Get In The Game: Time to Upgrade Machinery?

September 29, 2016 06:00 AM
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The 2016 National Football League season is in full swing. As a lifelong Minnesota Vikings fan, I can’t believe I’m going to do this, but here’s an insightful quote from Dallas Cowboys owner Jerry Jones. It’s some of the best financial and life advice I’ve heard.

“I’ve had my finest hours in business going against the grain,” Jones said. “... Business is bad. I jump in. Why? The opportunity’s good.”

He’s a smart man. Jones thinks the opposite way is where opportunities for financial gain await.

Sales Trend Reverses

Are the final months of 2016 a good time to upgrade into late-model used farm equipment? Most think it’s time to sit tight and trim expenditures. It’s not the time to be aggressive in terms of used machinery purchases. Or is it?

There’s some food for thought in this chart from the Machinery Pete Used Values Index. The index uses a 1-to-10 scale based on all auction data I’ve compiled for 27 years. This rating includes all used equipment.

I want to draw your attention to the fourth quarter of each year. From 2003 to 2013—11 years in a row—used values went up in the fourth quarter.

Section 179 motivated buyers to make purchases and minimize taxes. So in looking back, you’d think year-end wouldn’t be the time to get maximum value.

But hold on. Note what has happened during the fourth quarter in the past two years. Used equipment values remained flat in 2014, and they actually fell this past year.

That is partly because farmers pulled back a bit in terms of their buying attitude, but in great part it’s also a factor of farm equipment dealers who have poured excess late-model used equipment inventory out onto the wholesale auction market each December. 


From the dealer perspective, when group-think had everyone zigging one way (selling in December), it would have been better to zag (selling before or after December). Group-think might lead farmers to be conservative as they eye late 2016 buying windows. 

Consider Equipment Upgrades

Yet since mid- 2015, the overall rating pattern on late-model used farm equipment values has been basically flat. Year-end 2016 looks to be a tremendous buying opportunity.

I’ll loop back to Jerry Jones. In 1989, his Dallas Cowboys were on their way to a 1-15 record. They had one star player: running back Herschel Walker.

So he’s the one player they built around, the one untouchable player on the roster, right? Nope. They traded him to my Minnesota Vikings. We overpaid mightily. Jones’ Cowboys used the trade haul to build the 1990s teams that won three Super Bowls. “Business is bad, I jump in. Why? The opportunity is good.” 

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Spell Check

Boise, ID
9/29/2016 10:55 AM

  These are all wonderful "wants" but what does your banker say??


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