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Corn+Soybean Digest

Be Patient, Good Times Ahead

This has been a difficult year for many people inside and outside the business of agriculture. We all know the problems associated with the drought in the western and the far eastern Corn Belt as well as isolated areas in the central Corn Belt. Hail damage. Wind damage. Hog producers have had a difficult year. Milk prices are down sharply. The list goes on and on.

There's just not much to be happy about in business. About the only farmers who are happy this year are in Minnesota, parts of Iowa, Illinois and Indiana — where yields were very good and they didn't forward contract anything at low price levels.

Outside of agriculture, the news is actually worse. As I write this article, we're facing a potential war with Iraq. The Asian markets are starting to show signs of improvement, but European markets are in worse shape than ours. You can't pick up the paper or watch the news without hearing negative news concerning the stock market, the problems with Enron, WorldCom … and who knows what else. As the old saying goes, “bad news sells,” and the world certainly has plenty of it to peddle right now.

Bad Times Lead To Good Times

Someone once told me, “Bad times do not cause business failures, they merely expose them.” If you think about it, that's probably correct. Sometimes that's not true in agriculture because of weather disasters. But even then, it's sometimes the case.

Take a look at companies like WorldCom and Enron. They aren't going down the tubes because of the world economy or because of misguided accounting principles. These companies are in serious trouble because of greed. Greed at the very top — caused not from accounting issues, but because of a lack of business morals and ethics. People can make mistakes. You will; I will. But these were not mistakes. It was greed and a lack of ethics — pure and simple.

Good Times Are Coming

It's unfortunate, but recessions are needed to keep capitalistic economies stable. If the stock market had continued higher forever, inflation would have eaten everyone alive. Markets don't go straight up and stay there. Fortunately, they don't go straight down and stay there, either. A recession is needed in a capitalistic economy just as rain is needed in Los Angeles — to clear the smog. They're never fun, but very necessary.

As the chart on the Dow Jones below shows, the bull market has come a long way and its correction may continue even further. But I think we'll look back a year from now and recognize that all the negative news with corporate corruption we're witnessing now is the very news that is putting a short term bottom in the market. Bottoms always occur on negative news, and this one should be no exception.

I'm not saying that you should expect another major bull market in stocks soon. But I do think the worse is behind us.

Parting Thoughts

The U.S. economy is nearing its cycle lows and we should see a stabilizing stock market over the next two or three years. That's right — I think it will take at least three years before we see any significant upward movements in the overall market. The stock market has been as humbling to our city cousins as the grain market often is to you and me. In both cases, we must remember that good times do not last forever. Fortunately, the bad ones don't either.

Richard A. Brock is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report. For a trial subscription and information on Brock services, call 800-558-3431 or visit

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