Low Finance

By Wes Ishmael

“Well, I suppose fundamentals don’t matter anymore,” Peetie Womack growled into his sparkling new smart phone. Then he calmly rolled down the passenger window of Hooter’s pickup and threw the phone as hard as he could.

Hooter glanced into the rear-view to see pieces bouncing along the pavement, some of them catching the sun’s reflection to glisten for an instant before fading to dark like diamonds to dust. He could tell from the conversation that Peetie had been on the phone with his commodity broker.

“I take it that logic turned against you,” Hooter ventured.

Peetie burned a while longer.

“I know the funds increase liquidity,” Peetie roared as his grizzled left hand punched Hooter’s dash. “But I also know they can shove the market around without reason. Everything says go short, so they start to buy or vice versa.”

Hooter watched the road and Peetie at the same time. They’d had this conversation plenty of times before.

“You know me, Peetie; I was never smart enough or big enough to play that game over the long haul. There’s risk management and there’s survival management. My focus on the latter usually doesn’t leave me much time to consider the former, though I know the experts say the opposite should be true.”

“All I know is that there are days I’d like to strangle those Dutch tulip peddlers who brought futures markets to these shores way back when.”

“This one’s for you, Peetie.” Hooter said, shuffling through his CD case and then loading Dwight Yoakum’s Pocket of a Clown.

Orthodoxically Strange

“Besides, nobody can trade cows like you can,” Hooter said, trying to lighten the mood. “And, if I know you and if I know Uncas, you’re both going to make a deal you feel good about.”

Peetie stayed silent.

Hooter was driving him across the Red River to look at a package of broken-mouth cows on offer from Uncas Bingelmeyer. In all the years Hooter had known both of them, Peetie and Uncas had never met. But they’d heard plenty about the other from their mutual friend.

Nobody would ever mistake Uncas Bingelmeyer for Warren Buffet, but Hooter had to admit that his unorthodox buddy always seemed to figure out how to find the holes in the market and grow his holdings. Uncas always seemed to enter and exit markets at just the right time and never seemed to lose any sleep in between.

Peetie was still stewing when they pulled up to Uncas’ shop.

Hooter made the introductions. “We were just exploring the mysteries of the world’s financial instruments and the big board in Chicago,” Hooter explained.

“Well then, you’ve come to the right place,” Uncas said with a grin as broad as the sweep of his arm inviting them inside. He gestured to a bench in the corner, next to an antique brass cash register, pristine like it was new.

“How’s that for a financial instrument?” Uncas asked. “It’s an early 1900s model from National Cash Register. As you may know the history, they started in Ohio, but that’s not all that far from Chicago.”

“Huh?” Peetie was flummoxed.

Hooter came to the rescue. “Yep, the Windy City, home of the CME. How’d you come by this handsome artifact?”

“eBay,” said Uncas. He looked around furtively and whispered, “A friend of a friend tipped me off. Have you two heard of it? It’s like a flea market on steroids. Why the other day I bought a gross of tongue depressors for $5.”

“Well, like they say, the best time to buy something is when you don’t need it,” Hooter said.

“Exactly,” Uncas nodded.

Hooter could tell that Peetie was about to ask what tongue depressors had to do with the price of tea in China or the cows he’d come to see.

“Uncas, we’ve got a drive back ahead of us. Are the cows close?”

“Just up the road. Let’s go.”

Logic and Whatnot…

Given the conversation, Peetie was pleasantly surprised to see the black and black baldie cows —12 o’clock condition with healthy looking calves at side.

“I got a good deal on them,” Uncas said, answering the obvious questions. “I bought a new place up in Kansas I haven’t even told you about yet, Hooter. I planned to haul these up there, but I found an even better deal closer. Freight being what it is, much as the market says to keep them, I figure I’d better sell these.”

Hooter knew that last statement piqued Peetie’s interest. He also knew that Peetie had filed away previous conversations concerning Uncas’ amazing business success.

“You really think so?” Peetie said. “The market I mean. The fundamentals sure suggest…”

“Certainly,” Uncas said. “And you obviously do too, or you wouldn’t be here to barter on this fine stock.”

Peetie gazed at the cows, getting a price in mind. “Hooter has told me you always seem to be a step ahead of the market. I’m finding that tougher to do all the time with the funds, the algorithms and whatnot.”

“Isn’t that the truth,” Uncas replied, trying to steady the toothpick perched in the sizable gap between his front teeth. “My strategy has always been to intensify when it makes sense.”

Peetie’s eyes lit up like a raccoon spying something shiny. “You mean like a Texas Hedge?”

“A what?” Uncas replied. “No, you can be on either side of the river for it to work.”

“Huh?”

“You know,” Uncas said with some impatience. “Leverage the technical with the fundamental, like how you take on more risk exposure than what you’re trying to protect.”

“But isn’t that what a…”

Hooter interjected. “You two old hens best get to haggling if there’s going to be any sunlight left.”

Peetie made a low-ball offer just like Hooter knew he would. Uncas happily accepted it, just like Hooter knew he would. That made Peetie a whole lot more talkative, unfortunately.

“What do you think about spreading and diversification?” Peetie asked Uncas on the ride back.

“I’m all for it.”

“So, you use the crush then?”

“The what?”

“You know, where you buy corn and Feeder Cattle futures and sell Live cattle.”

Hooter never knew how Uncas’ eyes could work independently of each other, but there they were: the left one spinning counterclockwise considering the statement, while the right one held steady on Peetie.

“No, I’m thinking more along the lines of what I call outcrossing.”

It was Peetie’s turn again: “Huh?”

“You know like the week before the last time that corn dropped the limit?”

Peetie’s cheeks were flushed.

“Well, like I’m sure you were aware, the torrential rains in Beijing meant that their annual carnival was going to be a bust, meaning there wasn’t going to be near the demand for funnel cakes that everybody thought, so of course, corn had to go down. Obviously, I sold my corn contracts, gathered them back up after opening day, sold feeder cattle and