Here's Why!

  In  time of disruption, it can be comforting  and profitable  to have a part of your portfolio in a tangible asset that will stay in demand. Ownership of feeder cattle (calves) that have been weaned and are being fed a diet of concentrated nutrients in preparation of sale to meat processors  provides two primary financial benefits:

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• Returns are comparable to the stock market, but with uncorrelated or negatively correlated returns, this is to provide lower overall portfolio volatility without sacrificing yields.

• Immediate tax deductions for vet expenses, feed, and other ordinary farm expenses needed to maintain and raise your cattle.  

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   When feeder cattle are introduced into a portfolio, the overall Sharpe’s ratio increases. Yields are maintained relative to stocks, but overall portfolio return volatility is reduced.

   An added benefit for taxpayers, the cash method of accounting in farming permits owners to deduct the purchase cost of feed, vet expenses, and other ordinary farm expenses needed to maintain and raise your cattle, and only recognize income when received. You may also buy all of the feed needed to finish your cattle and deduct that at the time of purchase. This also provides a hedge against feed price increases.

   A little known fact is that cattle can be placed in a self directed IRA. Investors that do not want to invest in the stock or bond market or who want diversification may be interested in this option.

There are also economic benefits to owning tangible assets such as livestock. You can go see them and watch them grow.