Quote:
Originally Posted by philfree
It's just something I have always considered doing. Wondered if I could make any money doing it. And just because I don't know something today doesn't mean I can't learn about it and then know it. Kind of like any business. Definitely need to be dealing with trust worthy people. I'm pretty sure gahk99 is just wanting to rustle my cattle though so I better watch out for him.
It's not like I'd bet the farm on it. It would also be easy for me to just park all my money in the market but I thought I'd think outside the box for different investments. I'm thinking about buying some rental properties too but I don't know everything about that either so maybe I should just go ahead and punt.
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Right. Most people don't know what stocks are in the funds in their 401K much less PE ratios, dividends, returns, fees, whatever. And yet people still invest in it.
It's pretty easy to get into cows. All the lots around here are typically customer owned. Most of them will get the cows bought for you and then feed them out for you. It's pretty common.
But it carries some risk. There are opportunities for HUGE losses. A few years ago, I hauled some corn into a feedlot and asked the ops manager how things were going. He said, "Well, our guys went from losing $500/head to $300/head and they think that is pretty alright." And this is like a 35,000 head lot
All I could think to say was they have a different banker than I have.
There are different things you can do to minimize the risk. You can hedge on the board corn, feeders and fats. That way your only risk is death loss or degraded gain rates.
Typically there is little to no profit to be had by hedging all of your components. Like I said, a month ago you could hedge in a profit, but it won't be the giant ass gains that you always hear about.
Like I said before, I wouldn't do it with any money you ever intend to see again, but there can be money made with them.
All that being said, I've never done it. Dad has a few times, but I have not.
If you want the number to any local feedlots, let me know. I can get you guys that know what the hell they're doing and can explain the process better than I can. Or you can talk to ghak and buy a couple head to get your feet wet. But understand that there can be massive losses.