and

time again to be wrong.

we talk of big crops in countries far away......that knocks the price down.....but they never consider, you must add the cost

of shipping to get that grain here, and that can be quite costly......so how can they say that will make an inpact on our

prices......

since it is raining......or snowing......don't think a lot of work getting done this weekending in agland.......someone figure out

what a bu of corn would cost to be delivered to a feedlot in iowa or sw ks, from south America....remember, you have to pay

for the boat, and the semi from the point....plus the cost of the grain at the port.........

 

then compare that to what is paid........can you really compare them afterwords ?

 

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sw363535
Honored Advisor

Re: Can You Handle The Truth?

Maybe it is  "The presentation makes it sound like truth"  ... hopefully

 

 

Cheapo,,,,,,,,, I been harping that point for years .............. truth might be "the marketing crowd does not want to know the truth"......

 

Usda certainly does not...... Prognastigation allows for constant changing and adjusting, second guessing, and repronouncing of "the truth".

 

declaring the truth in an interview or a monthly "report" is just easy and most importantly you can't be wrong.  and loose your job.  Playing with, prononncing, reporting as we know it is sooooooo deniable and those variables are soooooo helpful in skirting accountability.

 

And consultants make more than inventory clerks.

-----------------------------------------------------------------------------------------------------------------

 

We have the technology and the ability to know the size of every harvest within hours of its finish.......... and have had for many years.....  but the "truth" and the use of that technology would cost jobs.    

Actual knowledge of crop size would not change the way markets are "supposed" to work.  The true variables are how willing is the seller and how much demand is there.   So we are forced to stay with this diversion of  guessing what the "creative truth" production might be  so it can be used as a tool to motivate our sales  As if there wasn't enough motivation to sell already ......Smiley Happy

 

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elcheapo
Veteran Advisor

Re: Can You Handle The Truth?

chew on this for a while................

the trade and board is telling us, too much grain in the world, the price MUST come down......ok.........

here is the REAL cost of that south America grain...........

 

In this example, we'll bring in corn from south America to one of the largest feedlots in  Kansas

 

from Satanta Kansas to Houston, Tx port..........721 miles

 

721 x 3.65 per mile= $2631.65   with 850 bu on board equals  $3.09 per bu

shipping (only rate I could get was on a container)

$455 for a container......which would hold 2048 bu....so 23 cents (cheaper than what I had thought)

cost for loading and loading, nickel a bu, minium

 

cost of grain at port in south America.....$156 us per metric ton....2200# to metric ton.....equals $3.92 per 56# bu of corn

 

ok kids....$3.92+.10+.23+3.09= $7.34 a bu

 

local bid for old crop at Satanta is 3.29....new crop is 3.60

 

ok.....the question is.....does it really matter that there is a big crop in south America ?  the answer is NO

 

the cost of shipping makes the crop size in south America mute.

 

lets hear your explaination as to why i'm wrong.........

 

as in the the movie........"you want the truth........you can't handle the truth".....with the data above, I rest my case

 

we should see grain prices at least....least 50% higher than where we are

 

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