Big data is making a big impact on how things are done in the agriculture industry

Takeaway: Big data is making a big impact on how things are done in the agriculture industry.

Why Big Data Is Big Business in Agriculture
Source: Gunnar3000/
Big-data technology and agriculture are meant for each other. The ag industry has enough data to keep the most ardent data analyst happy. And while farmers aren’t typically considered to be among the digerati, maybe they should be; They can use what big-data technology does well – decipher mountains of data.

On a recent trip to Salinas Valley, I talked with Chris Drew, product manager for Ocean Mist Farms. He explained that technology like sensor arrays can measure ground moisture, soil conductivity and atmospheric conditions. That information is then sent to John Deere’s data centers via satellite or cellular transmitters.

At the data centers, John Deere algorithms crunch the sensor data, meld it with other pertinent historical data and present the results in a Web-based format Drew and others at Ocean Mist Farms use to determine when to water, when to fertilize and how much water to add so the fertilizer ends up where it’s needed — at the plant’s roots.

This technology saves water and fertilizer, reduces costs, saves Drew from digging exploratory holes in fields that stretch from horizon to horizon and results in cheaper, better produce.

Sensor Data Overload

That’s just one example of the myriad types of data that farmers keep track of. To learn about other types of sensor data, I referred to Quentin Hardy’s New York Times documentary Working the Land and the Data. Hardy asked Kip Tom, a seventh-generation farmer now running Tom Farms, to diagram the different data Tom Farms accrues. The following slide was the result.


Historically, farmers relied on ledgers. In turn, computersintroduced farmers to spreadsheets, and a better way to keep track of farm data. However, looking at the above white board diagram one can see spreadsheets are inadequate to compile and make sense of all that information. Enter big-data technology, which can easily handle it all.

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Posted by on February 27, 2015 in Investments


Valuation vs. risk bubble


The In Vitro fund?

Hi there,

Lots of really good writing out there these days. Here is some I’ve liked.

Bill Gurley writes that most companies raising large rounds today are not ready for an IPO in this solid essay. Bijan Sabet of Spark Capital writes about the people who took a chance on him (thanks to our early believers). Got opinions on Apple and the auto industry? Maybe read this post by Horace Dediu of Asymco first. Mike Evans, CEO of Grubhub, does an awesome review of what it’s like to IPO.

Introducing the pre-seed

A few weeks ago, I saw VCs talking on Twitter about how the classifications between funding rounds was meaningless. And today, we’ve added a new classification.

Mission accomplished.

It’s called Pre-Seed.

I was going to make an absolutely hilarious joke about a new embryo stage fund but then saw this tweet by Hunter Walk which did the job. Damn you Hunter.


Sub-Prime Unicorn

Bryce Roberts of OATV has launched something called which offers an alternative to the venture model to fund tech companies. It’s still being figured out, but nevertheless, it’s great to see some innovation in how tech companies get funded (pre-seed doesn’t count as innovation btw). Bryce has a great post full of straight talk about what’s wrong with the current startup investing climate. Here’s my favorite part:


It’s worth remembering that companies like ShutterStock and GoPro were bootstrapped for a while before taking funding. If something like Bryce/OATV’s fund existed back then, I wonder if these companies would have taken advantage of it?



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Posted by on February 27, 2015 in Investments


