Prepared by Richard A. Brock & Associates, Inc.

It's Thursday, November 20 and I'm sitting in front of my computer screen having just watched the grain markets close. Corn closed at a new low for the move, down 2 cents for the day and roughly 20 cents from the high three-weeks ago. More importantly, key support has just been broken and this should be the beginning of the next major leg down in prices. Wheat prices also closed at new lows for the move–$1.20 from their highs in April. Soybeans finished the day down 8 cents, roughly 30 cents lower than where they were a week ago.

More importantly, I'm sitting here analyzing issues that our subscribers and clients seem to be concerned about now versus the ones they are going to be concerned about come July. Over the past two to three weeks we've recommended that anyone willing to re-own in futures and options at a later date, should go to 100% sold in soybeans, 60% sold on this year's corn and 50% hedged on next year's corn, 100% sold in wheat for this year and 60% for next year. As you can imagine, with aggressive sales recommendations like this, we have gone through endless grief with many subscribers and clients refusing to take the sales recommendations or at least will wait for a couple weeks to see if it's right! Human nature never changes.

While these are the issues people are worried about right now and in most cases not wanting to make any decisions, what will the same people be worried about in July? Personally, as I told our staff at our morning staff meeting today, “While you may be taking grief from subscribers and clients now for going to 60% sold in corn and 100% sold in soybeans, by July the complaints will likely be–why didn't we go to 100% sold on corn and why weren't we selling November 1998 soybeans when they were $7.00 per bushel?”

Believe me, we thought seriously about selling new-crop November beans this past week–and I think we will live to regret it. But when human nature dictates that people have trouble still selling the old crop, it's difficult to become that aggressive in the new crop. We did do so in corn and in wheat and hopefully by selling so aggressively we at least encouraged some of you to do something. It's unlikely that anyone went as aggressive as we recommended, but no doubt a few of you did. At this stage, I'm sure that you are happy that you did.

As we ponder these issues (and we have a lot of time to think over holidays such as Thanksgiving), what is it that makes people so different? Why is it that many of your neighbors spend more time worrying about the grain that has already been sold than the grain that hasn't been sold? Why is it that some of your other neighbors are more concerned about keeping their bins full than their bank accounts?

It's at times like this that I like to pull out two books that I've referred to over the years that have been of great help to me in the philosophical aspects of analyzing markets and understanding people. One is a book by W.D. Gann that was printed in 1942. Many of his philosophies seem a little bit strange relative to today because of the huge differences in price, but at the same time many of the philosophies and theories retain a lot of validity. Another book is one titled “Viewpoints of a Commodity Trader” by Roy Longstreet who was a long time professional trader. First published in 1967, it is merely a book of short-term tid-bits and philosophies from Mr. Longstreet relative to his many ups and downs in the trading profession. Between the two writers the following is a synopsis and summary of bits of “wisdom,170> and philosophies that can be adapted to today's markets from both a trading perspective and from a farm marketing perspective. Consider, if you will, the following:

1. A successful trader studies human nature and does the opposite of what the general public does.

2. The man who trades on the events instead of the cause is nearly always wrong.

3. The average person's memory is too short. He only remembers what he wants to remember or what suits his hopes and fears. He depends too much on others and does not think for himself.

4. Human nature does not change and each coming generation has to go through the same experiences as the former generation did.

5. When in doubt, always get out.

6. Never trade on hope. Hope wrecks more people than anything else.

7. Go with the trend and never against it.

8. Don't make marketing decisions without a good reason.

9. Never get out of a market just because you have lost patience and or get into a market because you are anxious from waiting.

10. When trading, always use stop loss orders in the futures market. Never cancel a stop loss after you have placed it at the time you make trade.

11. Avoid getting in and out of markets too often.

12. Be just as willing to sell short as you are to buy. Let your objective be to keep with the trend and make money.

13. Never buy just because the price of a commodity is low or sell just because it is high.

14. Don't guess when the market is topping. Don't guess when the market is at a bottom. Let the market prove itself. By following definitive rules you can do this.

The above points were taken primarily from Gann's book. He also points to five keys for success which are true whether you are a trader or a commodity marketer. Those include:

1. Knowledge

2. Patience

3. Nerve

4. Good Health

5. Capital

Socrates once said that some of the best advice is “know thyself.” It is so true in commodity marketing that you must know yourself and know that no two individuals are alike. When it comes to marketing all too many farmers complain because they don't know what it is they even want. Roy Longstreet makes a humorous statement in his book, “I've heard it said that unhappiness consists of not knowing what you want and killing yourself to get it.”

How true this is in marketing. How many times have we known people who have no goals or objectives and consequently have no idea about how to make a decision. What is your bottom line goal in marketing? Another issue worth considering is the fact that, although many people want to be successful at marketing, some will never be able to do it on their own. Marketing is an art–not necessarily a science. It is having the ability of taking information in specific market situations and being able to make a decision under adverse circumstances. This is not a black and white science. Is it then possible to do very well in marketing?

The philosopher Emerson gave the answer many years ago when he stated that a man is as a tree and his wealth is as a vine. The vine can grow no higher than the tree. Without getting too philosophical in this column, this is an important aspect of marketing to recognize. To be successful at it, one must be an artist. He has to be wise enough to learn from everyone else. The individual who already knows everything will be unable to learn anything from anyone else! Unfortunately, there are too many of these people already in the world.

This is probably enough of Brock's philosophy for one day. But, it's Thanksgiving and at least a few times a year I deserve the right to ramble about what some may consider non-practical issues–in the hope that in the long term at least part of what I have said will turn out to be useful to a few people. This is a good time of year to contemplate the marketing decision-making process and what everyone's goals and objectives are in marketing as well as farming and in life. Remember too that decisions “not made” are in fact decision and may turn out to be some of the more expensive decisions of the 1997/98 marketing season.

November 21, 1997Richard A. Brock & Associates, Inc.

2050 W. Good Hope Road, Milwaukee, Wisconsin

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