Mark: Financially Astute?

Mark: Financially Astute?
10/6/23

I’d heard about Mark long before I had the chance to meet him. He’d been the DHIA (Diary Herd Improvement Ass’n) supervisor of farm friends of ours before they moved here from New Hampshire. They told me he’d be coming some time, wanting his own farm, so be on the lookout for him. Although he didn’t have a farm background they said had the drive and intelligence to be successful as a dairyman. This interested me as there were so many parallels to my own path in the dairy industry.

But he never called our firm, so I didn’t meet him. I did find out where he settled, not far away at all. So, years later, when I learned he wanted to sell, I was quick to get over there. What Mark had been doing was very unusual at that time. He had only a tiny investment in machinery and the farm wasn’t a particularly good one, with mediocre land, a barely OK home, and a single story barn that was cheaply built. What he did was purchase his feed and he used the land as a big pasture, rotationally grazed. These were practices preached by Cooperative Extension (remember them?) but not yet held in high esteem locally. But it worked for Mark. He had a 26000 lb. herd average. That is considered excellent today, but this was back in the ’80’s when even 20000 lb. herds were rare. His cows were grade Holsteins, perfectly functional, though not especially valuable, despite the high production. His extensive use of pasture seriously reduced the feed he’d need to buy. Most of what he bought was corn silage, which he fed year-round. He did buy some hay for off-season feeding, so the cows had a balanced diet year-round, one that, nutritionally, did not change all that much. It worked well for him. The barn inside was functional, with big enough stalls for large cows and a wide enough manger to easily maneuver a feed cart). The stalls were on the older side, but he kept them repaired as they broke. The barn had plywood siding, not pretty, but it kept out the elements just the same as nicer siding would do. There was a concrete bunker silo, his one improvement. He could get silage far cheaper in the fall, buying a year’s supply at once with the supplier not needing to go to the work and expense of storing his crop.

This was a guy who financially had his act together, so why did he want to sell? Well, it seems his farming practices left him with some time on his hands. He used that time at the computer, buying and selling stocks, and was making far more money at that than he could at farming. And he found it more fun, more exhilarating. Just think of how much he could make if he did not have to spend the time tending to his herd.

Each time I showed the farm, I’d stay behind afterward and we’d talk some. Often it was about stocks. At the time, I had a small portfolio but did not actively manage it; I let my broker make suggestions and would usually follow them, but it was mostly “wait and see” management, nothing proactive. At the time so many others were doing what Mark did and I felt kind of wistful, knowing I was missing out on all those profits. Every time I was there it seems Mark had made another $10000 in an astute trade.

My own philosophy has been to actively manage only the financial things in my life that I knew well and not to try to pretend that I knew more about some businesses than their executives did. But my resolve was weakening and each conversation with Mark and others like him showed me how wrong my approach was: I was missing out. Big time.

Well, we found Wally, a cash buyer for his farm and went into contact. The buyer was a recently single fellow from New Jersey, a man who’d always wanted to farm but could not do that and keep his wife happy. But now they were divorced, he could finally show her what he could do and begin to realize his dream.

Things progressed and finally we had a closing date set up. It had gone smoothly as both of them used the same lawyer.  Just before The Day, the attorney called Mark and me to say Wally had called and could not make it that day after all. OK, we set up a new closing date. When that day arrived, the same thing happened. So yet another day was scheduled. We were all in the office, waiting for Wally.. and waiting,,, and waiting.  He didn’t show. We finally left, not in a good mood. A few days later the attorney was able to reach Wally, listened to his excuse, and we scheduled yet another closing date. It was an encore. No show. Whereupon the lawyer fired Wally.

I later learned what was going on in New Jersey. Wally had never wanted to be divorced; it was his wife’s idea. He had always given her what she wanted and if she wanted a divorce, she’d get that too. Buying a farm was his way of showing her that he could be successful without her, that he had value. As the time neared for each closing, she’d call him up and make nice, offering hope that they could get back together. He wanted that more than he wanted to farm, so he’d blow off the closing. Then she’d get cold on him, he’d decide again to move, and when that date got near, he’d get another conciliatory call from her. How could anyone have predicted that this was going to happen?

So Mark was left with his farm, no more buyer, and months of time wasted. He had another problem, one of his own making. It seems that once we found Wally, he decided to cut his expenses and stopped breeding his cattle. No more insemination fees. He hadn’t told me about this while the deal was still alive. I was shocked that anyone would do this. While legal enough, it’s not honest. I’d sold many stocked and equipped farms before and not once had this happened. To save a few bucks for yourself, you end up screwing the buyer. Only Mark had screwed himself. Now he had a farm he was no longer interested in and his whole herd were all tail-enders. He’d doomed himself to low production for the better part of a year, all to save a few hundred bucks in breeding fees.

Another problem surfaced, a far bigger one. At the time, Lucent Technologies was a high-flying stock. It was formed as part of the Bell Telephone system regulatory split-up. Lucent was their technology sphere. I even had a few shares of it and every month the report get better and better. I’d been suggesting to my stock broker that maybe we ought to get more of it but he felt I had enough. Mark didn't need to use a stock broker, so didn’t incur the regular broker’s fees. Nor did he have that brake. He put nearly everything he had into Lucent. You can guess what was going to happen, and it did. Lucent crashed overnight. I lost a couple thousand, but Mark lost nearly everything he had, everything but the farm. And, having failed to keep the cattle bred, that was set to be unprofitable for the coming months. He took a job in a distribution center and stopped farming, using only the home. What else could he do?

Meanwhile, we still held the substantial downpayment Wally had made on the place. Probably to ashamed to face us after all that had (not) happened, Wally never asked for it back. Though we were entitled to a commission as we’d found a ready, able and willing buyer, his deposit wasn’t our money. Nor was it Mark’s. It just sat there… for months. I consulted the lawyer on what to do. He could tell me what to do but wouldn’t do it, not himself, as his practice avoided anything to do with courts. Hie said we had to sue Mark over it. That did not set well with us, but we could not take steps against Wally as it was Mark that was our client, not Wally.

So, eventually, we did it. Which brought about an outraged call from Mark. When I explained how it had to work, he calmed down, thank goodness, and agreed to sue Wally to get his deposit so he could pay us - and himself. In time, the legal process worked and Wally’s deposit was turned over to Mark, who then was able to give us our share ( which was far less than the commission would have been had the sale gone through).

We parted as friends, but circumstances no longer threw us together. It was some years before I met Mark again. It seems he’d been the successful bidder on a county tax foreclosure, one I’d also attended as a buyer. Fortunately I did not bid against him as the parcel he acquired was one that did not fit what I look for. I normally sit up front at these auctions and had not seen him behind me. I don’t bid against a friend if it can be helped. Mark showed me through his new home, which he’d been building mostly by himself. Though not exactly to my own taste, it was well done and had some expensive features, ones he’d managed to find at bargain prices and was able to incorporate in the home. I do the same thing with my own homes when I can. So he’d recovered from his losses, cut a completely new path for his family, and was happy in the new situation.