A unique perspective

In a mother’s womb were two babies. One asked the other: “Do you believe in life after delivery?” The other replied, “Why, of course. There has to be something after delivery. Maybe we are here to prepare ourselves for what we will be later.”
“Nonsense” said the first. “There is no life after delivery. What kind of life would that be?”
The second said, “I don’t know, but there will be more light than here. Maybe we will walk with our legs and eat from our mouths. Maybe we will have other senses that we can’t understand now.”
The first replied, “That is absurd. Walking is impossible. And eating with our mouths? Ridiculous! The umbilical cord supplies nutrition and everything we need. But the umbilical cord is so short. Life after delivery is to be logically excluded.”
The second insisted, “Well I think there is something and maybe it’s different than it is here. Maybe we won’t need this physical cord anymore.”
The first replied, “Nonsense. And moreover if there is life, then why has no one has ever come back from there? Delivery is the end of life, and in the after-delivery there is nothing but darkness and silence and oblivion. It takes us nowhere.”
“Well, I don’t know,” said the second, “but certainly we will meet Mother and she will take care of us.”
The first replied “Mother? You actually believe in Mother? That’s laughable. If Mother exists then where is She now?”
The second said, “She is all around us. We are surrounded by her. We are of Her. It is in Her that we live. Without Her this world would not and could not exist.”
Said the first: “Well I don’t see Her, so it is only logical that She doesn’t exist.”
To which the second replied, “Sometimes, when you’re in silence and you focus and you really listen, you can perceive Her presence, and you can hear Her loving voice, calling down from above.”

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Posted by on February 18, 2015 in Investments


The financial industry’s crucial role in sustainable development

"Climate change is the greatest of these environmental threats (though by far not the only one). Given the current trajectory of global fossil-fuel use, the planet’s temperature is likely to rise by 4-6 degrees Celsius above its pre-industrial level, an increase that would be catastrophic for food production, human health, and biodiversity; indeed, in many parts of the world, it would threaten communities’ survival"

From a joint study by renowned economist Jeffrey Sachs and Hendrik do To it at Investec

Author: Jeffrey D. Sachs, Professor of Sustainable Development, Professor of Health Policy and Management, and Director of the Earth Institute at Columbia University. Hendrik J. du Toit is Chief Executive Officer of Investec Asset Management.

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Posted by on February 17, 2015 in Investments


Organized People are not borne, they are made

We all know that one friend or coworker who is super-organized. The person who is punctual, finishes projects with time to spare, and always knows exactly where to find what they need when they need it.

Instead of hating that person, why not figure out how they do it?

“Organized people are not born; they’re built,” says John Trosko, founder ofOrganizingLA, a Los Angeles-based organizing firm. “The people who emerge as ‘organized’ use a variety of tools and methods to accomplish their goals and priorities in life.”

Their systems become habits, says Trosko. Here are seven things organized people do on a regular basis to stay on top of it all:

1. Organized People Seek Out Tools

From kitchen timers to smartphone technology, organized people find tools that can help them make the most of their day, week, and year, says Trosko.

They use mobile phone apps with pop-up reminders, for example. They also use timers to help visualize the passage of time. And they break down tasks into smaller chunks and take short non-work-related breaks in between, which increases their overall productivity.

2. Organized People Set Priorities

Instead of having an overwhelming number of commitments and little idea where to start, organized people have a clear sense of what’s important, says Lisa Zaslow, founder of Gotham Organizers, New York City-based professional organizers.

“They know what their goals are, what needs to be done when, and what can be put off,” she says. “They start the day with a clear plan of their ‘MITs’–their ‘most important things.’ And they review their plan throughout the day and adjust as necessary.”

3. Organized People Have Less Stuff

The golden rule of organization is to have as little as possible to organize, says productivity expert Hillary Rettig, author ofThe 7 Secrets of the Prolific.

“They figure out what the core of their professional and personal missions are and eliminate all else,” she says. “They will still have stuff to organize, but they’ve made the job doable.”

4. Organized People Choose Simple Solutions

When organizing systems are complex, they often go unused. Trosko says organized people use simple tools that make an easy job of putting things away.

For example, baskets hold receipts that need to be filed, bills that need to be paid, and books that are waiting to be read. A hook by the door makes it convenient to hang up a coat. And bowls and trays near an entryway will keep keys and wallets in one place.

5. Organized People Practice Maintenance

Organization requires continual upkeep, says Zaslow: “You don’t go to the gym, get in shape, then cancel your membership,” she says. “Being organized is the same.”

Organized people will take a few moments each day to put things back in their proper places. They might archive an email, for example, or put away papers.

“They don’t drop things in a random pile ‘just for now’–it’s always now,” says Zaslow. “The tiny amount of time it takes to do this is vastly less than the time it takes to look for something that wasn’t put away properly.”

