"The Big Short", for those who haven't seen it, is a film about speculation on subprime mortgages.

Before watching film, I’d dabbled in similar (CFD) trading with fake money. I was hesitant to invest any hard earned euros, at least before I’d developed an understanding – neither beef farming nor a PhD are sufficiently lucrative to maintain such expensive hobbies.

The principles were simple. I wasn’t buying shares or commodities as such, merely predicting what way their value would go. If I thought that they’d go up, it was time to ‘buy’. Should there be reason to believe that the price would drop then a ‘short’ was on the cards.

In “The Big Short” our heroes effectively ‘short’ a section of the American mortgage market after a numeric genius sees a pattern emerging in flimsy housing loans.

I began to spend more time reading the business section of the paper and following economists on twitter - scouring for hints. For a fortnight, things went well. Rumours and speculation here and there yielded a couple of fake killings – things were going the right way.

Taking risks

Timing is important with such trading. One must cash in when appropriate. If the value of a share goes the opposite way to your prediction, then potential losses can be a multiple of the initial wager – this is the major risk.

I ‘bought’ oil on an inkling that things were improving, and they did… for a couple of days.

The following day the price plunged and has snowballed since. I still haven’t ‘cashed out’ and must pump fake money in to keep my fake trade going. At this stage the fake farm would’ve been sold and I’d be in the fake gutter. I’ve abandoned all hope of recouping my fake millions.

Price of beef

You’re thinking, where the hell is he going with this?

The movie got me pondering. If we could predict the direction of our Irish Ag commodities, what way would the money go? Take beef for example.

Teagasc predict a drop in beef price for 2016, though they haven’t always called it right. Their outlook for 2014 predicted a rise from 2013, which did not occur. Correct predictions of a jump in 2015 were perhaps slightly lucky in that much of this increase could’ve been attributed to the weakening euro, which was not acknowledged in their “outlook” document.

Brexit will be huge of course, and until a decision is made the euro will continue to slide. It’s a drum that has been beaten repeatedly in the IFJ, but the fact remains that a British exit from the EU would fling open the doors of uncertainty for beef exports. Furthermore, an exporting country with a higher beef price than that of its customers, as was the case for much of the second half of 2015, is unsustainable.

On the plus side, we are constantly informed of efforts to market our beef internationally and supply new markets – creating fresh demand is an insurance policy that we must take out. Will new markets inflate our cheques in 2016? According to the IFJ, live exports seem to be reigniting too; another price-plus?

Buy or short, what would you do?