Staying Long in Agriculture

[Cowlesy]

Thought some may enjoy some supply/demand information on the wheat market.

http://www.uswheat.org/USWPublicDocs.nsf/a280b21ba0e2ea9385256f3900554e60/5a057ed50148c092852573ec006c0d76/$FILE/S&D080208pub.pdf

 

[forsmant]

Who pays you when your short or long position is right? I read that you were short financials and that short is soaring. Who do you sell to?

 

[Cowlesy]

Who pays you when your short or long position is right? I read that you were short financials and that short is soaring. Who do you sell to?

I am not short financials, but I am long an exchange traded fund ("ETF") that seeks to obtain results that are double the inverse of the DJ U.S. Financial Index --- I imagine they use a swap product to do so.

If I were to sell it for a gain, I would sell the shares to someone else willing to pay the price I'd ask for them. If no one would offer to buy them at the price I set, I'd have to hold on to them or sell them for less.

http://www.proshares.com/funds/skf.html?Overview

That's the product itself.

 

[forsmant]

I don't really know enough about trading.

 

[AceNZ]

Who pays you when your short or long position is right? I read that you were short financials and that short is soaring. Who do you sell to?

Every trade has two parties: a buyer and a seller. When you go long, you buy from someone who is selling. Then when you sell, someone buys from you. If it was a profitable trade, then you sold for a higher price than you bought. Just like a sale at a flea market or on eBay -- you get paid by the buyer. The only difference is that the exchange where the trade takes place helps mediate the process, so you never have to directly interact with the other party.

The same thing holds true, in reverse, for selling short. The only difference is that in order to sell something you don't own, you have to borrow it first. Your brokerage firm helps to orchestrate the borrowing process. If no shares are available to be borrowed, then you can't sell short.

Each market has its own quirks. The process I described is for stocks. Options, forex and commodities each have slight differences. The central aspect of a buyer dealing with a seller, though, always holds.

 

[Sandra]

You need to educate yourself about growing it, not investing in it.

 

[sirellyn]

The only thing that worries me about agriculture is that if everything goes down hard, the government is used to treating us as a welfare state, and in the last great depression farmers didn't make off like bandits simply because of price fixing by the government.

If you don't learn from it, history has a nasty habit of repeating itself.