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20 % Rule

  • Sell enough grain to cover 120% of production costs as soon as possible.

  • Only engage in speculation if you're at least 80% confident that the market will increase by at least 10%, preferably 20%, between October 1 and June 1.

  1. Selling at 120% COP establishes an automatic profit mechanism while reducing downside risk. Over the long term, this strategy ensures strong financial health for the farm.

  2. For speculation to justify the long-term risk, the market should experience a 10% rally from October 1 to June 1, and a 5% rally from October 1 to January 1. Ideally, target gains should be twice that of the S&P 500.

  3. Reevaluate the plan once per quarter and update it every two weeks, as specified in the Market Max program.

  4. Once Grain is in storage, the farmer is now a PROFESSIONAL SPECULATOR.

  • The 20% Rule is a target to strive for, but there will be years where hitting that mark is simply not feasible. The purpose of the 20% Rule is to provide a guiding principle and a standardized system.
    In some years, a negative or tiny ROI might be the best that can be expected.

20% Rule Steps:

  1. Current ROI. (Revenue / Cost per acre). Good or Not?

  2. Cash is King. Payments Trump Speculation. Funds are in place to pay bills 30 days ahead of the deadline.

  3. Product Spoilage Risk. HIGH RISK = SELL NOW. NO QUESTIONS. Transfer risk to someone else.

  4. OCT 1 Market Evaluation: 3 options

    • Sell 100% of production. Reason WHY.

    • OR Sell to a comfortable risk level. Reason WHY.

    • OR Speculate. Reason WHY.

  5. Only Speculate when confidence to achieve price is greater than 80%. Reason WHY.

The only management decision that needs to be made is your actual target price.

Rule One:

THE TREND IS YOUR FRIEND

Global Bull Market or Bear? Don’t Fight The Market.

  • Bear Market: Trend is Down, targets BELOW support/resistance lines

  • Bull Market: Trend is UP, targets ABOVE support/resistance lines

Is the Ag market stronger than Global?

  • Will the AG market act independently from global markets? WHY?

Rule Two:

80% CONFIDENCE

  • Only time you speculate is in a bull market with 80% Confidence.

  • Trade like a PRO. Exit Strategy, PROFIT AND LOSS

  • HOPEIUM is NOT a STRATEGY

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General Selling Rules:

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Power of Why

Always ask "WHY" and "HOW" to make informed management decisions.

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