News from AP. Farming communities that were largely insulated from the recession last year by high crop prices and other factors are now feeling the nation's economic chill more acutely as corn, wheat and soybeans become cheaper, and land values fall.
Farmers across the Midwest and Plains states are increasingly cautious about spending on new equipment and land, and that is threatening businesses that until recently had been spared serious financial hardship.
At the John Deere dealership in Wahoo, combines and tractors farmers ordered last year with proceeds from $7 per-bushel corn are still being delivered -- despite the fact that corn prices are now closer to $4 per bushel. The activity doesn't yet reflect how frugal many farmers have become because of falling crop prices, dwindling land values and burgeoning problems in the ethanol industry.
BOTTOM LINE. The business cycle impacts the price of all asset prices. A weak economy is followed by lower prices of hard assets -- commodities (energy, agriculturals, metals,...), art, farm prices, real estate,...and the stocks of companies associated with these assets (click on chart to enlarge).
I will be happy to speak to your investment group on how the business cycle impacts investment strategies and the choice of asset classes. To find out more about my in depth view of the markets and my strategy just visit our website https://www.peterdag.com/. You can review The Peter Dag Portfolio, free of charge of course. You can also call me at 1-800-833-2782 to discuss your specific money management needs. George Dagnino, PhD
Since 1977
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