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Advisor

Re: Cold War part deux

shaggy, i'm gonna pick just one thing out of your reply. the statement "equipment as an investment" is intriguing. When it comes to investments, I've always thought of farm equipment as a means to an end or just a necessary evil. the results from the use of the farm equipment are the my intended investment. (ok, a few things have gone up in value, new semi trailers and 8000 Jd tractors).  I'm just nitpicking tho. this discussion is very interesting.

 

You're recent re-entry in the cattle business is a good diversification.

 

time's statement about their cash management strategy existing for at least 4 generations also caught my eye. My family was trying to get out of germany 4 generations ago. Life can be a matter of timing. My father had a promising farming career interupted by some people in europe (in the  mid 40's and later  korea). that changed cash mangement for sure.

Honored Advisor

Re: Cold War part deux

Shaggy the equipment is a yes and no issue.  Depending on it's increased income generating value.

 

We measure value wrong IMO.  We have allowed our assets to be measured by dollars that are manipulated into greater or lesser value compared to everything else.

An assets value --again my opinion---- has to be measured against its ability to generate income above its cost.  And as Time points out saving cash is not a good investment.  The Fed is seeing to that.  And we have reached a point where land is worthless as well.  it's income producing ability is not great enough to pay for the investment.  And we are all wondering what it is really worth.

 

We are seeing the worst case senario.  Dollar devaluation so assets cost more along with commodity devaluation so productivity is decreased----------- The farm economy, through the work of Crop projections,  in 2014 applied the air brakes and our collective faces are against the windshield.  We are in that position and for another month we have nearly empty bins .

 

Your cow is probably the only good investment in agriculture right now and by the time you buy her dinner, her profitable years are 4 years away.

 Times point of cash savings is right ---- government manipulation will keep dollar savings a bad investment.  

 

 

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Senior Advisor

Re: Cold War part deux

So in a nutshell, we've got rough waters ahead. I'm only facing these waters while maning a skiff, but at least my skiff isn't worn and tattered. Maybe I should invest in a trailer as well so I have 1 final option, a quick getaway. LOL

FWIW, just like yourself, everyone locally told me I wouldn't turn a profit on my cattle operation until year #4. I like to work against the odds, so I've got a goal to achieve profitability by year #3, but I might need to increase my numbers to do so. Considering putting a few stockers back in the pin so I can use all my facilities not just the cow/calf ones.
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Advisor

Re: Cold War part deux

Time, you basically agreed with me but couldn't bring yourself to admit it.

 

I'd suggest that after harvest you might want to go on retreat and do some serious meditation of the virtue of humility.

 

 

 

 

 

 

 

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Veteran Advisor

Re: Cold War part deux

Nox, you linked to Krugman, whose basic premise is that government spending isn't leading to asset inflation, or if it is, as in the case of housing that he infamously made years ago before the bubble and crash, its a good thing. So forgive us if we perceive Krugman to be a blithering fool.

 

Silver was a little less than $5 per ounce in 2003...Gold $250 or so. Silver is now at $17, after trading up to five times the 2003 price. Gold has followed a similar trajectory. Land prices...do the math. Housing...up, crash...going up again. Somehow I personally do not believe that this serves the business community very well, or society in general. Uncertainly is the enemy of good planning.

 

If the point you wish to make is that smart people don't trust fiat money, and that they put their assets in hard places, such as land, well, I think you can pretty easily say that without being obtuse about it, and that you would certainly not want to link to Krugman or one of his acolytes.

 

For fun, just ask Bruce to take a Krugman column and explain it in his own words. That would be rich.

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Honored Advisor

Re: Cold War part deux

Uncertainly is the enemy of good planning.

 

Uncertainty is the absence of good planning. 

 

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Esteemed Advisor

Re: Cold War part deux

Knox...not sure why the lash out at me. I agreed with Palouse even though we have far different views of the world.

I said nothing against your points, just that the purdue prof studied the average, and average is never profitable in a commodity business and thus his outcome was predictable and yet meaningless.

 

Krugman is a verifiable idiot. just review his comments about the internet in 1998...monetizing debt is ok...although it has never worked in the history of the world in any civilization....

 

Quite a combo....a thread where Krugman is presented is rational...and I am criticized for a lack of humility and told to go on a retreat...

 

Well, have a great day, off to shell some of the pathetic no-till corn that never yields...was that humble enough for you? 

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Veteran Contributor

Re: Cold War part deux

Shaggy, are you talking about adding a few purchased stockers to try to achieve quicker profitability? Just curious if you would try to hedge them to take some of the price risk out of the equation. I haven't run any numbers on buying calves this fall but they just feel too expensive to make anything on especially if there is a price correction ahead.
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Senior Advisor

Re: Cold War part deux

That is exactly what I'm considering nutlug.  Prices are high and I'm sure we'll have a price dip and that is when I'll attempt a purchase.  I just don't see the future in producing and selling $3 corn and <$3 milo when the cattle business is booming at the momment.

 

I'm a little late, I should have been ready to roll with the cow/calf operation back when grain was twice as high but that is spilt milk now.  Not looking at fattening huge numbers, probably less than 50 but my gut tells me that is where I need to be right now.  Might even consider grazing off some wheat acres next spring, but our insurance price for wheat this fall was just high enough that my APH should still guarentee a profit even if I have a claim.  Lots of questions yet to be answered, but I feel the cattle market is the place to be especially since I've already got all the facilities and supporting equipment.

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