Cycles

I do not pay very  much attention to cycles.  I will admit they do exist.  I see market cycles within the week, the month, a six month period, and even the year and beyond.  The thing is due to the way I market cattle the cycles do not matter at all to me.  Before I learned how to market cattle on a real time cash flow reckoning, I paid a lot of attention to this stuff.  I was listening to the wrong people.  Good thing I got that straightened out or else I’d probably be an unemployed production welder right now. (no offense to the welders out there.  I love welding myself.  It’s just that there have been a lot of layoffs in my area).  I have noticed another cycle.  The cycle of the cry baby

Right now we are somewhere near the top part of their cycle.  They tend to emerge when losses in the cattle biz go beyond $200/head, anything below that we do not hear from them very much.  So I conclude that any losses around $150ish and lower are acceptable losses.  (snorf)  There’s a sweet sexy term, acceptable loss.

I’ll give you a few examples.  In the middle of the last decade 04-05 the “experts” were predicting time periods when we would begin exporting to Japan again after BSE.  So the cattle feeders would load on a certain weight of cattle that would be market ready at that date.  Only the boarder did not open around that date.  These guys would bid a huge premium into feeders, thinking they would get it back when exports resumed.  They really believed they would get $10/ctw more for fats when exports resumed.  They did this several times for over a year.  Losing big money every time.  “It was all Japan’s fault.  They weren’t playing nicely and cooperating.  It was Canada’s fault, after all that is where the dirty cow originated form.  What am I to do?”  The peak cycle of the cry baby

I saw it again in 08-09 when the market fell out of bed.  In summer of 08 corn was high, fuel was high, feeders were high, fats were high.  Then bang!  This housing bubble thing popped.  “During the high run up in stocks the damn hedge fund managers put their money in commodities.  The CME has more corn contracts for bushels than we have bushels.  It’s just all funny money and bullshit contracts, that never should have been printed to begin with.  Then when stocks fell, they pulled out of commodities to buy cheap stocks, which is where they belong anyway, in stocks, and crashed our markets too.  Them assholes!”  Early 09 was peak cycle for the cry baby.

Here’s one that is more current.   Everybody is crying over the drought affecting their operation.  Costs are high (not as high as they were.  Feeders and corn were both higher than they are now).  But hey, it’s not my argument.  “Forage prices are too high.  I can’t afford them so I am forced to buy poorer quality forage.  We need rain.  The price of corn is too damn high.  We need to repeal the RFS.  What is the governments deal anyway?  Picking one corn user over the other.  It’s all ethanol’s fault.  We keep losing acres of forage production and pasture to the plow to raise corn for ethanol”.  Thing is folks I don’t know if this is even the peak yet.  “We need a Farm Bill!  We need to fix this fiscal cliff problem”.

Well I got some good news for you guys.  The 10 year cycle peaks on years that end in 3 (snorf)

Do you notice something here?  They always have something or someone to blame for their short comings.  Bud Williams told me once that in his lifetime of observing and working with ranchers that they are more than happy to lose money as long as they have someone to blame it on.

A few years back I got to go golfing with a few big shots.   During the day we were discussing the cattle biz, sipping whiskey, and smoking cigars.  They were all bragging, and yes it seemed like bragging, about how much money they were losing.  One asked me what my worst move was of the year so far, and I told him I made $17/head.  I got laughed at!  They said $17/head wasn’t worth scratching their nuts for.  I didn’t understand, still don’t.  It’s cool to lose money and not cool to make a small profit?  WTF!?

The cry babies are busy right now.  Last week was cattlemen’s convention in my state.  I didn’t go.  I was busy.  So this weekend I tried to get caught up on the news.  There they were on the TV and news articles bragging about how tough it is.  How resilient they are.  But oh man “If we don’t get some help, or relief soon it will be real bad and people will be out of business.”  That is another natural cycle folks.   Businesses fail all the time.  Bankruptcies happen all the time.  And have since the beginning of civilization.  And yet we have managed to make it to the point we are at now.  A time of such great abundance.  The cry babies didn’t make that happen!

Action

I’m not really sure how it happened, but I get quite a few people contact me for advice.  Not just about cattle either.  I have a few that are chronic callers.  They call me A LOT, and never do anything.  They never buy any cattle to get started.  They never pull the trigger to start that great business idea they have.  They just call me and run idea of the week by me.  Some numbers are programed into my phone so I know not to answer.

I asked one of them this question this last weekend.  “Do you ever just get tired of talking about it?”  I got a bit of awkward  silence.

Seriously people, at what time to you just get sick and tired of talking about it.  When I was a kid all I wanted to do was ride bulls and raise cattle.  I didn’t just talk about it, I went and did it.   The world we live in is about action.  Thing is, if you know where you are going, and prove you can get things done, the world has a way of making a path to your door.  If all you do is talk about it the world has a way of beating you down.

I have many ideas why people probably never get started.  I’ll discuss three here

First is the fear of success.  That’s right.  Some people have been broke for so long they just can’t imagine anything else.  Success would push them out of their comfort zone.  Having success first means you will have to finish things you start.  You will have to become a person of action.  This will bring new responsibilities.  When you begin to make money and build equity your current group of broke thinking friends will push you out of their group.  New opportunities will come your way, and at first that is weird.

Second is the fear of failure.  I don’t need to spend much time here.  We all know this fear.  These are the guys in the coffee shops I have blogged about before.  The ones that sit there and brag about how their life could have turned out different if they took that one shot.  I guess there must be some value in having the opportunity to tell that story.  Maybe we all heard them tell is so many times, or we hear it from loved ones like grandparents or our parents that we have concluded that is where the bar is set?  Just yesterday I was driving down the road and I was thinking of how I used to make fun of mediocre, and found myself wishing people would at least strive to be mediocre today.  Yes I think we’ve sunk that far.  After reading everybody’s thankful lists on Facebook, and seeing/hearing about the black Friday chaos, yes we have become a society of degenerates.

