Tuesday, September 14, 2010

Futures Gain

Low and behold class III Milk futures gains big today. January - June 2011 gained $0.12.

Futures are commonly called "risk management" but, what really makes futures tick, making money for those in the middle, is really what is known as "loss aversion." See:http://en.wikipedia.org/wiki/Loss_aversion

"In economics and decision theory, loss aversion refers to people's tendency to strongly prefer avoiding losses to acquiring gains. Some studies suggest that losses are twice as powerful, psychologically, as gains."

Actually, humans seemed "hard wired" to do dumb, stupid things when contemplating a loss.

See: http://www.ted.com/talks/laurie_santos.html


  1. Wow! Prices trending up! That is WONDERFUL! I wonder if its the manipulation of the CME? After all, when prices trend down, some folks cite CME manipulation as the culprit. The manipulators must be faltering!

  2. Sounds like thin skin to me. CME is manipulation and if the prices are up someone (not farmers) is making money.

  3. NO, its ain't thin skin -- just an observation. Guess you need it both ways -- when prices go up its manipulation, when its down it manipulation. If you think that -- well its pretty clear who has the thin skin.

  4. Seems ro me any questions about CME manipulation was settled when Dairy Farmers of America pled guilty and paid a $12 million fine for doing just that! Nate Wilson

  5. Nuff said! Good point Nate.

  6. DFA loves to brag -- I can just hear Hanman boasting about how they are so good/big/strong/etc that they can "manipulate" the CME. They may have tried, but they failed. Trying and accomlishing are two different things. If they were that good, DFA should be swimming in the money they should have made regardless of if the milk prices goes up or down.