Open orders are one of the best tools in a merchandiser’s toolbox.
When I took my first job that offered a 401(k) retirement account, I decided that even though retirement was far off and I had plenty of practical things I could use the money for immediately, I would commit to having a small amount deducted from every paycheck and put in that account. Given enough time, small contributions accumulate into a nice nest egg.
Choosing to have that money deducted before I ever saw the paycheck was the key to success. Saving money is a good idea, there are tax benefits, employer matching – the arguments in favor of it are many. That being said, I credit the automated deductions for the growing balance in that account more than I credit my good sense, discipline, financial acumen, or anything else.
If before every pay period I had to tell someone how much I wanted to contribute out of the upcoming check, or cash the check and then give some of it back, that account would have a much smaller balance. Why? All the reasons to save would have been just as good. It’s because my emotions would have sabotaged my good sense. It just would have been much more difficult to have to make a sound financial decision repeatedly (especially with the money sitting there in my hand) than to make it in a moment of clarity and then automate the execution.
It’s easy to set goals, especially for things that are unavailable today. It’s easy to commit to the idea of doing what it takes to reach those goals. It’s harder to actually do the things that will accomplish those goals, especially when you set the goals in a moment of clarity and have to act on them in an environment of emotion and uncertainty.
Open orders. All of this is why I believe that the humble open order is one of the most powerful tools in the grain merchandiser’s arsenal. Whether you are buying from producers, selling to price-sensitive end users, or managing spreads for your own basis position, the open order automates execution of a good decision.
“I’ll just keep on eye on the market,” “Call me when it gets closer,” and other similar statements are the first steps on the path to lack of action. It takes a lot of time, thought, and calculation to arrive at these kinds of important numbers. Don’t let all that go to waste – increase the odds of success by automating the execution with open orders.
Philip Luce is chief executive officer of White Commercial Corp., Stuart, FL; Kansas City, MO; 800-327-7000.