June 1998
Prairie Ramblings
By Tracy Sayler
Library
Back
Prairie Grains is the
official publication of
the Minnesota
Association of
Wheat Growers,
North Dakota Grain
Growers Association,
South Dakota Wheat,
Inc., and the
Minnesota Barley
Growers Association.
What's the quickest way to lose $10,000, aside from a weekend trip to the casino or contributing to the Clinton Legal Defense Fund? The Beardstown Ladies would likely agree that it's playing the futures market, especially if the sum of your trading knowledge is based on the Eddy Murphy-Dan Aykroyd movie, "Trading Places."
A recent e-mail we received (via the web: www.smallgrains.org) from a Floridian looking for marketing advice brings this topic to light. In the e-mail he writes: "To whom it may concern: I am new in commodity markets. I could say that I don't know anything about it. Somebody suggested to me that "December Wheat" would be a good investment. What do you think of December Wheat? What would be the potential of net profit if I invest $10,000? In what time period?"
Yikes.
To avoid a case of the blind leading the blind, since I am no market guru, I responded to the fellow from Florida, explaining that commodity markets can be a risky investment, even for experienced traders. That he consider investing in mutual funds or stocks instead, and if he was still interested in commodity markets, that he use an experienced grain trader with a respected marketing firm.
Not bad, right? But this advice did break the first law for commodity traders, according to a list of market maxims compiled by Roy Smith, who farms near Plattsmouth, Neb: It is morally wrong to allow a sucker to keep his money.
Roy is a corn and soybeans marketing expert, and publishes the "Farmer to Farmer Seasonal Strategies Newsletter" ($20 for 12 issues a year: ph. 402-298-8570, email: roysmith@navix.net. His newsletter on the web: http://www.amag.com/html/mforum/smithapr.htm) Some of his Murphy's laws for commodity traders are tongue-in-cheek, and others might only be understood by veteran marketing wonks, but you'll agree that many of them seem like gospel truths of the trading pit.
For every expert who says prices are going up, there is one who says they are going down.
Everyone has a trading strategy that won't work.
If you can drink it, don't trade it.
The market is not logical; it is psychological.
The successful speculator is one who dies before his time comes.
If you drop a dead cat far enough, it will bounce.
The market goes your way the day after your stop was hit.
The big move begins the day after your option expires.
He who sells uncovered options goes broke.
If you feel like doubling up a profitable position, slam your dialing finger in the drawer until the feeling goes away.
The perfect strategy works every time until you start using it.
If your strategy seems to be working well, you haven't been using it long enough.
The guy who owns the horse when it dies is the loser.
When it comes to luck or skill, you can't beat luck.
Pigs won't eat $5 corn or $500 meal.
When the plate of cookies goes around the table, don't forget to take a couple.
When the market is wrong, it doesn't pay to be right.
He who sells what isn't his'n, pays the price or goes to prison.
Be right; sit tight.
The best way to make a small fortune is to start with a large one.
He who knows doesn't tell, he who tells doesn't know.
When you're hot, when you're not, take a vacation.
The market knows more than the sum total of everyone in it.
What everyone knows ain't worth knowing.
The market will do whatever is necessary to fool the majority.
Fundamentals are seldom what they appear to be.
If you always do what you've always done, you'll always get what you've always got.
The first five letters of "broker" spell "broke."
The market punishes those who make mistakes. n