As You Sow, So Shall You Reap
I met a couple of my buddies for lunch the other day. Some guys I hang out with sometimes. We were talking about the recent economic conditions, and how messed up they are for everybody. Our particular industry that we are in is slowly spiraling down the drain. A few years ago, in this one particular niche, there was plenty of demand that would easily support any old shop that decided to open up. You didn’t need much experience, or even business knowledge of savvy. If you just sold this particular product, you could make money.
Things like that happen all throughout a normal business cycle. For any particular product or service that is offered by a bunch of different companies, it can be tough to separate the exceptional services from the mediocre, and even the lucky. Whenever there is a general economic boom, you could swing a dead cat a hit a slew of successful businesses.
Similarly in the stock market. In the roaring nineties (and even as far back as the roaring twenties), anybody with half a brain could, through some real experience, convince themselves they were a savvy investor, as pretty much any tech stock, especially Internet stocks, were doubling every couple months as a matter of course. Of course, then the bubble eventually burst, and wiped out a lot of so-called “savvy” investors.
So it is with any market boom/bust cycle. On the boom side, anybody can set up shop, make tons of cash, and convince themselves they’ve discovered the secrets to a successful market. But the true winners are the ones that survive the bust and continue to make money.
Like the particular industry my friends and I are involved in, ten years ago, any housewife without any education could set up shop and make a decent profit. But with the economy shrinking, as many peoples disposable incomes, making some purchases are no longer no-brainers. People are actually forced to make some hard choices how they spend their money.
We noticed this old guy sitting next to us, and he was kind of going alone with our conversation. He wasn’t eve’s dropping or anything, it was just a quite cafÃ© without a lot of other people, and he seemed to be nodding along with certain parts of the conversation. Slowly he kind of joined the conversation.
That in and of itself is an interesting thing. There’s the guy who shows up to a few people who are talking, and interjects himself rudely, and tries to hijack the conversation. Perhaps you’ve seen this guy at a party or a bar. Then there’s a guy who happens to be in the area, and slowly over time, your conversation circle slowly expands, like some kind of social amoeba or something.
Anyway, this old guy happened to be a farmer, and he was telling us how farmers every year must make a tough decision on what to grow. Because the planting time to the harvest time is quite a few months, a wrong decision can have some pretty harsh results. If you belong to some kind of system where the government offers some kind of guaranteed protection, where they’ll buy your stuff at a certain price, this isn’t such a big deal. But they only offer a certain price for certain products. And the government price is usually on the low side. So while it’s safe to farm that way, at least in this neck of the woods, it is anything but lucrative.
Which is why many farmers attempt to grow things not on the government approved list of guaranteed purchases. While this is entails a lot more risk, the rewards are much better. The rub is that you have to predict six or eight months ahead of time what the market will be like. Of course, if you grow some kind of product that is always in high demand, then you’ve got yourself a good business. But then again, there’s always competition for that same product ever year.
So youâ€™ve got to not only accurately predict what the market demand will be, bit you’ve got to have a pretty good handle on your competition as well.
There’s much more that goes into farming that just planting seed and waiting for them to grow. This farmer was telling us that they too, experience the same boom/bust cycle. Somebody will start to grow a new crop, and it will do very well. Then the next year they’ll be even more demand, and more farmers growing that same product. But then a few years down the road, the market will be saturated, and they’ll be more supply than demand, and the farmers that joined in too late in the game will be left holding the bag. Literally. A bag of product that they can’t sell.
The secret, he said, (which we listened to intently, as this was some old guy who’d been around the block a few times) was to always be aware of your circumstances, and your abilities. He said a lot of farmers get stuck in growing the same thing year after year, and get dependent on market demand. When market demand turns sour, they have no place to go. But those that are always successful always keep something hidden in their back pocket. Always have an idea in the back of their mind for a new crop or a new product in case the market suddenly turns.
To some people, a field of dirt is a burden that can only produce corn or wheat or whatever you’re used to producing. But to others, a field of dirt is pure magic, and will grow whatever seeds you plant. If you keep your eyes and ears open for opportunities, and choose wisely, and plant the right seeds, you will have an extremely lucrative harvest year after year after year.
To expand your resources in the present and make the best possible choices for the future, click on the link below: