CROPS

Risk...something that is always present in our world, sometimes less and sometimes more. The term gets used as if it is a kind of boogeyman monster that'll getcha if you don't watch out, so "it" has to be avoided at all costs. The reality is that risk is welded to reward. There is no return on any investment, including time, effort or money, without some form of risk. Even hiding gold coins under the floorboards of the back porch has its risks. Since most of us have some kind of investment, i.e. 401(k) or savings accounts, we all have to at least take the time to be aware of what our specific risks are and what we can do about them.

The stock market today holds lots of risk for anyone with a 401(k) or other retirement account. The questions that must be asked urgently right now are "What is the potential upside compared to the possible downside right now?" and "Am I willing to take a risk of 20 percent to 40 percent of my invested capital over the next six months to a year in exchange for the possible gains in this environment? The first is a question that we have to ask ourselves constantly. The second is more about the present circumstances.

The second half of the equation is about where the money must be "parked" if it is withdrawn from market exposure. Money market funds pay little right now, but there are few alternatives. It's a vexatious conundrum, but to be a good money manager, we have to answer the questions as honestly and thoroughly as possible, and there is no "final answer". There is no shame in taking money out of the market for a rest, even if only a portion of the total. It is remarkable how much mental stress it can relieve, but don't forget, the money absolutely must go back to work again at some point. It is way too easy to leave capital parked on the sidelines for too long.

Wheat is coming near seasonal lows, although harvest is not really rolling yet in the Southeast. The USDA supply and demand reports last week brought us nothing to change the pattern we have been seeing in wheat prices, which is to say a trending lower channel. A weaker U.S. dollar will be somewhat helpful later, but for now the buyers of wheat know that living is easy for the next 60 days. Opportunistic trading can be stressful and time-consuming, so for now, we have less reason to be holding back on regular sales ahead of harvest.

Information and opinions contained herein come from sources believed to be reliable, but are not guaranteed as to accuracy or completeness. The risk of loss in trading futures and/or options is substantial. Each investor must consider whether this is a suitable investment. When trading futures and/or options, it is possible to lose more than the full value of your account. All funds committed should be risk capital.