6. Organized People Regularly Purge

Situations change and formerly useful things become unnecessary. Instead of letting clutter sneak up on them, Zaslow says organized people periodically purge. They clear out their files when the drawer starts to get full, for example, and they toss the notes for the project that was canceled.

Zaslow says she once had a client who would buy a new filing cabinet each time one got full: “By the time she called me to intervene, she had file cabinets in her home office, guest room, upstairs hall, den, and basement,” she says. “Needless to say, most of the information was out of date and irrelevant.”

7. Organized People Project Themselves Into The Future

Using a two-person mind-set–present self and future self–can help you stay organized, says Lorie Marrero, founder of the Clutter Diet, an online organizing program. She likes to think of her future self when she takes care of small tasks right away.

“If I walk through a room and see a mess, I will say, ‘I bet if I do those dishes now my future self will be so much happier later,” she says. “That motivates me to do those favors for my future self.”

Marrero says organized people also think into the future when they add activities to their calendars: "They ask: ‘What could I do before, during, or after this appointment to improve it?’" she says. If they need to prepare for it, bring something to it, or follow up after it, they schedule it now and put it on their task list.

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Posted by on February 16, 2015 in Investments


Chunk-Down that Goal

building-a-planSometimes our biggest life goals seem so overwhelming.

We rarely see them as a series of small, achievable tasks, but in reality, breaking down a large goal into smaller tasks—and accomplishing them one at a time—is exactly how any big goal gets achieved.

After you have decided what you really want, with specific deadlines, the next step is to determine all of the individual action steps you will need to take to accomplish your goal.

How to Chunk It Down

There are several ways to figure out the action steps you will need to take to accomplish any goal. One is to consult with people who have already done what you want to do and ask what steps they took. From their experience, they can give you all of the necessary steps as well as advice on what pitfalls to avoid.

Another way is to purchase a book or manual that outlines the process.

Yet another way is to start from the end and look backward. You simply close your eyes and imagine that it is now the future and you have already achieved your goal. Then just look back and see what you had to do to get to where you now are. What was the last thing you did? And then the thing before that, and then the thing before that, until you arrive at the first action you had to start with.

Remember that it is okay not to know how to do something.

It’s okay to ask for guidance and advice from those who do know. Sometimes you can get it free, and sometimes you have to pay for it. Get used to asking, “Can you tell me how to go about…?” and “What would I have to do to…?” and “How did you…?”

Keep researching and asking until you can create a realistic action plan that will get you from where you are to where you want to go.

What will you need to do? How much money will you need to save or raise? What new skills will you need to learn? What resources will you need to mobilize? Who will you need to enroll in your vision? Who will you need to ask for assistance? What new disciplines or habits will you need to build into your life?

Another valuable technique for creating an action plan for your goals is called mind mapping.

How to Use Mind Mapping

Mind mapping is a simple but powerful process for creating a detailed to do list for achieving your goal. It lets you determine what information you’ll need to gather, who you’ll need to talk to, what small steps you’ll need to take, how much money you’ll need to earn or raise, which deadlines you’ll need to meet, and so on—for each and every goal.

When I began creating my first educational audio program—a breakthrough goal that led to extraordinary gains for me and my business—I used mind mapping to help me “chunk down” that very large goal into all the individual tasks I would need to complete to produce a finished product.

To mind-map your own goals, follow these steps as illustrated in the example:

  1. Center circle: In the center circle, jot down the name of your stated goal—in this case, Create an Audio Educational Program.
  2. Outside circles: Next, divide the goal into the major categories of tasks you’ll need to accomplish to achieve the greater goal—in this case, Title, Studio, Topics, Audience, and so on.
  3. Spokes: Then, draw spokes radiating outward from each mini-circle and label each one (such as Write Copy, Color Picture for Back Cover, and Arrange Lunch.)

On a separate line connected to the minicircle, write every single step you’ll need to take. Break down each one of the more detailed task spokes with action items to help you create your master to do list.

