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<p>[QUOTE=&quot;howboutatrade, post: 1130090, member: 10387&quot;]Man does not create anything new...we merely combine/use/transfer/modify/aid things that already exist into something else or better.&nbsp; </p><p>&nbsp;</p><p>The ability to transfer these items to someone else is how &quot;higher value&quot; or wealth is created.&nbsp; The fact the middle-east has oil is one thing...their ability to get it out of the ground and to a place where people need it is another.&nbsp; The people who need it pay more for it than the people who have far too much (supply and demand).&nbsp; A farmer is in the same boat...he does not need all the produce he has grown (aided a seed to grow more, he created nothing)...it can either rot in the field, or be harvested and sold to someone else who needs it.&nbsp; There are many players in the chain that make money...each, if done right, is increasing their wealth.</p><p>&nbsp;</p><p>Land owner gets rent from farmer.&nbsp; Farmer gets $$ for produce.&nbsp; Mill/Manufacturer/etc gets $$ for modification.&nbsp; Store gets $$ for delivery to consumer.&nbsp; Consumer gets nutrition/personal utility.&nbsp; All are gaining, and if done well, all other than the consumer are gaining financial wealth/profit while the consumer is transfering wealth gained elsewhere for nutrition/personal utility.&nbsp; Nothing is created...value is added to something that is already present (the seed)...value in the dirt and climate that provides nutrients, value in increasing yield, value in modification, value in delivery.</p><p>&nbsp;</p><p>The key is to figure out which step in the chain is adding the most value (generating the larger profits/wealth) and trying your best to participate.&nbsp; Todays equity markets allow joe blow in the Sonoran desert to participate in Farmland Ownership in the midwest through REITs.&nbsp; He can buy any REIT.</p><p>&nbsp;</p><p>So Sonoran Joe blindly guesses that a toxic airplane crash will happen in Kansas, so he buys a REIT focused on Indiana farmland because it will not be toxic and worth more money.&nbsp; This is a Speculative bet on Indiana farmland that is based on a blind guess.</p><p>&nbsp;</p><p>Sonoran Joe decides, after hearing about a great summer climate and the fact that 80% of landowners contracts will be renegotiated in fall, decides a REIT in this space will create upside in the next few months when landowners use the current summer climate to demand higher rents from farmers in their new contracts.&nbsp; This is a Trading bet based on the new contract season (time/place guess)</p><p>&nbsp;</p><p>Sonoroan Joe decides that the move to grain ethanol based fuels, to transition away from Oil based fuels, will result in some great technological changes that impact the price of farmland in a positive fashion, so he decides a REIT is a good bet.&nbsp; This is an investment in farmland that will produce changes over years of transition (educated guess)</p><p>&nbsp;</p><p>All are guesses...all are trying to participate in value add activities that will increase Sonoran Joe&#039;s wealth...all have risk and may or may not payoff.&nbsp; Sonoran Joe, through his portfolio makes many diversified guesses (not all eggs in one basket).&nbsp; If he is doing things right, he is balancing his guesses between Speculation, Trading, and Investment based on his specific risk tolerance.&nbsp; If he is doing things wrong, he is placing far too many Speculative/Trading guesses, and reacting to the fact that no toxic plain crash, no contract upside, or the change in news that any of these will/won&#039;t happen.[/QUOTE]</p><p><br /></p>

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