Happy Monday evening!  We saw some more upward movement in the cattle markets today after strength late last week.  Great news, right?  Well . . . not really.  Absolute price movement, that is to say the market moving up or down, isn't really important. 

Oh, dear.  Fetch the fainting couch and the smelling salts, Beauregard.  I think a few of the readers wearing the tighter corsets just swooned. 

That's right.  The market moving up and down is NOT what's important.  A market moving up is not "good" and a market moving down is not "bad".  Not to a skilled marketer, anyway.  I'll prove it to you with GEOMETRY.  Let's say our friend Beauregard owns a rectangular parcel of land that is for sale.  His rectangular parcel of land is ONE MILE WIDE.  How much will you give him for it?  Come on, come on.  No stalling.  Quickly!  How much will you give him for it?  Spit it out!  What is your bid on Beauregard's mile-wide tract? 

Cat got your tongue?  Well, of course.  There is no possible way you could converse about, much less bid on, a rectangular parcel of land until you knew both of the dimensions, both width AND depth.  I only gave you one dimension, so our conversation could go nowhere.  That is because the area of a rectangle is a FUNCTION of two variables - width and depth.  Beauregard's rectangle could have been one mile wide by one mile deep - a section.  OR, it could have been one mile wide by ten miles deep - ten sections.  Or it could have been a fifty foot railroad easement - which would make the tract just over six very impractical acres in size.  That second dimension literally makes all the difference in the world.   

Talking about a market going up as being "good" and a market going down as being "bad" is every bit as ridiculous as bidding on a land parcel of which you only know one dimension.  Why?  Because every transaction we make has TWO components, or dimensions, if you will.  What are they?  SELL and BUY.  So, it's real cute to get all dewey and flushed when the market goes up, but that dewey flush is coming about only because we are focusing on the SELL and ignoring the buy.  Yes, when the market goes up we do indeed get to SELL into a high market, but if we want to stay in the cattle business, what must we also do in that high market?  BUY.  So, we sell into a high market and also buy in a high market.  The sell and the buy cancel each other out, and we are left with the margin between the two.  As Gomer Pyle would say, "Shazam!"

On the other side of the spectrum, when the market is low we do indeed have to sell into a low market, but what do we also get to do?  That's right . . . we get to BUY in a low market.  The sell and the buy cancel each other out and we are left with the margin.  And so you see, my dears, it DOES NOT MATTER what direction the market is moving.  All that matters is whether or not you have marketing skill, and know how to do the 4th grade arithmetic required for competence in this business. 

There is one caveat to this beautiful reality.  LEVERAGE.  If you are leveraged on your cattle out the GAZOO, which I'd be willing to bet most of you are, you NEED the market to go up.  What a pity.  Why?  Because the market only goes up 50% of the time.  Leverage will doom you to a life of breaking even, and a life of roller-coaster emotions.  You will be happy as a clam when the market goes up, and a miserable, frightened ogre when the market is going down.  Just ask your ex-wife.  I'm sure she'd be happy to tell you all about it.

If you would like to see the FUN WITH MATH examples to go along with this post, click on over to www.Barnhardt.biz. 

Forecasters are killing the North American Cattle Industry.
"Global warming" is a complete fraud designed to advance the cause of socialism and enslave humanity.
Abortion is the murder of an innocent human being and is never justified under any circumstance whatsoever.
Every human being is a question, to which the ONLY answer is Jesus Christ.