Below is an excerpt from a weekly column called “A Scientific View” written by Hedge Plus owner Patrick Hayes. In this column dated December 17, 2018 Patrick cites the Serenity Prayer and how valuable is it as it applies to farm marketing.
I think our society teaches that those that fight are winners and those that don’t, are not! There seems to be a battle that most of us in farm marketing fight all the time, perseverance and fight versus acceptance of what you can not change.
Most farmers I know are fighters and have great persistence. Have you ever been determined to market your crop and “will” your marketing to greatness? However, in farm marketing, persistence and fighting isn’t enough because there are variables we cannot control and sometimes we are unaware of (“Black Swan”).
I believe the number one trait of great traders are those that avoid big losses. They accept that they cannot figure out where prices are going and accept that premise, instead of believing that they know where prices are going and fighting what the markets actually give them.
How many traders and farmers do you know who sell cash crop or enter into buyback or hedge positions based on the belief they have the knowledge to know where prices are going! My estimate is that 80% or more of market participants fight to predict price action.
Great traders accept their inability to predict price action.
Great traders either knowingly or instinctually practice what I was able to see in life and in action 3 decades ago. They live the serenity prayer (see below).
The Serenity Prayer:
“God grant me the serenity to accept the things I cannot change,
the courage to change the things I can,
and the wisdom to know the difference.”
Those highly successful 20 percenters, live this prayer. In our field, the 20 percenters accept that they cannot predict price action. They focus on the risk they have (what they can control), thereby avoiding big losses and enjoy success by taking what the market gives using risk management. Farm marketing is no longer a fight for them, because they have learned what they can change and they do not pursue what they can’t.
The 80 percenters continue to try to figure out the market and are unaware of what they cannot do. They focus on their will to fight and what they want to happen, instead of what the market will give them and end up taking too much risk and suffering a few big losses, which more than eliminates the reward of when they were right. They haven’t learned acceptance, and they lack the wisdom to even know the problem.
Most farmers will enter into risky positions that could give them a big reward, but enter with too much risk. Instead, they could target less of a reward with a much higher probability of success, thus taking what the market is most likely to give them. Will they always be right, no, but they will avoid the big loss, and that is the common denominator among profitable marketers.
This is the most insightful thing I have learned in my life, and I am continuously fighting to live it. This is a hard lesson to practice because Americans have been taught to work hard and fight. No one has taught us the yin of the yang; we don’t know when we cannot conquer, and we will keep doing the same thing over and over again. Side note- the definition of insanity is doing the same thing and expecting different results.
In farm marketing, acceptance means knowing that you, I, or anyone else, cannot predict price direction. Changing what we can by placing our focus on our risk and knowing that risk management tool is what we can change.
Many who read this ASV will brush it off and think I am out of my mind, maybe even some of my staff will think I went off the deep end. I cannot change them.
Those of you who learn or have learned to live the Serenity Prayer will not only have happier lives but will also be better marketers.