BU$INE$$ ALERT!!

[DOC HARRIS]

In light of the current INTER-National Financial crisis, any businessman worth his salt (and this certainly includes Beef Cattle Breeders and Producers of ANY size) must give serious and PURPOSEFUL consideration to the current status of his/her Beef Cattle Breeding Herd! The unsettled condition of the "Stock Market" and the major 'slide' it has taken in the last few days has thrust a spear directly into the guts of every businessman - whatever his vocation, life's work, or occupation may be. That is a given condition. But the important factors to be recognized here are:

NUMBER 1- DO NOT PANIC! I can speak from experience, because in 70+ years of worrying about the "Bottom Line", and "What-Do-I-Do-Now!?" situations in businesses that I have been involved in, all the while trying to raise three boys and getting them educated and married off, I have had my heart in my throat many times! Deep breaths and stomach butterflies are very familiar to me and my dear wife! But keeping a firm grip on my impulses and THINKING logically seemed to drag us through every emergency.

NUMBER 2- TAKE A DEEP BREATH! The oxygen that you infuse into your blood stream will allow your brain to function optimally, and as a result, you can see the reasoning behind your actions and feel satisfied with the results.

The catalyst which prompted my writing this thread is the present and immediate situation in the Beef Cattle Community relating to "DISPERSAL SALES!" I don't believe that I have ever seen so many Dispersal sales involving Large, well-established, successful herds going partly or completely out of business - totally - in such a short period of time! There have been, and always will be, for one reason or another, breeders who will get into the business, perhaps as a tax dodge for a few years, and then disperse their herd. I don't consider them "Beef Breeders" per se. To me they are nothing but "Opportunists" - furthering their immediate interests, without regard for basic principles or eventual consequences. I call them Entrepreneurial Prostitutes - or sometimes similar meaning words that are shorter in length! I have dealt with several in my life, and it isn't a pleasant experience, particularly when it damages your own profession - and YOUR integrity!

But the Herds that I have been aware of this season don't fit that catagory. Some of them are long time, well established operations, which have worked diligently to improve their genetics and methods so as to improve their business and enhance their future. One seldom really KNOWS the underlying reasons for a Dispersal - Illness of the Owner, Retirement, Divorce, Partnership Dissolution, a change of direction of Genetics within the herd itself, there could be any number of justified reasons for a change of direction.

But the important element to consider at this time is the number of opportunities to capitalize on the circumstances, and acquire IMPROVED GENETICS AND PHENOTYPE for your herd that you wouldn't have the chance of getting in perhaps your entire lifetime, if it weren't for the cumulation of events which focuses on QUALITY, and being able to place the emphasis on IMPROVED BREEDING DECISIONS. the availability this season of High Quality seedstock, particularly proven Donors, is exceptional, and a thorough search of those Dispersals , of whichever Breed you may seeking, could prove to be one of the most advantageous moments of your BU$INE$$ life!

In that regard, I have taken the opportunity to ALERT you of the Feature article on the Front Page of CattleToday - today! I urge you to read it in its entirety, and give considerable thought to the improvement of your genetics - this sale season. Sell your low producers, missed breedings, older breeders, or wild-eyed heifers that you were considering keeping as replacements, and take that money, add some INVESTMENT money to it, and really set yourself up for the future!

"MANY PRODUCERS MAKING RESTOCKING PLANS"

Read this carefully, and give a lot of thought to your future operations!

DOC HARRIS

 

[grannysoo]

Thanks Doc! I agree that now is the time to improve the herd. Cull the weak and buy the strong at the weak prices. This is one of the best opportunities I have ever seen with cows.

 

[HerefordSire]

Doc....

I noticed the dispersal sale pattern also. It just didn't fit in. I started to wonder what was going on. What I realized is not related to any breed in particular....if a calf bring $1.15 per pound at local sale barns and the calf cost more to produce than $1.15 per pound, then it won't take long for these small ranchers to quit buying seed stock or anything else.

 

[DOC HARRIS]

Doc....

I noticed the dispersal sale pattern also. It just didn't fit in. I started to wonder what was going on. What I realized is not related to any breed in particular....if a calf bring $1.15 per pound at local sale barns and the calf cost more to produce than $1.15 per pound, then it won't take long for these small ranchers to quit buying seed stock or anything else.

HerefordSire-

After giving consideration to your assumptions, I think I see what you mean. But, on the other hand, IF the chicken tries to cross the INTERSTATE HIGHWAY at "Goin' Home time", she will probably get "feathered"! But by watching carefully, and picking the right moment in the middle of total Panic, she can SELECT her way through the maelstrom, and picking the right spots at the right time, she can be successful in turning a traffic nightmare into a cozy nest - where she can lay her 'Golden Eggs", and still have a nest egg for the future!

