Willian Eckhart going broke taking a small profit- William Eckhart

[mcfarms]

“One common adage on this subject that is completely wrongheaded is: you can’t go broke taking profits. That’s precisely how many traders do go broke. While amateurs go broke by taking large losses, professionals go broke by taking small profits. The problem in a nutshell is that human nature does not operate to maximize gain but rather to maximize the chance of gain. The desire to maximize the number of winning trades (or minimize the number of losing trades) works against the trader. The success rate of trades is the least important performance statistic and may even be inversely related to performance.” – William Eckhardt -

[mcfarms]

I meant to say I saw this on New Ag Talk, Id edit my post but my chisel broke as i was carving out the last post on my stone tablet that is agriville.

[oneoff]

And that is why locking in small farm profits (or even losses) is a poor plan. There are a dozen of unforseen twists and deductions that always seem to come out a suprises.


All the way from production stage; through storage and marketing and actual delivery and grading; transportation and "sale"; and even payment collection. Even checkoffs and germination declines; spoilage and final samples can more than reduce that planned profit into the red.

And that doesn't even mention that very few farmers have any accurate idea of the actual net weight that they have or can come up with at the end of the day.

[farmaholic]

After you lose there, you can gamble in the Marketing Casino with options and futures.

[furrowtickler]

there are a few bigger operations here that tried to run on slim margins on big acres. I think targets were $25/ac net. And that was the past 5 years.
The problem is , as was stated above - one little misstep - hail , bugs, disease, one missed rain and your fuked.

[farmaholic]

Furrow, why so low ($25/ac), how much are they paying for rent, chem , fert, seed, etc. (each separate)? So he is willing to accept an amount compared to almost the lowest cost input? AND he carries all the risk. Insane.

[SASKFARMER3]

Furrow the guys operating on 25 are they all members of the accounting advisors group!

[hobbyfrmr]

net $25/ac x 10,000 acres = 250,000.
Net after costs land payments. Whats wrong with that?
I dont think they have papers that would qualify the to make that kind of salary in canada!

[furrowtickler]

Sounds good on paper - never works out in real life.
Think about it - an inexperienced combine driver last year could cost you $40/ac easily by throwing over canola.
That JD - expertly set was throwing over 700 lbs more than the others at 5 mph , at 3.5 they were all very close.
14bus loss on 3.5 ac .. well 4 bus /ac at an ave of $12/bus = $48/ac

Point is, a $25/ac margin in today's crops can be a loss very quickly
Tight margins only work on paper or with a fixed production - not crop production - ever

[farmaholic]

That was an odd comment Hobby. People with their "papers" who make that kind of money a lot of times aren't worth their salt either. In fact, today's Producer may be underpaid for the level of knowledge, sophistication and work required to manage a farm, let alone 10, 000 acres. It's the guys under "X"(you pick the number)number of acres that try to run the show almost alone that are underpaid. How many hats is one person expected to wear?

[hobbyfrmr]

Farmaholic,
I understand your sentiment,and I live it every day. The working world acknowledges certificates and degrees and accomplishments. If you do not have papers or documented skills you will provide the real value companies are looking for, for less money. Without "documented" skills, a person will very, very seldom qualify for those types of salaries.

[hobbyfrmr]

So keep farming big! $25 is the bottom of the margin game. Make it $100/acre. A millionaire in one year managing a 10,000 acre farm, not including land appreciation.
That is sweet money anywhere in North America.

[oneoff]

Maybe with someone one else's money.......otherwise look at your paltry ROI (return on investment)


Like has been said before....talk about missing the point !!! (of this thread)

[hobbyfrmr]

One off, I did miss that point. Suddenly it's not that interesting anymore.