Most people would like to have a crystal ball and be able to know what the future will be. Recently, a psychic magazine went broke. When asked, the owner said “We didn’t see it coming.”
People in agriculture are also searching for a way to foretell the future. We use “cycles,” and of course the best and most reliable, the local “Coffee Shop.” Today I’m writing about Cycles, Coffee Shops may come later.
Cycles tell what happened in the past. The past can tell us what might happen but not when. We already know that something will happen. If we don’t know when, then it doesn’t really help. Cycles are used to help people guess what the markets will do. If you are in business, it is difficult to operate profitably on guesses. In the cattle market, the cycle is 10 years, unless it is 11 or 12 years or maybe . . . ? If we wait to buy at the bottom, we will not know when this is until it is way past the bottom. If we try to sell at the top it might not be the top yet, but we won’t know that until it is way past the top.
Businesses should not be operated on guesses or hope. We should be operating on what we know. If we sell at a high price and buy back on the same market, or if we sell on a low market and buy back on the same market, this will create no problems and is good business. If we sell on a high market then wait to buy back later . . . if this wasn’t the top and the market goes higher, what do we do now? If we buy because the cycle tells us that it should be the bottom but the market keeps going down, what do we do now?
Work with the prices today, not what they might be in the future. For instance if we are selling milk today, if we keep the cow, that buys the milk she will produce for tomorrow. If there is not a profit between the sell and the buy, then we should sell the cow and buy something that shows a profit like a young heifer or . . .? The heifer will be giving milk someday, or she will be a “sell” at some time and replaced with something at a profit. This is probably a poor example, but I wanted to use something we get everyday. If you sell and can’t replace at a profit, then something should be done.
Business should be profitable now, not maybe in the future. Sell to generate cash-flow; buy to generate profit. Do this at today’s prices and the more often the better.
Cycles are for people who have a lot of time to study the past and try to use it to forecast the future. These people don’t have to be right. They can always say it was the weather or some other problem that made it “different this time.”
If you are in business and prices are high, you probably know it. If you are in business and prices are low, I’m sure you know it. People who understand this make profits at high prices and at low prices.
High or low, Smile and Mean it!