One of my early lessons in the markets involved selling short soybeans. Of course, at least I was planning on planting them so supposedly it was technically a "hedge". And that was the intention. Not speculation at all.

Well you can probably guess the results. The market went against me for about two dollars worth, my line of credit was almost exhausted and I still had a crop to plant, and so I bailed out, cutting my losses before I didn't have enough money left to finish planting my spring crops.

And then of course you can guess the rest of the story. Within a week after I bailed with my hedge account still barely in tact, the market changed directions. Had I been able to keep my position, that fall ended up about where it had started when I shorted the market. In other words, outside some interest paid, my hedge would have turned out about break even.

As it turned out I sold my beans for a net two bucks less than I would have netted out. Lesson learned.

Did that stop me from "hedging"?. No I learned and  carried on. But with a lot more discretion. And never doing more than I couold aford to lose.

But I do have a happy ending. Or somewhere thereabouts. The very last time I hedged was when corn was at an all time high. Don't remember the specifics but corn was somewhere in the 4-5 dollar range when we had been used to a 2 in the first digit. So I talked to the banker and took out a SEPERATE line of credit specifically for my hedge account with my projected acres specified and showing it truly was a hedge. I piled in. Sold probably half a prospected crop (which is VERY acressive for our production area - it can e=come in at a quarter of production in a drought year). And it turned out good. Never had to use the additional line of credit to any degree as I got in close enough to the high. Actually MADE a profit in my hedging brokerage account instead of sent money to them. Amazing!!!! And fully came to the conclusion it was mostly plain dumb luck. I had no ability to guess properly where prices were going or what production might be. Dumb ass luck. I never figured it exactly but back of the napkin type figures I figured I had made enough that year by hedging I had offset all my previous many years of minor losses. I broke even or might even been a little ahead.

So I quit. The last time I ever hedged. I was not very smart, but smart enough I was damn lucky to end up even or a little ahead. Guys a hundred times smarter than me (including farmers) always on the other side of the trade betting against me.

Now I did keep my account open till I quit farming actively. My rule had become if I should ever run across record high prices offered in the spring, I MIGHT' consider hedging again. But none of this "better hedge now because prices are going to zero if you don't" mistakes.

Call me crazy. Call me stupid. Call me a poor businessman. Call me a poor money manager. I'm all of the above. But somehow in all my stupidity I seemed to have survived and actually in better financial shape than I ever imanagined to acchieve. Boggles my mind. Ain't dumb ass luck grand!!!!!!!!!