When “Cash Becomes King” . . . .

[errolanderson]

Buffet has indeed been sitting in cash, and is missing out on a massive bull run. Far underperfromed the broader market:
https://www.cnbc.com/2019/11/01/even-obvious-way-for-buffett-to-solve-big-cash-problem-is-a-puzzle.html https://www.cnbc.com/2019/11/01/even-obvious-way-for-buffett-to-solve-big-cash-problem-is-a-puzzle.html
https://economictimes.indiatimes.com/markets/stocks/news/warren-buffetts-worst-year-since-2009-splits-investors/articleshow/71856808.cms?from=mdr https://economictimes.indiatimes.com/markets/stocks/news/warren-buffetts-worst-year-since-2009-splits-investors/articleshow/71856808.cms?from=mdr

Errol, I do appreciate you bringing actual economic information and starting the discussions here. It is such a pleasant change from the usual global warming Trolls. But, have you taken the time to check back through some of your old posts, to see how your track record has been for forecasting deflation, and stock market collapse? I just went as far as 2012, and didn't see any optimism all the way. In fact, in early 2012, with the DJIA at way less than half of today's value you were still warning about a stock market crash and related deflation. Climbing a wall of worry has never seemed as applicable as it does in this market, but relentlessly climb is all it does.

You are right AlbertaFarmer, but the market has been highly manipulated by central bankers. As an analyst, you can see the curve in the road, but how long to get to the curve is a different story. Just like in the movie "The Big Short" the incoming mortgage crisis could be seen well in advance, but it took 2 extra years before fallout began. A lot of toe tapping in-wait . . . .

I'm a believer that true economics ALWAYS prevails, not matter how much central bank manipulation occurs. Yes, this process has taken much longer and the stock market is now artificially supported by money printing with insane valuations and this has contributed to the current wildfire repo crisis. But in reality, central bank Keynesian economics (taught in all financial schools) this has made the big picture economic situation far worse. 'Feed me now' is going to take a toll on the next generation's standard of living.

In 2015, I did pen an article for Country Guide on incoming deflation . . . a word that was unheard-of at the time. Call me wrong . . . but in my mind, not a chance . . . this dance is beginning in-earnest.

[bucket]

Errol

With the impending doom about to happen how will this affect agriculture in regards to grain prices ...they can't really drop further or there will be a lot of hurt????

[foragefarmer]

Eight years of predicating doom and gloom! Who are you and what credentials do you have to make these economic assertions. Are you a professional financial adviser? Have you personally had any success timing the markets while taking your own advice?

If you have been taking your own advice, what has that CASH you have held on hand earned you since 2012?

You mention Buffet for the first time in your economic synopsis that he is now holding a large amount of cash, what was he doing the last eight years, hoarding cash waiting for the big crash? No the majority of the time he as buying Blue Chips!

Yes there may be some sort of a correction to come, but for coming Agriville with your monthly predication of a cash is coming is like crying wolf over and over again!

[errolanderson]

Errol

With the impending doom about to happen how will this affect agriculture in regards to grain prices ...they can't really drop further or there will be a lot of hurt????

bucket, there will be rallies, but they won't hold in this environment.

Be prepared to price grain as markets are moving up . . . if you wait for the peak it'll be too late. Green peas are hot right now, so is canary seed. Durum looks quite good, but coming off recent highs. Flax may be a sleeper depending on Kazakhstan final production. Keep close to your buyers . . . watch for those weekend texts for premiums to fill near-term sales. Sales will come and go.

Without a China deal, beans appear vulnerable to near-term weakness. Moving grain will be a challenge this winter. Try to move where possible, bin quality a concern . . . you can always reopen the price ceiling with a broker . . . safer option plus it injects cashflow. Realize easier said than done . . . .

[errolanderson]

Eight years of predicating doom and gloom! Who are you and what credentials do you have to make these economic assertions. Are you a professional financial adviser? Have you personally had any success timing the markets while taking your own advice?

If you have been taking your own advice, what has that CASH you have held on hand earned you since 2012?

You mention Buffet for the first time in your economic synopsis that he is now holding a large amount of cash, what was he doing the last eight years, hoarding cash waiting for the big crash? No the majority of the time he as buying Blue Chips!

Yes there may be some sort of a correction to come, but for coming Agriville with your monthly predication of a cash is coming is like crying wolf over and over again!

forage . . . China commodity boom peaked in 2012 . . . it basically been all downhill since then. China consumes about 50% of global commodities. This was the beginning of deflationary pressures and slowing trade. I'm not making this up . . . this is now being reflected in local economies right now.

[seldomseen]

I have been hearing CASH IS KING ever since the 2008 crash and as far as I could tell it never did become king.

When i was young go into a dealership and they would go gaga when you offered cash for a deal and you would get a hot price. Since I heard cash was king in 2008 go into a dealership and they don't even care if its cash. They just want you to sign up for finance and the price is the same cash or not.

[GDR]

I have been hearing CASH IS KING ever since the 2008 crash and as far as I could tell it never did become king.

When i was young go into a dealership and they would go gaga when you offered cash for a deal and you would get a hot price. Since I heard cash was king in 2008 go into a dealership and they don't even care if its cash. They just want you to sign up for finance and the price is the same cash or not.

That's because they get a kick back from the finance company now. The cash meaning is not about new purchase at dealerships it's about capitalizing on someone else's misfortune. One party needs to sell to pay bills or keep the doors open, today, not tommorrow or next week when the financing comes through. The guy with the cash is able to capitalize on the deal because they can deliver today. I see that all the time in everything from small item purchases way up to multi-million dollar land deals. As lending tightens up which it needs to the difference between today's price and the if I can get the loan price grows.

Same applies to having your money tied up in investments, assets whatever if you can't liquidate fast enough you miss the opportunity.

[ajl]

I guess we will see if cash is king at operating loan renewal time which starts in Feb. There is a lot of deflation out there if one was to open there eyes. I have pointed them out before and it is the reason there is a farm income crisis right now. Canola was $14 US in 2013 and is now $7.50. A lot of wheat is being sold for this winter for the same price as 1975. Local gas price at the pump is around 0.89 but has more tax in today than before so the rack prices are lower so plenty of signs of deflation if you care to look. Governments and there central banks have fought deflation 24/7 for more than a decade now so that is why there has not yet been a lot of it until recently but once the ball gets rolling it will be unstoppable. When is it time to go short? The right answer to that will be worth a lot. Will be interesting.

[jazz]

I wouldnt be holding too much cash. A few yrs ago the govt authorized bail in legislation where the bank can take personal savings and bail itself out if needed.

[tmyrfield]

https://business.financialpost.com/news/fp-street/new-bail-in-regime-for-canadian-banks-will-ease-burden-on-taxpayer-in-case-of-crisis https://business.financialpost.com/news/fp-street/new-bail-in-regime-for-canadian-banks-will-ease-burden-on-taxpayer-in-case-of-crisis


cash may be king but don't store it in a bank...
in case you don't understand... a banks liabilities are the deposits that people and business have.

Also ironic that they are saying that this is done to protect taxpayers...lol, just who in the world do they think have money on deposit?