BIO: Mike Lung is the Director of Brokerage at Allendale Inc, which is best known for specializing in the Agriculture sector since 1985, working with farmers, ranchers, merchandisers, and others to hedge their risk when it comes to buying and selling agricultural products/inputs.

STORY: Mike got into the wheat market without a plan or any research. The market went down and saw him lose his investment.

LEARNING: Always have a defined exit plan before you get into any trade. Use futures and options for effective risk management.

“Have a plan of attack, do your research and really know what you’re getting yourself into before you get into a trade.”

Mike Lung

Guest profile

Mike Lung is the Director of Brokerage at Allendale Inc, which is best known for specializing in the Agriculture sector since 1985, working with farmers, ranchers, merchandisers, and others to hedge their risk when it comes to buying and selling agricultural products/inputs.

During his time at Allendale, Mike has had to help navigate his clients through trade wars, COVID fear, drought concerns, packing house fires, and much more. These types of events drew him deeper into the commodity rabbit hole to figure out what exactly makes the markets tick. He is currently working towards a Chartered Market Technician designation and will be diving into getting his CFA afterward.

Mike has been quoted in articles by Reuters, Agri-Pulse, Iowa Agribusiness Radio Network, Bloomberg, and more.

Worst investment ever

Mike jumped into the wheat market with the hope of making good returns. At the time, there were rumors that Russia would be cutting its export program and increasing tariffs. This meant that that business was all going to come flocking to the US. So he got into it.

Then the price started going down, but Mike was still confident with the market and kept putting in more. Prices just kept going down. While Mike didn’t take a big hit, the downward market spiral took a lot of his confidence, and he eventually decided it was time to cut off the trade.

Lessons learned

When going into something, especially if it’s on a speculative basis, make sure that you have a defined exit.
Learn how to use futures and options for effective risk management.

Andrew’s takeaways

If your exit plan is a stop loss that’s automatically executed, accept that stock will always bounce back. The main thing is you’re just trying to prevent catastrophic loss.

Actionable advice

Write down your plan of attack or trading strategy on paper before you enter anything.

No. 1 goal for the next 12 months

Mike’s number one goal for the next 12 months is to pass the two Chartered Market Technician tests.

Parting words

“Don’t put any more in trades.”

Mike Lung

[spp-transcript]

Connect with Mike Lung

Andrew’s books

How to Start Building Your Wealth Investing in the Stock Market
My Worst Investment Ever
9 Valuation Mistakes and How to Avoid Them
Transform Your Business with Dr.Deming’s 14 Points

Andrew’s online programs

Connect with Andrew Stotz:

Further reading mentioned

Keith Fitschen (April 2013), Building Reliable Trading Systems: Tradable Strategies That Perform As They Backtest and Meet Your Risk-Reward Goals

#262 - Your Problems Are Easy Grow Up