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Harley,
I apologize if I get a little emotional about producers always
blaming the "big boys". The influence that Cargill and other
large grain dealers can have on the markets has steadily
decreased over the years as commodity pool and funds have grown.
I'm not suggesting that they don't "move" the market on
occasion. If one reads the closing comments for the grain
markets, many times, the sole reason for movement, in one
direction or another, is "fund buying or fund selling". I've
seen three day periods when the funds bought of sold thirty
thousand contracts of beans, twenty five thousand contracts of
corn, and fifteen thousand contracts of wheat. Institutions,
commodity pools and funds, floor brokers (locals) and large
grain traders all influence the market...whether any one group
"controls" the market is difficult to prove.
Steve Karnish
CCT
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> From: Harley Meyer <meyer@xxxxxxxxxxx>
> To: metastock@xxxxxxxxxxxxx
> Subject: Re: futures zero sum or not? Re: System development
> Date: Tuesday, August 25, 1998 1:24 PM
>
> It is good to read your farm roots. When I referred to
listening to the
> farmers for the trading opportunities. I did not mean what you
replied
> with. What I was referring to was the observation that there
is an us
> (farmers) and them (institutions - Cargill, IBP, etc.). Not
what Darrell
> thinks will be a good direction of the market. But the big
picture of
> how these two groups push against one another.
>
> Harley
>
> Steve Karnish wrote:
> >
> > Harley,
> >
> > The only thing I know about Yankton is that Lyle Alzado went
to
> > school there. I have traded grain since 1975 and I live in
the
> > "Palouse". My area is the largest yielding, per acre, wheat
> > country in the world. Many neighbors are harvesting 105 to
120
> > bushels an acre this year. At $2.50 a bushel, their
bountiful
> > harvest are still not allowing them to break even on their
> > investments. Without discussing/arguing your "assumptions"
on a
> > point to point basis, I will only take issue with you on one
of
> > your statements:
> >
> > > " But if you want to take advantage of the
> > > trading opportunities then you need to listen to
> > > the farmers who are trying to hedge their crops or
> > > livestock."
> >
> > I've trading for hundreds of producers and well, they're
really
> > good at producing a crop; but, they are the worst marketers
I've
> > ever encountered. Listening to market and trading advice
from a
> > family farmer, (I married into the fifth generation to work
the
> > land I live on), is a quick trip to the poor house.
> >
> > The ability to discern market direction is a tough job that
> > involves endless hours of analytical work (pencil and paper
> > pushing). As they say around here: "To even get a farmer to
do
> > paperwork is like nailing butter to the wall." I use my
> > customers' advice as contrarian opinions. If my producers
all
> > what to be long, there is no doubt, in my mind, that the
market
> > will continue to slide.
> >
> > I've talked to about 200 wheat farmers in the last year and
have
> > asked each group I've spoken to if anyone, in the gathering,
> > took advantage of $7.50 wheat (April/May 1996) and sold a
> > percentage of their crop. I then ask if anyone sold wheat
over
> > $6.00 (a lesser amount, but a price that brings enormous
> > profits). Guess how many of these farmers were bright
enough to
> > sell above $6.00 .....absolutely zero. Maybe, the time
window
> > was too small...after all, they only had six weeks to lock
in
> > those prices. What does that tell you?
> >
> > Monday morning, at 5:45 am, I'll start to get calls from my
> > producers. Every one of them thinks that the wheat market
is
> > going up. I'll hear about the floods in China, "Uncle
Billy"
> > buying wheat for the poor and a bunch of other "horseshit"
> > fundamentals. But, Harley, I've been short since Tuesday's
> > opening and a most of these producers have reluctantly
allowed
> > me to put them in short positions because they also realize
that
> > when it comes to market direction: they don't have a clue.
When
> > you're always wrong, it's easy to blame Cargill, ADM,
commodity
> > brokers, floor traders, and anyone else so that you can
shift
> > the blame away from your own incompetence.
> >
> > I don't need to travel to Yankton...I live 7 miles from
> > pavement, smack in the middle of a wheat producing area
that's
> > every Dakotaoans "wet dream". I do agree with your
statement:
> > "Anyway, enough said" and understand why you don't invest in
> > futures.
> >
> > Steve Karnish
> > CCT
> > ----------
> > > From: Harley Meyer <meyer@xxxxxxxxxxx>
> > > To: metastock@xxxxxxxxxxxxx
> > > Subject: Re: futures zero sum or not? Re: System
development
> > > Date: Sunday, August 23, 1998 8:29 PM
> > >
> > > Steve,
> > > I don't invest in futures so I don't take it as a
> > > tip. I look at what I saw as an American tragedy -
> > > staring the family farmer. If you ever get to
> > > Yankton, SD. Let me know you can spend some time
> > > with him.
