Feeder prices and diversity.

[lakading]

Now here is a question. If you don't invest what you can't afford to lose how can you invest in agriculture and hope to make a living. If you buy cattle to earn you a living it seems that you really can't afford to lose at least big time and when people go belly up in the cattle business it seems that they couldn't afford to lose that deal. Maybe "afford to lose" is relative. I figure i can lose everything and start over. I just don't want to do that very bad.

What do you mean by afford to lose?

Read it again. He said what you can "stand" to lose, not what you can "afford" to lose. If you're o.k. losing everything and starting over, roll the dice. If you cry when you lose $20 in a slot maching, maybe you should stay home next time.

 

[Workinonit Farm]

I spend more time watching that stock than the cattle as you can loose everthing in one day, ask anyone that had a lot of Enron.

Ask anyone who took a hit end of Oct. 1987.

Diversity is a necessity. For those (who work off the farm/ranch) who have the option to participate in a 401K plan, do it. Start an IRA if possible.

To the original question, I/we here have some diversity regarding "livestock". In addition to the cows, we also have hogs. Run chickens and rabbits on an even smaller scale.
The rest of the "eggs" are split (diversified) between a couple of IRA's that were transferred from 401K's a couple of CD's, and very small stock portfolio.

As has been mentioned elsewhere, to stay afloat, make profit and ride out the lows, one must be diversified and keep overhead to a minimum. You won't find any luxury vehicles etc. at this place. LOL We have what we need. An old Ford 2600 tractor, all the vehicles are 1988 (finally sold the 77 Chevy), ancient mower and rake, baler from the time of Methuselah, etc. However, everything is paid for, no notes. It took a long time for us to get to this point, many highs and lows, times in the red and times in the black.

As far as "stand to lose", any investment has it's risks. If cannot stand to lose that (hypothetical) $10,000 you have floating around, then only invest $5,000 in whatever investment you're thinking about. If losing that prospective money will cause you to go belly up, then don't risk it.

Sorry for rambling.

Katherine

 

[auctionboy]

I agree with workinonit farm completely. I believe in frugal living, and get my joy from other things then new vehicles. Farming is definitly an investment in cows, land, building, equipment.. If you can't stand to lose any money or take a risk I have bad news for you, the farming life is so much riskier then most jobs, You have so much invested in that farm. Thank God for insurance.

 

[Beef11]

Sorry about the "stand" and "afford" misquote.
The way i see it is that all investments are at risk. Some are perceived as safer like enron was in 2000, a good solid long term investment. How many banks have gone belly up? FDIC insurance only covers to a certain amount. Stocks go up and down. Land values climb ever higher but what about the 80's and the 30's. No matter what you do it is at risk the only difference is past history. How many people have been robbed? So the mattress theory isn't foolproof. Its always at risk and we can only guess how much. entrepreneurs live off of it as risked money if it is lost they don't eat. How much can they stand to lose? Diversification just spreads the "eggs" so when you drop the basket they don't all break.

 

[auctionboy]

beef11,
Show me a risk free investment and we will all invest.

 

[lakading]

Sorry about the "stand" and "afford" misquote.
The way i see it is that all investments are at risk. Some are perceived as safer like enron was in 2000, a good solid long term investment. How many banks have gone belly up? FDIC insurance only covers to a certain amount. Stocks go up and down. Land values climb ever higher but what about the 80's and the 30's. No matter what you do it is at risk the only difference is past history. How many people have been robbed? So the mattress theory isn't foolproof. Its always at risk and we can only guess how much. entrepreneurs live off of it as risked money if it is lost they don't eat. How much can they stand to lose? Diversification just spreads the "eggs" so when you drop the basket they don't all break.

No worries. Everyone has their own level of risk tolerance. As for diversification, you're right on. I think Caustic's point was that no matter how many baskets you use make sure that you don't put any more in one single basket than you're willing to part with if things don't go according to plan.

 

[Workinonit Farm]

make sure that you don't put any more in one single basket than you're willing to part with if things don't go according to plan.

That's it, exactly. Excellent advice.

Katherine

 

[Bluestem]

Raise goats for money, cattle for respect. I don't invest in the stockmarket any longer. Good way for a little guy that does not know what they are doing to lose. Done best (on paper) with land values. Been investing in oil and gas wells for sometime now. Not a good investment for the light hearted. But unlike stocks, there is only one decision to make, you in or out.

 

[Caustic Burno]

beef11,
Show me a risk free investment and we will all invest.

Prepaid funeral thats it.

Heck money in a coffee can in the back yard isn't risk free. I guess I just have a different few on risk and being frugal with investments. My parents were born in 1914 and the depression made a hugh impact on there lives and they way they viewed the world.
My Grandfather was the largest land owner in the county and lost most of it during the depression as he lost most of his money with the collapse of the stock market and banks.
So I have seen how going from owning 9 sections to one impacts a family and the way they think.