Call the Market

With all that's happened during the last couple years to our economy, it's hard not to let our inner Chicken Little win sometimes. With the most recent bank closings in California and New York, I'd be lying to you if I said I didn't have to beat down my own inner Chicken Little at times. I recently read the Rich Dad Poor Dad book by Robert Kiyosaki, and he dedicates a whole section in his bestselling novel to dealing with your inner Chicken Little.

Kiyosaki said in his overcoming cynicism chapter, "the cynic is really a little chicken. We all get a little chicken when fear and doubt cloud our thoughts. All of us have doubts: 'I'm not smart,' 'I'm not good enough,' 'So-and-so is better than me.' Our doubts often paralyze us. We play the 'What if?' game. 'What if the economy crashes right after I invest?' 'What if things don't go as planned?' Or we have friends or loved ones who will remind us of our shortcomings. They often say, 'What makes you think you can do that?' 'If that's such a good idea, how come someone else hasn't done it?' 'That will never work,' 'You don't know what you're talking about.' These words of doubt often get so loud that we fail to act. Noise is either created inside our heads or comes from outside, often from friends, family, co-workers and the media."

He goes on, "Most people are poor because when it comes to investing, the world is filled with Chicken Littles running around yelling, 'The sky is falling! The sky is falling!' And Chicken Littles are effective, because every one of us is a little chicken. It often takes great courage to not let rumors and talk of doom and gloom affect your doubts and fears. But a savvy investor knows that the seemingly worst of times is actually the best of times to make money. When everyone else is too afraid to act, they pull the trigger and are rewarded."

It's hard not to look at the spot April live cattle contract and begin to sweat or feel your inner Chicken Little chirping. The contract has traded lower during the last six consecutive days, and on the afternoon of March 14, the contract closed below the market's 40-day moving average. But while that's all true, we can't forget to keep the market's long-term perspective in mind. The market is anticipated to trade bullishly during the next two to potentially three years, so in the grand scheme of things, does six days of lower trade really amount to much?

I don't think it's wise to blatantly ignore the pressures that the market is experiencing, but at this point, the live cattle and feeder cattle markets remain in an incredibly strong position and the external factors facing the economy haven't totally bombarded their spheres. Monitoring all of the changes in the banking sector remains a top priority, but so does advancing the cattle market while the opportunity lasts.

Cattlemen need to be aware of what's happening outside the cattle complex to the U.S. and world economies, but their motivation needs to remain ultra-focused on capitalizing on the leverage they currently possess and how to best work the market during the next two to three years to get the best prices imaginable.

ShayLe Stewart can be reached at ShayLe.Stewart@dtn.com

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