Cattle vs. Stock Market

[Muletrack]

Back in my U-Mary days I asked a priest (my philosophy professor) if he owned any stocks. He said his dad always told him, "Son, you can buy all the stock you want, as long at it has four legs." That's my awkward segue into this link, Cattle v. the Dow-Jones: https://www.farmprogress.com/marketing/cattle-versus-dow-jones

 

[Brute 23]

That's so ridiculous it's painful to read. Please don't do that.

 

[sstterry]

I am not so sure I buy into what Doug Ferguson says. He writes a lot of stuff in a lot of different places. Sometimes what he says contradicts what he has said in other places.

 

[Beefeater]

I certainly won't argue with the added life values of learning work ethics, compassion and other values from cattle. However, this is apples to oranges comparison without adding ALL of the related expenses.

 

[KAstocker]

I think it depends. If the only money you ever made in cattle was 2013-2015, you should stick to the stock market for education saving. That will guarantee you a 7% return on average if you do mutual funds. If you know how to invest, your returns can be much better.

There are some people who actually make money in cattle though. Listen to Pete Bonds. He says he's making well over 20% returns on stockers. I think teaching a kid how to run a business could be very valuable. The problem is most cattlemen aren't businessman, so all they are doing is basically getting a second job. And being a herdsman just isn't a high paying job.

 

[KAstocker]

Although someone could just do the 529 plan and still let their kid have their little side livestock business to teach them life lessons. I assume there are tax benefits to the 529 plan.

 

[Stocker Steve]

Like Doug Ferguson, but he does ramble. Like Charles Schwab even more.

A major issue for cow calf is increasing input costs the past 20 years. I think a lot of this is due to outside money and government policy.

I think the long term question is how much do you invest in stock market vs. ranching vs. fixed income?

 

[Dave]

Over the years (a lot of them) I have made more money with cattle than I ever did on the stock market. And I have never lost as much money or as quickly with cows has I have a couple times with the stock market. I really think the same principals apply. Pick the right ones to buy and the right time to sell, you make money. Pick the wrong ones or hold too long and you lose your shirt.

 

[Stocker Steve]

There are some people who actually make money in cattle though. Listen to Pete Bonds. He says he's making well over 20% returns on stockers. I think teaching a kid how to run a business could be very valuable. The problem is most cattlemen aren't businessman, so all they are doing is basically getting a second job.

Is he doing something unusual other than having a lot of leverage?

 

[KAstocker]

Is he doing something unusual other than having a lot of leverage?

I don't know, but I'm sure he is mostly leveraged on his stockers. I don't know why someone wouldn't use leverage in today's economy on short term assets like stockers. That is, if you are looking at maximizing returns.

He focuses on ROI like a businessman, rather than production yield, like most cattlemen.

 

[Lee VanRoss]

I would submit in order to make a go of it like Doug one would have to become acquainted with . the sale barn circuit.
A bovine horse trader as it were. Not to negrate the methodology as it is still the cattle business. It would seem
to me a lot easier to 'run cattle' with a cell phone than to move the same fence and cows every day and depending
on an unknown market. I think KA stocker summed it up pretty well.

 

[Brute 23]

His article is so one sided it cant even be taken seriously.

 

[Stocker Steve]

Over the years (a lot of them) I have made more money with cattle than I ever did on the stock market. And I have never lost as much money or as quickly with cows has I have a couple times with the stock market. I really think the same principals apply. Pick the right ones to buy and the right time to sell, you make money. Pick the wrong ones or hold too long and you lose your shirt.

Stock pickers can do well in either market.
It is just that the auctioneers are not as honest as the Wall Street traders.

 

[Muletrack]

His article is so one sided it cant even be taken seriously.

One-sided? What's the other side?

 

[Brute 23]

One-sided? What's the other side?

He leaves out expenses and labor and a lot of other things from the cattle to make it seem rosy while leaving off things like the tax benefits of a 529 to make it seem worse.

The idea of compating stockers to the DJ in itself is ridiculous. Those are two different levels with in their sectors.