Sep

26

The Plunger, from Ryan Carlson

September 26, 2007 |

WheatWith the amazing moves in wheat lately, I'd like to recommend The Plunger by Edward Jerome Dies. Published in 1929, The Plunger focuses on Benjamin Hutchinson, a legendary Chicago trader. 'Old Hutch' was King of the Wheat Pit in the late 19th Century and I read in awe about how he dominated trading at the CBOT. There are reprint editions made in the mid 1970s at a reasonable price.

Alex Castaldo adds:

As a reminder of how difficult it is to hedge a generalized deflation, let us look at a chart of wheat prices from Kindleberger's book The World in Depression, on page 88. If wheat prices in 1929 are set at 100, they subsequently plunged to under 50 in 1931, 1932 and 1933 before gradually recovering and reaching 100 again in 1938.  In the prosperous year of 1925 they had reached a maximum of 120. A terrible time for wheat producers indeed…

J. T. Holley remarks:

I have on the back of an envelope somewhere a study I did on softs/grains. I did this study to learn scale trading. The counting that stuck in my head is that when corn, soybeans, and wheat reached the top five percentile of their historical price distribution they were significantly lower two years from the date of entry. My staring point was that 1974 high of 650, which was probably breaking massive statistic rules!


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