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Non-Cattle Specific Topics
Coffee Shop
Speculators are necessary
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<blockquote data-quote="john250" data-source="post: 799949" data-attributes="member: 4406"><p>Deep pockets usually win in commodity speculation. </p><p>I don't have the gut to trade the commodities, but I would not consider trading unless I could be on the floor at CBOT or CME. The saddest words around that world are "opened down the limit". It means you want to sell, but there are no buyers. Before you can get out of your position you lose 2-3 $/bu on a 5000 bu contract. The traders on the floor liquidate their own losing positions before they liquidate the positions of average joes or so I have heard. </p><p>I think the markets are necessary, if flawed. They are pretty good at price discovery.</p><p>It takes speculators to make a market, unless you can take your product direct to a consumer. Studies have shown that the CBOT and CME have an incredibly small percentage of winners among those who are strictly speculators-not hedgers. </p><p>My notion has always been that if I had money to speculate, in Vegas friendly women will serve me free drinks while I lose the money. In Chicago, they'll take my money and charge me a commission for the service. </p><p>Hedging is a different deal.</p></blockquote><p></p>
[QUOTE="john250, post: 799949, member: 4406"] Deep pockets usually win in commodity speculation. I don't have the gut to trade the commodities, but I would not consider trading unless I could be on the floor at CBOT or CME. The saddest words around that world are "opened down the limit". It means you want to sell, but there are no buyers. Before you can get out of your position you lose 2-3 $/bu on a 5000 bu contract. The traders on the floor liquidate their own losing positions before they liquidate the positions of average joes or so I have heard. I think the markets are necessary, if flawed. They are pretty good at price discovery. It takes speculators to make a market, unless you can take your product direct to a consumer. Studies have shown that the CBOT and CME have an incredibly small percentage of winners among those who are strictly speculators-not hedgers. My notion has always been that if I had money to speculate, in Vegas friendly women will serve me free drinks while I lose the money. In Chicago, they'll take my money and charge me a commission for the service. Hedging is a different deal. [/QUOTE]
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Speculators are necessary
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