The most difficult question to answer when investing or speculating is this: When to get out? The answer to that question, regardless if you are exiting the market with a profit or a loss is the same. There is no answer to that question.
Getting out of any market position, liquidating down to the sleeping point is a personal matter, plain and simple. Again, there is no pat answer as to when to exit an open market position.
Honestly, I am asked that question daily, and I mean daily: Should I get out and take the loss? Should I get out and take the profit?
My answer is always the same. I say, “You either get out or sit tight. You cannot do both. And I cannot answer your question.”
More often than not, however, I reply to that question by saying, “Hey, you know how you make big money in the marketplace?” They usually answer by quickly saying, “How can I do that?” I say, “By being stubborn.”
And without fail I go on to say, “Do you know how to lose big money in the marketplace?” They usually answer just quickly by saying, “How does that happen?” Again, and without fail, I say, “By being stubborn.”
There you have it. There is no easy answer telling an investor or trader when to exit a trade that has profits or a loss.
When investing or speculating, the greatest amount of money to be made is by being stubborn. By the same token, the greatest amount of money to be lost is by being stubborn.
For the past decade cryptocurrencies have garnered so much press it leaves me breathless. There are countless tales of someone who bought into a cryptocurrency such as Bitcoin, Ethereum, Litecoin, Cardano, Polkadot, Stellar, Chainlink, Binance Coin, Tether and Monero, just to mention a few, and they made a fortune. Some, however, lost a lot of money.
From Investopedia: “Did you know Bitcoin beat the 2020 returns of gold and the S&P 500? And there’s a slew of altcoins making similarly exciting moves in the market. You can find them on eToro, the world’s leading social trading platform. “
Well, here is a cryptocurrency tale I can spin that is true. For months I listened to talking heads and celebrities on television and a few “teenaged money managers” touting a cryptocurrency called IRON Titanium Token or TITAN. It languished for the longest time at well under 50 cents each, but on June 1 rose a tad over $68.
But then came the crash. On that fateful day, and after trading north of $68, it fell to a tad over zero. This week, TITAN is trading at 0.000000577 cents each. Not quite at zero, but close enough if you are still long the market.
Be stubborn and make a fortune. Be stubborn and lose your money.
What does all that suggest? It suggests investors and traders should follow my two main rules. Rule 1: No one knows for sure what any market will do. Not for sure they don’t.
Rule 2 comes from an old Chinese saying: “Always use a stop.”
For the grain complex, this was an interesting week. It was exactly one year ago when grain prices bottomed on the first Friday in August and quickly headed north.
The complex rallied into the second quarter of 2021 thanks to heavy export sales to China and a host of other countries in need of grain. It was a demand rally and a classic at that.
In recent weeks, I have touted the potential for grain prices to embark on a “price rationing rally” for a variety of reasons, but in particular because U.S. supplies of corn, soybeans and spring wheat are razor thin. My lean remains that of a bull and I fully expect history to repeat itself moving forward as it did a year ago this week.
The unfolding, “price rationing rally” with grains will be a demand-led bull market. The only place left in the entire world to buy needed grain and in particular for corn — where there will be a madcap scramble to secure large quantities — is here in the United States.
After all, corn prices are $10 a bushel in China and $8.50 in Brazil. In the United States, front month corn futures are $5.55 a bushel.
Will history repeat itself with grain prices rising into the second quarter of 2022 similar to a year ago? The data and timing are certainly bullish grains.
Try to maintain a bullish bias moving forward. But because yours truly is bullish does not mean I will be correct.
Hope for the best.
Read More: Hope for the best – AgriNews