Next, Make a Daily To-Do List

Once you’ve completed a mind map for your goal, convert all of the to-do items into daily action items by listing each one on your daily to-do lists and committing to a completion date for each one. Then schedule them in the appropriate order into your calendar, and do whatever it takes to stay on schedule.

Do First Things First

The goal is to stay on schedule and complete the most important item first. In his excellent book, Eat That Frog! 21 Great Ways to Stop Procrastinating and Get More Done in Less Time, Brian Tracy reveals not just how to conquer procrastination but also how to prioritize and complete all of your action items.

In his unique system, Brian advises goal setters to identify the one to five things you must accomplish on any given day, and then pick the one you absolutely must do first. This becomes your biggest and ugliest frog.

He then suggests you accomplish that task first—in essence, eat that frog first—and, by so doing; make the rest of your day much, much easier. It’s a great strategy. But unfortunately, most of us leave the biggest and ugliest frog for last, hoping it will go away or somehow become easier. It never does. However, when you accomplish your toughest task early in the day, it sets the tone for the rest of your day.

By chunking down your goals, and then taking daily action on them, you create momentum and build your confidence, both of which move you farther and faster toward the achievement of your goals.

Now go take some action!

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Posted by on February 16, 2015 in Investments


Repression Investing: Got Gold ?

Gone are the ZIRP days – the ‘Zero Interest Rate Policy’ is being replaced by negative interest rates in various countries. ZIRP is a form of financial repression, where savers earn less than the inflation rate to discourage saving. Pundits suggest the U.S. has chosen a different course, as ‘liftoff’ may soon take U.S. rates higher. We’ll try to separate reality from fiction, discussing investment implications for the U.S. dollar and gold.

Much of investing is about trying to retain or enhance purchasing power. Even conservative investors are enticed to take risks, as hoarding dollar bills is an all but certain way to lose purchasing power when there is inflation. Real interest rates, i.e. nominal interest rates net of headline inflation, have been negative for some time, making holding cash a losing proposition. The chart below shows that when using the headline consumer price index as a reference point, financial repression has been rampant for some time.

Below are real interest rates in the U.S. and Eurozone, i.e. nominal interest rates minus headline consumer price index (CPI) based inflation:

This chart shows:

  • Financial repression has been rampant.
  • Despite all the talk of a U.S. “exit,” real interest rates in the U.S. not only continue to be negative, but they are lower than in the Eurozone.
  • Eurozone real interest rates recently inched into positive territory because headline CPI inflation has been negative of late.

We wouldn’t want to talk anyone out of holding cash. However, investors need to be aware of what it is: in our assessment, when real interest rates are negative, cash cannot be considered “safe.” We have long warned that there may be no such thing as a safe asset anymore and investors may want to consider a diversified approach to something as mundane as cash.

Let’s look at gold. Critics decry it as an unproductive, barbarous relic. It’s correct that this shiny metal doesn’t pay any interest and may be ‘unproductive.’ But we just saw that cash, another unproductive asset, yields negative real interest. Gold may be a formidable competitor when real interest rates are negative, i.e. in an era of financial repression.

Now, clearly, the risk profile of gold is different from that of cash. Most have their daily expenses priced in their local currency rather than ounces of gold, making the value of cash more predictable for short-term expenses.

A business can be valued based on various models taking future earnings into account (e.g. through a discounted free cash flow model). Similarly, when looking at gold, investors may want to consider what the future may bear. It’s not that the gold will change, but the currency in which it is valued: since 1970, the price of gold has had an average return of 8.3% per annum through the end of 2014:

If we chose to look at the past 100 years, we would also get attractive returns, although U.S. investors weren’t allowed to hold gold during part of that time. Most investors appreciate an 8.3% annual return; there are a couple of challenges, though:

  • It’s not been a smooth ride; investors buying gold at the peak in 1980 would have had to wait a long time for the price of gold to recover.
  • There’s no guarantee that the price of gold will continue to rise over time.