It takes some planning and preparation to be able to know where to lay those eggs in order for them to hatch and benefit her!

DOC HARRIS

 

[Frankie]

Doc....

I noticed the dispersal sale pattern also. It just didn't fit in. I started to wonder what was going on. What I realized is not related to any breed in particular....if a calf bring $1.15 per pound at local sale barns and the calf cost more to produce than $1.15 per pound, then it won't take long for these small ranchers to quit buying seed stock or anything else.

$1.15. :lol: :lol: Man, some people are really spoiled.

 

[HerefordSire]

Doc...

I agree with your philosopy in which I reply: bankers only loan money to people than don't need money. In effect, we are probably talking about the haves and have nots. Lets be agressive and take the top 20% and call them haves. These people can enter the markets and steal product once, and if, my financial derivative domino collapse hypothesis commences. In my experience, there is no need to enter a market on the long side unless the price is moving up. We will know when to enter the market. We can listen for the loud moans. Right now they are just little whimpers. We have to have patience. Why buy one donor now, when I can buy five donors for the same amount of money...soon?

 

[HerefordSire]

Doc....

I noticed the dispersal sale pattern also. It just didn't fit in. I started to wonder what was going on. What I realized is not related to any breed in particular....if a calf bring $1.15 per pound at local sale barns and the calf cost more to produce than $1.15 per pound, then it won't take long for these small ranchers to quit buying seed stock or anything else.

$1.15. :lol: :lol: Man, some people are really spoiled.

You can plug any number in there. The margin is what I was pointing out. It appears to be negative. The irratic climate patterns have ranchers not knowing what to expect. Many are confused. Also, increases in fertilizer and lime, herbicides, fuel, feed and seed, utilities, property taxes, etc. have eroded any small positive profit margin that could have been there in prior years.

 

[backhoeboogie]

NUMBER 1- DO NOT PANIC! I can speak from experience
DOC HARRIS

Doc, of all the things you have contributed to this board, that is best advice you have ever offered IMHO.

No one can make their best decisions while thinking in the reptilian brain mode. That is where most everyone's thinking goes in a panic. It is just a natural function of the brain to have us thinking "fight or flee" under pressure within the C quadrant of the brain. Important decisions need to be made while we are in the A quadrant.

 

[spinandslide]

thank you Doc. We are more immersed in the horse area of livestock, but do have the cattle too. I am taking your advice regarding to breathe.

I guess this is all just alittle overwelming..Im young, 26, and I dont remember "hard times" like many older folks do.

Thank you for posting this...

 

[HerefordSire]

Doc...

I agree with your philosopy in which I reply: bankers only loan money to people than don't need money. In effect, we are probably talking about the haves and have nots. Lets be agressive and take the top 20% and call them haves. These people can enter the markets and steal product once, and if, my financial derivative domino collapse hypothesis commences. In my experience, there is no need to enter a market on the long side unless the price is moving up. We will know when to enter the market. We can listen for the loud moans. Right now they are just little whimpers. We have to have patience. Why buy one donor now, when I can buy five donors for the same amount of money...soon?

Just by chance you think I am kidding about the potential consequences of derivatives falling like dominoes, read this entire well written article:

"As far as I am concerned, there is definitely a bubble in the financial markets, but it is not in commodities. Remember, investment bubbles or manias always end with excess capacity, over-supply, falling demand and euphoric investor sentiment. Well, I do not see any of these signs in the world of natural resources. On the other hand, I can observe a massive bubble in 'Over the Counter' or unregulated derivatives. Shockingly, the notional value of this market grew by a whopping 44% last year and it now stands at roughly US$600 trillion. To put this number into perspective, let me just say that it is roughly ten times the size of the global economy!"

http://www.financialsense.com/editorial ... /0926.html


Are you scared yet?

 

[TexasBred]

thank you Doc. We are more immersed in the horse area of livestock, but do have the cattle too. I am taking your advice regarding to breathe.

I guess this is all just alittle overwelming..Im young, 26, and I dont remember "hard times" like many older folks do.

Thank you for posting this...

Sarah...folks with horses are ALWAYS immersed. :lol2: :lol2: Now I'm running before I get swatted. :help:

 

[HerefordSire]

A picture is better than words?
http://www.financialsense.com/fsu/edito ... /0917.html

 

[DOC HARRIS]

Doc...

