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Supply and Demand 3 of 3

08 Feb

Now let’s think logically for a minute.  I live in reality so I see no need to worry about what the price MIGHT have been.  I can’t read cards, palms or stars so I just deal with what I have at the time

The only reason I can think of to have the demand conversation is to give ourselves an out for losing money, like in the example earlier.  We all know we like to have someone to blame for our short comings.  Bud Williams says in his years of experience (2 of my lifetimes) he has noticed that cattleman are willing and ready to accept a loss as long as they have an out to blame it on (that is not a quote it is a summarization)

You see there is another law that trumps the law of supply and demand.  It is the law of substitution.  If feeders were to get that high I would go buy range maggots  (sheep).  If the price of beef gets to high the consumer will take their ball and go play in the pork or poultry yard.

Now this is where “smart” people tell me, see if the consumer goes elsewhere the price for your product drops.  Maybe so.  Just remember earlier that I stated the market is currently trying to create its opposite.  So we ALREADY KNOW  this is coming.  Now I don’t sell BEEF.  I sell cattle and buy cattle. (notice the order I put that in.  Sell/Buy.  This is a clue. )Moving BEEF is a packer and retailer problem.  If you have any marketing skill you would still know how to make money when this happens.  Going back to the example of 08, that was my best year ever.  I doubled the size of my operation and that set me up for great years in 09 and 2010.  Knowledge and marketing skill, is how I did it.  None of this demand bull  was ever a thought in my head.

Here is a bit of trivia for you.  This whole concept of making charts and graphs, depicting the scam of supply/demand making cattlemen profitable was created by a commodity broker in Denver.  It really did wonders for his business.  At the time he was the only one doing it.  The boys over at cattlefax felt left out and took it to a whole new level.  How many of you have ever sat through one of their seminars and left totally confused?  That confused feeling wasn’t because you aren’t smart enough to get it.  No, it was because you were trying to make sense of something totally irrelevant.

 

To think that an increase in demand will result in higher profitability is absurd.  To say that the law of supply and demand leads to increased profits, is a politically correct way to say “We now know how many incompetent fools can make a profit based on dumb luck”    All it takes to look like a marketing genius is a rising market.  Knowledge and marketing skill are what separates the profitable operators from the rest

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Posted by on February 8, 2012 in Uncategorized

 

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