Third.  We do not love small.  I wish I had a nickel for every time I told someone to keep working that job in town, and go buy twenty head of cattle to get started.  Live off your job and reinvest profits from the cattle to expand your herd, only to have that person scoff at me.  “I can’t make a living off 20 head.”   I sat at a town hall meeting this summer with our Congressman and heard a kid in his early 20’s tell our rep what a joke the beginning farmer programs are.  He can’t get enough money to buy land and machinery, and make a decent living.  I gave that kid an earful.  (talking like that makes you a kid.  His classmates that came from nothing had to join the armed forces.  We call them men/women)  If we gave this kid $1,000,000 to start a farming operation, my guess is he’d be out of business in 10 years, and probably declare bankruptcy on 1.5 million.   If he can’t make it work as a small part time gig, what the hell makes him think he can make it full time?  I started with 20 head.  Built up from there.  It took 10 years to become a full time occupation for me.  Big operations don’t just happen over night for most of us.  They start small, and grow.  Think about it.  It took your parents/grandparents a lifetime to get to where they are.

If and when you decide to try you will have failures, and successes.  That is ok.  We all need to get our nose bloodied once in a while.

Let It Burn

Last week I gave a speech about the economic impact an operation like mine has.  I went through some old pictures from when I started feeding cattle.  It really brought back some old memories.   It brought up a couple questions.  One, why did my girlfriend go through all that with me, and then agree to marry me?  Question two.  Would I go through it again?

Right now because of the drought many people are going through some rough times.  Those late nights where the worry keeps you up might be a good time to brainstorm on how to better manage for drought and any other adverse conditions.  And yes you could prepare better.  If you had done a good job prepping,  you wouldn’t be staying up at night.  This is something I know about.

Shortly after I started farming and raising cattle full time, we were hit with a drought.  It  caused a lot of anxiety and sleepless nights.  I was quickly faced with the reality that I was going to need to supplement my income.  Supplementing my income off and on was a regular occurrence in the beginning for me.   I tripped and fell on my face, which usually landed in a shit sandwich, more times than I care to admit to.  That’s life, and a lot of it was brought on by my own stupidity.

As I was putting the power point together for my speech I remembered all the tough times.  They made me who I am today.  Until about a year and a half ago I was not comfortable talking about it.

At the back door to our house I have a chair that I sit down in to take my boots off.  Some of the most important stuff that ever happened in my business happened in that chair.  I never realized it until last week.  I would come home after a really bad day.  Culling some cows due to drought.  Back in the days when I had a registered herd, lightning killed the “great bull calf that was going to get me discovered”.  Or my train wreck calves I blogged about before.  And I also mentioned in a previous blog there are family issues.  I remember baling hay on a patch that should have given me 70 bales and all I got was 13.

So here is the thing I want those of you who are struggling to think about.  I sat in that chair and cried.   That’s right.  I am admitting to the whole world.  I came home and cried.  And I mean like a little girl.  I cried so hard for so long I made a puddle on the floor.  I had, had it.  Life was too hard.  This cattle thing was to hard.  The deck was stacked against me.  All I ever wanted to do was raise cattle and it was to damn hard.  I was crying to quit.  Or so I thought.

My wife (girlfriend at the time) made supper for me.  I didn’t eat any of it.  We didn’t talk much on those nights.  Neither one of us slept much on those nights, even though she really didn’t have much of an idea what was keeping her up.

The next morning I made coffee, and laced up my boots once again and headed out the door.  I was to stupid to quit.  I was too stubborn to quit.  I was too proud to quit.  I WANTED IT TOO BADLY TO QUIT.

Last week I realized I wasn’t sitting in that chair crying to quit.  I was crying to keep going.  I was in pain.  My wife was in pain.  We spent numerous nights feeling that pain burn.  We didn’t know what else to do but let it burn.  If I had quit during those times, we would still be in pain.

Here’s the thing.  Pain is temporary.  If you press on it will go away.  Maybe tomorrow.  Maybe next year.  If you quit, it will stay.  So for those of you who are in pain right now, keep going.  You are already feeling the burn.  GET A REWARD FROM IT!

I wanted it too badly.  Raising cattle was all I  could ever think of since I was a little kid.  That and bullriding.  That is a long time to be focused on something, especially when you are young.  I will blog about focus in the future.  I also had a lot of desire, which I also will blog about in the future.  I will say this, desire is the starting point for all achievement.

So you are in the cattle biz.  You are struggling from this drought.  EMBRACE IT!  That’s right.  Embrace it.  Road blocks, challenges, set backs are there for a reason.  This is something I know a lot about.  The reason is to weed out the weak.  The posers.  The ones who don’t really want it that damn bad.

Have you ever listened to an interview with some rock star?  They ask him about his early days.  What shaped his career.  What was the motivation behind a certain hit song.  You seem to hear some story about living in some rat infested building with some junkie for a roommate.  Losing a best friend,  or something.  I’m telling you they let it burn.  They cried to keep going.  I talk to lots of successful business owners, and they all talk about their struggles from the early days.  Before they made it to the point of critical mass.  And I tell you they all have a passion you can see in their face when they talk of those struggles.

So if you are struggling from this drought.  CRY!  LET IT BURN!  Think about where you are and where you want to go.  Cry to keep going.  I’ll tell you something about this world we live in.  She has a funny way of making room for people that know where they are going.