Speculators are necessary

[VanC]

A store that has a bag of sugar or anythng else sitting on the shelf that long should have shut down long ago. Inventory management is something everyone needs to learn and use. The big boys have learned it and the small ones better too if they plan on staying above water. Wouldn't hurt to learn to calculate weighted averages too and never replace anything that has to be discounted to move. Haven't seen anybody here that let's inefficient cattle hang around so same applies to ratailers. You don't have to match the price of the big boys. Just price your stuff to where it's not worth their time and money to drive to the big boys place for the small savings. A good example is a convenience store/bakery located about 60 miles from me. Had 18 million in sales last year....over 5 million in NET profit. It can be done.

Good point, TB. There are millions of small businesses that thrive in this country even with competition from bigger outfits. I suspect some may just be luckier, but most are just better managed.

 

[upfrombottom]

When your profits are base on percentage, the massive upswings don't effect the bottom line as much, if they do then it's a management problem. When profits are based on volume, the only way to increase profits is to increase demand i.e. sell more. Major upswings in prices that are created by false demand(speculators buying up stock), are impossible to predict and overcome if you don't have major reserves to invest.

When speculators are making money, it has to come from somewhere. They are gambling that the demand for a product will go up and increase its value. If what they are speculating on doesn't happen, but the price has risin because demand is on paper, they will dump the stock in a hurry to get as much profit as the can before the price falls. Where did the profit they just made come from? It came out of somebody's pocket.

 

[bannedagain]

When your profits are base on percentage, the massive upswings don't effect the bottom line as much, if they do then it's a management problem. When profits are based on volume, the only way to increase profits is to increase demand i.e. sell more. Major upswings in prices that are created by false demand(speculators buying up stock), are impossible to predict and overcome if you don't have major reserves to invest.

When speculators are making money, it has to come from somewhere. They are gambling that the demand for a product will go up and increase its value. If what they are speculating on doesn't happen, but the price has risin because demand is on paper, they will dump the stock in a hurry to get as much profit as the can before the price falls. Where did the profit they just made come from? It came out of somebody's pocket.

That profit came from a speculator who thought the exact opposite.

 

[TexasBred]

When your profits are base on percentage, the massive upswings don't effect the bottom line as much, if they do then it's a management problem. When profits are based on volume, the only way to increase profits is to increase demand i.e. sell more. Major upswings in prices that are created by false demand(speculators buying up stock), are impossible to predict and overcome if you don't have major reserves to invest.

When speculators are making money, it has to come from somewhere. They are gambling that the demand for a product will go up and increase its value. If what they are speculating on doesn't happen, but the price has risin because demand is on paper, they will dump the stock in a hurry to get as much profit as the can before the price falls. Where did the profit they just made come from? It came out of somebody's pocket.

That profit came from a speculator who thought the exact opposite.

bingo...no different than any other trading. For every buyer there has to be a seller. Doesn't matter much what the product is.

 

[Jogeephus]

Not neccessarily. Robbing Peter to pay Paul makes bin auditting a very lucrative business. And if you are on the shady side it can be really lucrative.

 

[bannedagain]

TB


Some people really can't grasp this speculation deal at all.

When I am looking to market fats there are speculators on each side, the put boys think the market is going higher and the call boys think the market is going lower. I in turn think one thing or the other is going to happen so I pay the premium.

When I'm looking to market feeder cattle, again there are fellas on both sides of that deal. Those put boys who think the market is going up and those call boys who think it is going down. I pay the premium for whatever I think. The speculator has not hurt or helped me either way. It has however allowed me to place a bottom on my fats and a top on my feeders. Now this isn't as simple as buying and selling the same identical product but it shows how speculators make things work.