It also turns out that the purchasing power of gold hasn’t changed all that much: a gallon of milk or a suit cost about as much in gold 100 years ago as they do today. This suggests:

  • Over long time horizons, gold has been able to retain its purchasing power.
  • Just as gold may be an unproductive piece of metal, the CPI may well underreport inflation. That, in turn, suggests that positive real interest rates may only be a competitor to gold if investors truly are able to retain or enhance their purchasing power holding with cash like instruments.

Let’s look at the crystal ball of what the future may bear. A valid criticism of the ‘real interest rate’ chart above is that it looks at current rather than future inflation. Central banks have various ways to gauge future inflation expectations. Without getting into technical details, the charts below, one for the U.S. and one for the Eurozone, are supposed to eliminate short-term noise, focusing on longer-term inflation expectations:

The red line refers to the 2% inflation target; central bankers get worried when expectations of longer run inflation are at risk of falling ‘too low.’ That’s why European Central Bank head Draghi is ringing the alarm bell. In the U.S., Bernanke historically announced another round of QE when the above chart approached 2%. So while the ECB turns on the printing press, the Fed, looking at similar trends, shrugs them off, blaming low oil prices for distortions in this way of looking at the data. Never mind that this way of looking at the data is supposed to filter out the short-term effects of oil.

We draw from this:

First, central bankers are prone to interpret the data to serve their agenda. We can make lots of arguments why QE in the Eurozone is inappropriate; and, conversely, the Fed appears to engage in a make believe assessment of the economy. The future policy course may increasingly be driven by ideology.

With interest rates low, we have our doubts real interest rates are going to move high anytime soon. In the context of this discussion, it is high real interest rates that pose a threat to the price of gold.

Let’s look at another forward-looking measure: the Congressional Budget Office’s (CBO’s) outlook on deficits. No, this isn’t about the budget proposal projecting deficits over the next decade, but the most recent CBO outlook projecting long-term deficits:

Many criticize CBO numbers as being notoriously inaccurate. Maybe. But in our analysis, in a decade from now, the U.S. may be paying $1 trillion more a year in interest expense alone should the average cost of borrowing go back up to its historic levels. There may not be money for other government programs left; one way of looking at the challenge is that the biggest threat to national security may be the deficit because there may not be any money left for the defense budget. Let’s not scoff at Greece and Europe: the U.S. has related challenges.

To us, this avalanche of expenses may provide an incentive to keeping real interest rates low to help the government finance itself. Indeed, we think it may be difficult to have positive real interest rates for an extended period of time over the next decade. I would like to caution that when I explained my concern to a Fed policy maker, he said this outlook is unrealistic as it wouldn’t provide a stable equilibrium. My response: I never suggested this would be stable.

We can avoid the explosion of deficits with major entitlement reform. We could introduce means testing to receive benefits; we could increase the age at which social security gets paid. There are solutions to these problems, but they are politically very difficult to implement, no matter who controls Congress. The Europeans have tried austerity. In the U.S, we may favor the magic wand of the Fed. Having said that, many U.S. benefits are indexed to inflation, causing the printing press to be of little relief unless unless the CPI under-states inflation.

Another way to look at this is that this is the first time in U.S. history that both the government and consumers have what we believe is too much debt. Foreigners – that don’t vote – own much of this debt. This provides an incentive to debase the value of the debt. Differently said: interests of the government and savers are not aligned. More broadly speaking, investors – be that in the U.S., Japan, Europe, can’t rely on their government to preserve the purchasing power of their savings.

We don’t need to be right about the future. As long as there’s a risk that we are right, it may be prudent to take it into account in an asset allocation. If you like to learn more how to construct a portfolio in an era of financial repression, and what role gold may play in such a portfolio, please register to join us for our February gold webinar. If you believe this analysis might be of value to your friends, please share it with them. Also, if you haven’t done so, please sign up to receive Merk Insights for free.

Axel Merk

Axel Merk is President & CIO of Merk Investments
Manager of the Merk Funds

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Posted by on February 11, 2015 in Investments


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