> > >
> > > I understand what you say as far as zero sum but
> > > in some markets that isn't true. For example I
> > > brought up to Darrell why don't you just deliver
> > > your cattle on your future contracts. He laughed,
> > > "ya right." The specs for live cattle delivery are
> > > such that they can't be delivered. The delivery
> > > weight is approximately 1150 lb.. Most cattle are
> > > much heavier than that when they go to market. He
> > > also said that the only place for delivery is
> > > Chicago. So it becomes more expensive for
> > > transportation.
> > >
> > > I might have the weights wrong but he did say if
> > > he could of made it work he would of.
> > >
> > >
> > > As far as a conspiracy it is a word. Now weather
> > > the cost of doing business ends up with the same
> > > results is a horse a piece and just another
> > > word(s). Darrell has had to step out of the main
> > > stream of raising livestock and do some things
> > > that others don't or won't do to be able to make a
> > > living.
> > >
> > > I don't thing Darrell calls it a conspiracy, he
> > > just knows that Cargill and IBP are ruthless in
> > > their business dealings. Now if you don't think
> > > that these big grain companies don't control the
> > > market that's ok with me. We all have our points
> > > of view. But if you want to take advantage of the
> > > trading opportunities then you need to listen to
> > > the farmers who are trying to hedge their crops or
> > > livestock.
> > >
> > > Anyway enough said.
> > >
> > > Harley
> > >
> > >
> > >
> > > Steve Karnish wrote:
> > > >
> > > > Harley,
> > > >
> > > > Beware Harley, I've received my most unreliable trading
> > > > information at reunions. This blanket indictment of
Cargill
> > > > sounds like other common accusations: Soros controls
the
> > > > currencies, Buffet controls the silver market (or was
that
> > the
> > > > Hunts?), the Mafia controls NFL Football. I have twenty
> > wheat
> > > > producers as clients and I hear conspiracy theories on a
> > daily
> > > > basis. If the "funds" are selling 2,000 contracts of on
> > > > Monday... true, it will be hard for wheat to advance in
> > price
> > > > (but does mean that the funds control the markets?).
> > > >
> > > > This really hasn't a single thing to do with "zero sum".
> > "Zero
> > > > sum" is the term applied to the accounting of the
futures
> > > > market. Harley makes a dollar, Steve (or someone) loses
a
> > > > dollar. This is a huge difference when compared to
stocks
> > and is
> > > > the reason that futures are a tougher game to extract
> > profits
> > > > from.
> > > > Why didn't your friend hedge his crop at that wildly
> > profitable
> > > > level ($9.00)? Cargill doesn't control the
market...fear
> > and
> > > > greed controls the markets.
> > > >
> > > > Steve Karnish
> > > > CCT
> > > >
> > > >
> > > > ----------
> > > > > From: Harley Meyer <meyer@xxxxxxxxxxx>
> > > > > To: metastock@xxxxxxxxxxxxx
> > > > > Subject: futures zero sum or not? Re: System
development
> > > > > Date: Sunday, August 23, 1998 2:57 PM
> > > > >
> > > > > I went to visit a friend at our 20th class
> > > > > reunion. He used to be a big farmer. 1000 head of
> > > > > cattle and 300 hog fairowing (sp) operation. He is
> > > > > small now. He said that Cargill and IBP pretty
> > > > > much control the futures market. They control by
> > > > > controlling supply of the commodity and by taking
> > > > > positions in the market. He gave me several
> > > > > examples. Here is one of them.
> > > > >
> > > > > Soybeans were around $9 and were about to breakout
> > > > > to the upside. The farmers were holding back
> > > > > taking their grain to the elevators. The farmers
> > > > > where waiting for the breakout. After the breakout
> > > > > the plan was to lock in their prices with a hedge
> > > > > in the market and then take the grain to the
> > > > > elevators. Well Cargill floated a rumor that they
> > > > > bought 300 million bushels of soybeans from
> > > > > Brazil. The soybean market collapsed and the
> > > > > farmers had to take their soybeans to the
> > > > > elevators taking a lower price.
> > > > >
> > > > > He is pretty frustrated over the whole situation.
> > > > > The way he explained it to me. It is about the
> > > > > same way that the share croppers were treated
> > > > > years ago.
> > > > >
> > > > > A bit off topic but wanted to point out that the
> > > > > futures has some bias when you think of a zero sum
> > > > > game.