I agree with your philosopy in which I reply: bankers only loan money to people than don't need money. In effect, we are probably talking about the haves and have nots. Lets be agressive and take the top 20% and call them haves. These people can enter the markets and steal product once, and if, my financial derivative domino collapse hypothesis commences. In my experience, there is no need to enter a market on the long side unless the price is moving up. We will know when to enter the market. We can listen for the loud moans. Right now they are just little whimpers. We have to have patience. Why buy one donor now, when I can buy five donors for the same amount of money...soon?

HS-

In my opinion, your premise is flawed. I am alluding to a logical rationale. You are playing Russian Roulette, which is what gets people into trouble in the first place! "WAIT" is what broke the camel's back. At THIS moment in time, my prospectus relates to "One In The Hand" and NOT "Two in the Bush". We don't know what will be in the future, or how far away the "future" may be. This is "REAL TIME". Your "...soon?" is ethereal. The Donor's are here - - NOW! The iron is HOT - - NOW!

I would not want to find myself saying, "If I had known THEN what I know NOW - - Well - - things would be different - - NOW!" I'll take the "Bird in the hand" now, and acquire one or two or so Donors. They may be able to provide me with a herd of improved Genetics, with which I may make my own donors!

To me, your "wait and see" attitude smacks of Neville Chamberlain's "Peace In Our Time" cop-out blather when he signed the Munich Pact with Germany. Adolph Hitler disproved THAT philosophy!

DOC HARRIS

 

[RD-Sam]

I'll bet those donor cows would be some mighty tasty eatin too! :lol2: I wouldn't go gettin too leveraged, that is what started this whole thing to begin with. :cowboy:

 

[alexfarms]

Doc...

I agree with your philosopy in which I reply: bankers only loan money to people than don't need money. In effect, we are probably talking about the haves and have nots. Lets be agressive and take the top 20% and call them haves. These people can enter the markets and steal product once, and if, my financial derivative domino collapse hypothesis commences. In my experience, there is no need to enter a market on the long side unless the price is moving up. We will know when to enter the market. We can listen for the loud moans. Right now they are just little whimpers. We have to have patience. Why buy one donor now, when I can buy five donors for the same amount of money...soon?

HS-

In my opinion, your premise is flawed. I am alluding to a logical rationale. You are playing Russian Roulette, which is what gets people into trouble in the first place! "WAIT" is what broke the camel's back. At THIS moment in time, my prospectus relates to "One In The Hand" and NOT "Two in the Bush". We don't know what will be in the future, or how far away the "future" may be. This is "REAL TIME". Your "...soon?" is ethereal. The Donor's are here - - NOW! The iron is HOT - - NOW!

I would not want to find myself saying, "If I had known THEN what I know NOW - - Well - - things would be different - - NOW!" I'll take the "Bird in the hand" now, and acquire one or two or so Donors. They may be able to provide me with a herd of improved Genetics, with which I may make my own donors!

To me, your "wait and see" attitude smacks of Neville Chamberlain's "Peace In Our Time" cop-out blather when he signed the Munich Pact with Germany. Adolph Hitler disproved THAT philosophy!

DOC HARRIS

Doc,
For what it is worth, in my experience waiting has almost always been a mistake. It depends on the individual's situation. Now can be a good time to gamble if you don't have much to lose. I had a farmer neighbor who waited very patiently for years and then bought up alot of ground in the '80's after the price dropped about 75% from the highs. That may be the only person I have ever known who pulled that off on that scale. I think todays market is tough to buy into in my situation, so for now I will wait.

 

[alexfarms]

A picture is better than words?
http://www.financialsense.com/fsu/edito ... /0917.html

How will all these foney "assets" ever be dealt with? How can our economy ever absorb that much debt? I just can't imagine. I knew too much money was being borrowed by alot of people who had very little equity, but those numbers are just unbelievable.

 

[angus9259]

I agree DOC and hope you're (we're) right because I've been buying.

That said, this would probably be the first time I was right about something like this. Normally I'm in the buy HIGH sell LOW club.

 

[rocket2222]

The catalyst which prompted my writing this thread is the present and immediate situation in the Beef Cattle Community relating to "DISPERSAL SALES!" I don't believe that I have ever seen so many Dispersal sales involving Large, well-established, successful herds going partly or completely out of business - totally - in such a short period of time! There have been, and always will be, for one reason or another, breeders who will get into the business, perhaps as a tax dodge for a few years, and then disperse their herd. I don't consider them "Beef Breeders" per se. To me they are nothing but "Opportunists" - furthering their immediate interests, without regard for basic principles or eventual consequences. I call them Entrepreneurial Prostitutes - or sometimes similar meaning words that are shorter in length! I have dealt with several in my life, and it isn't a pleasant experience, particularly when it damages your own profession - and YOUR integrity!

