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1 Man's journey in Business and Life............

did you notice the ambiguousness? I am becoming more and more in tuned to how people think I am blowing my horn! I am not blowing a horn, I am creating a symphonic and true bridge to corporate accountability and really how things work in a privately held corporation. So it is May 1994, I was urging that based on our continued explosive growth, we should minimize our exposure to unexpected and really unmanageable market swings. I had been reaching out and  talking to many contacts and broker's I have had the pleasure to meet, traveling to these ultra luxurious conferences  and meetings, that no one else even cared about in the company. I will never forget it, I finally convinced my owner to buy futures, not fix coffee based on contractual real  life pricing. I devised a plan where we could actually capture more profit company wide, if we executed it right and we were diligent and very disciplined. In other words, we would protect our downside potential with options and protect our upside with buying futures, or vice versa. It wasn't the old way, it was a sea change and it felt a lot like throwing all your savings on a roulette table on black! but it really wasn't in fact, everyone was doing it, Proctor and Gamble, Sara Lee, certainly Kraft etc... but we weren't them. Anyway, I convinced our owner to open up a trading account and to give me $35,000 to Play with. My very first time I did this I bought 4 July futures, because coffee is bought in 6 different time periods. So it was early May and i bought 4 contracts, futures which says you will take delivery on 4 contracts equalling 37,500 lbs of coffee x in the month you fixed the coffee, which never happens when you are an investor, but if you are a physical buyer, at least we could take delivery and try to make money, worst case scenario. Well when you buy a contract like that it only costs you say $2500 to secure your price. It is called speculation, and you are saying I think the coffee in that time frame will go up, so I am securing my profits now and if it goes up we reap the extra profits! This is nirvana in our business. Yuo know how far we have came? It was dinosaurs on steroids really. Anyway, I bought the coffee on a Friday, I risked $10,000 of not my money to secure pricing over the summer basically. Well guess what happens? Over the weekend there is a major frost in Brazil, the number one coffee producer in the world. As I have explained they export 40 % of the world's total consumption. Well the fidelity, smith barney and whoever else guys had a huge position in this coffee. I showed up on Monday morning and the the market was $1.27 per lb on the opening,  I bought our position at $1.17 per lb. So walking in the door We made $15,000 risking 10. Not bad right? We doubled our money and we still makke money because we actually take delivery and roast and price it for a fixed profit. I'll never forget the call I got next telling me about this frost in the most important coffee producing areas in Brazil, the crop could be reduced by 50%!!!@ Really, I was seeing stars. So I sat dripping sweat and as worried I have have been in my whole life but within 4 hours the market went bananas! When it hit $2.56 cents per lb, I hit the sell button. It went to $2.74 but hey, even I have scruples. In 4 hours I made the company $210,000 risking $10,000. Then we proceeded to find out the extent of expected shortages, By the way there was plenty of Brazilian coffee already in warehouses and really it turned out to be not that bad. So we ended up already owning coffee at $1.17 for all our contracts. made a ridiculous amount of money on the futures market and we were still able to go back to our customers and get a price increase! The all encompassing trifecta! So we actually made somewhere around somewhere around $400,000 on that one transaction for the year in 4 hours. Not bad huh?  What a year we had that year. Anytime you can plan and succeed feels good to me, I was so happy. It also really solidified my position as a really inner circle member of the company, it was a real change from then on. I gained my bosses complete trust and from there on in it was, basically do what you want, well sort of. Know matter what the buck still stopped at his desk, and you what, rightfully so. I had more work to do and that was that. No looking back, no asking for any special favors , nothing, I was just jacked on succeeding, which a lot of people told me I was nuts. I didn't care, I felt I was doing the right thing for someone I admired and he was good to me I felt so that was that. Wow, I wonder if a Harvard MBA would see it the same way? You know, i have interviewed a bunch of them since then, I can tell you, no they would have handled it extremely different. Oh well. I was feeling pretty good, life was good. I didn't really enjoy it but it was. too young to realize it I guess, there's a regret but chalk it up to a life lesson. Goodnight everyone, thanks for following, I appreciate it!! PEACE!!! Joe









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