> > > > >
> > > > > Harley
> > > > >
> > > > > Steve Karnish wrote:
> > > > > >
> > > > > > John,
> > > > > >
> > > > > > Good systems that track commodities should be able
to
> > cross
> > > > over
> > > > > > and do well in equities. The futures game is "zero
sum"
> > (if
> > > > > > John Manasco "wins" a dollar...Steve Karnish "loses"
a
> > > > dollar).
> > > > > > Most folks believe that this makes it a tougher
game. I
> > > > thought
> > > > > > just for fun I'd post the exact same linear
regression
> > > > > > oscillator systematic approach that I posted for
lumber,
> > but
> > > > > > this time for a stock (DELL, one of Jim's current
> > > > favorites).
> > > > > > The approach is the same for lumber or DELL...but,
the
> > > > variables
> > > > > > change to adapt to the rhythm. The chart represents
the
> > > > first
> > > > > > six months of the year.
> > > > > >
> > > > > > Steve Karnish
> > > > > > CCT
> > > > > > ----------
> > > > > > > From: John Manasco <manasco@xxxxxxxxxxxx>
> > > > > > > To: metastock@xxxxxxxxxxxxx
> > > > > > > Subject: Re:System development
> > > > > > > Date: Saturday, August 22, 1998 11:56 AM
> > > > > > >
> > > > > > > Steve Karnish
> > > > > > >
> > > > > > > Thanks for the reply. You're right about my exit
> > strategy.
> > > > > > This is
> > > > > > > something I'm working on to improve. I'd like to
come
> > up
> > > > with
> > > > > > something
> > > > > > > that takes the decision out of my greedy little
hands.
> > I'm
> > > > at
> > > > > > my worst
> > > > > > > when I try to outguess myself.
> > > > > > >
> > > > > > > I've never traded commodities, never even new what
> > they
> > > > were
> > > > > > until about
> > > > > > > five years ago. Someday I'll venture into that
arena
> > but
> > > > for
> > > > > > now I'll
> > > > > > > stick to equities and options.
> > > > > > >
> > > > > > > Your forcast oscillator system is concise and to
the
> > > > point. I
> > > > > > like
> > > > > > > systems that have a minimum of indicators much
more
> > than
> > > > > > systems that
> > > > > > > use a myriad of indicators overlapping each other.
Do
> > you
> > > > also
> > > > > > use other
> > > > > > > money management rules in case your system fails?
> > > > > > >
> > > > > > > Do you find some systems work better on futures
that
> > > > equities?
> > > > > > I'm
> > > > > > > comming to believe that there is no one system
that
> > will
> > > > work
> > > > > > on
> > > > > > > everything but I need to tailor my systems for
> > different
> > > > > > industry
> > > > > > > groups and different individual equities. This is
> > hard to
> > > > > > accomplish
> > > > > > > without curve fitting but I'm finding that stocks
do
> > have
> > > > > > their
> > > > > > > individual personalities and respond better to
some
> > > > indicators
> > > > > > than
> > > > > > > others.
> > > > > > >
> > > > > > > Do you use candlesticks exclusively? Could you say
> > > > something
> > > > > > about why
> > > > > > > you like them?
> > > > > > >
> > > > > > > Anyone else want to jump in please do so. I'd like
to
> > hear
> > > > > > from new
> > > > > > > investors and users of Metastock. How are you
going
> > about
> > > > > > deciding which
> > > > > > > indicators to study? Are there any trends
developing
> > which
> > > > may
> > > > > > be
> > > > > > > helpful to more seasoned investors who also need
help?
> > > > When I
> > > > > > first
> > > > > > > started using Metastock I looked at the usual RSI,
> > MACD,
> > > > > > Stochastics
> > > > > > > etc. Then everyone started exploring statistical
based
> > > > system.
> > > > > > What's
> > > > > > > new now? Any using fibonacci studies? How about
cycle
> > > > analysis
> > > > > > and fast
> > > > > > > fourier transforms? A Gann discussion group just
> > started.
> > > > I
> > > > > > hope they
> > > > > > > report back to the list on regular occasions on
their
> > > > > > progress.
> > > > > > >
> > > > > > > Anyway it's a nice afternoon and I'm going
outdoors to
> > > > enjoy
> > > > > > it.
> > > > > > >
> > > > > > > Good trading
> > > > > > >
> > > > > > > John Manasco
> > > > > >
> > > > > > --------------------------------------------------
> > > > > >
> > > > > > Name: DELL.gif
> > > > > > DELL.gif Type: GIF Image (image/gif)
> > > > > > Encoding: base64
> > > > > > Description: Dell (GIF Image)
> > > > > >
> > > > > > Name: DELL98.gif
> > > > > > DELL98.gif Type: GIF Image (image/gif)
> > > > > > Encoding: base64
> > > > > > Description: Dell98 (GIF Image)
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