Robert Kiyosaki - Rich Dad, Poor Dad
Most American farmers are on a cash basis accounting system and often carry soybeans for sale into the next tax year as a way of balancing their income. Traditionally, farm real estate debt comes due on March 1. This generates another buying opportunity for the inventory manager. Within the same time frame, the South American crop is being harvested and supplies are again plentiful if the crop is good.
In other words, the inventory manager must decide in November how much to buy between then and spring. Technical analysis can be a big help. What do the charts indicate? Are prices near long- or short-term support areas? How much volatility is in the markets? This gives insight into how wide or narrow the trading range is expected to be. Keep in mind that beans are elastic. They will respond to changes—often widely.
When you put yourself in the inventory manager's seat, all known and unknown variables come into sharper focus. This is true for virtually any commodity traded. Suppose you wish to trade the financials. You can evaluate interest rates from the standpoint of a bank officer inventorying money. What about the S&P 500? Put yourself in the shoes of a mutual fund manager. If you have a $20 million stock portfolio to manage, what do you do?
The object of this exercise is to gain an overview of the market you are interested in trading. Is the trend likely to be up, down, or sideways? If your analysis indicates it is up, you would go long on the futures or buy call options. If it is down, go short or buy puts. If it is sideways, stand aside or learn to trade within the price range.
Before trading, you must also gauge the strength of your conviction. Hold back when you get conflicting signals from the sea- sonals, fundamentals, and other technicals. Your confidence should increase when everything is synchronized.
Timing can make all the difference—even when your analysis is absolutely correct. You can be dead right and still lose in the futures market, especially in the short term. In the long term, you must have the money and the patience to wait for the right time or to get in and out of the market with small, controlled losses until the timing is right for a big win.
Jim Cramers Real Money Sane Investing In An Insane World Cramer