But the Herds that I have been aware of this season don't fit that catagory. Some of them are long time, well established operations, which have worked diligently to improve their genetics and methods so as to improve their business and enhance their future. One seldom really KNOWS the underlying reasons for a Dispersal - Illness of the Owner, Retirement, Divorce, Partnership Dissolution, a change of direction of Genetics within the herd itself, there could be any number of justified reasons for a change of direction.

But the important element to consider at this time is the number of opportunities to capitalize on the circumstances, and acquire IMPROVED GENETICS AND PHENOTYPE for your herd that you wouldn't have the chance of getting in perhaps your entire lifetime, if it weren't for the cumulation of events which focuses on QUALITY, and being able to place the emphasis on IMPROVED BREEDING DECISIONS. the availability this season of High Quality seedstock, particularly proven Donors, is exceptional, and a thorough search of those Dispersals , of whichever Breed you may seeking, could prove to be one of the most advantageous moments of your BU$INE$$ life!

!

DOC HARRIS

I'm not sure I see what you all are seeing, after seeing a few more sales, looks like to me the good ones are still bringing good money, the lower end stuff selling for less than they would normally do, and that's the way it should be, the ones that should have been culled out are selling at cull prices.

 

[SRBeef]

I appreciate the thought and time in the post.

One thing I see is that for many of these "dispersal sales" folks have just figured ouut there is currently no money to be made in the traditional cattle business. Prices are not far from where they were years and years ago.

In many cases with changes in corn growing for example, folks have figured out that they can produce much more profit growing crops than beef. I don't think these sales are the result of panic as much as economics. Plans for many of these sales long predate the current situation on Wall St. jmho.

Thanks for the interesting discussion.

 

[HerefordSire]

HS-

In my opinion, your premise is flawed. I am alluding to a logical rationale. You are playing Russian Roulette, which is what gets people into trouble in the first place! "WAIT" is what broke the camel's back. At THIS moment in time, my prospectus relates to "One In The Hand" and NOT "Two in the Bush". We don't know what will be in the future, or how far away the "future" may be. This is "REAL TIME". Your "...soon?" is ethereal. The Donor's are here - - NOW! The iron is HOT - - NOW!

I would not want to find myself saying, "If I had known THEN what I know NOW - - Well - - things would be different - - NOW!" I'll take the "Bird in the hand" now, and acquire one or two or so Donors. They may be able to provide me with a herd of improved Genetics, with which I may make my own donors!

To me, your "wait and see" attitude smacks of Neville Chamberlain's "Peace In Our Time" cop-out blather when he signed the Munich Pact with Germany. Adolph Hitler disproved THAT philosophy!

DOC HARRIS


Doc..

In my financial experience, it is much less risky to buy in a market increasing than decreasing. It is very diffcult to catch a falling knife no matter what price we think is good. I am a pretty good bottom picker and it takes much more skill to excel in this area. Most readers on this board are probably not. They may not know human psychology as well. Timing takes years of experience to master. In other words, it is usually better to pay a higher price in an increasing market than it is to pay a lower price in a decreasing market. It is perfectly normal to not be able to control oneself when market prices are historically very attractive. I prefer the use of Japanese candlesticks, parabolic curves, and moving average price intersects as nasty tools to anticipate herded market psychology. Some may prefer the use of listening to the decible levels of peer moaning. Whatever technique is employed, be prepared for unprecendented credit levels never before seen in our country controlled by leveraged derivative instruments. The only way out of this trick bag is to save more than we borrow. We want that stuff now. Forget being patient and waiting. However, we as a country will do the opposite. We will print more money than ever before in the history of the US by selling our full faith and credit notes. We will put our name on documents entitling other countries to grab our assets should bankruptcy of our nation ever occur. This additional M3 money supply will dilute all existing dollars which is the only way we can afford to pay the massive debts issued in prior time. Derivatives can be complex instruments to understand. Our own government doesn't even know the actual exposure or these instruments of leverage. Usually, they are tied to each other and it is sometimes difficult to distiguish actual value and risk at specific momentum times. This is why individuals are able to all of the sudden disclose billions of dollars in losses unknown by their financial employers. They don't understand them. I bet you Hank Paulson understands them. He is way off base though. He is asking for $700B. He needs much more than that, but he is no ex-Goldman CEO dummy. He know he has to get a small amount first, then ask for greater sums later.