Tommy Kent Crouch recalls that his first futures trade was in pork bellies and caused him to lose the down payment on the house for which he and his wife were saving. That was back in 1966 and Crouch calls it his “first lesson” in trading, but it was one of many and the beginning of a lifelong love affair with markets and trading.
Crouch grew up on a farm in central Indiana and was hired as a hog buyer by Heinold Commodities when he was 20 years old. In 1971 he got the opportunity to go to Chicago to be a livestock analyst for Heinold.
“I couldn’t pack my bags fast enough,” Crouch says. “I was responsible for giving market recommendations to branch offices throughout the country. I handled a deck, I filled a lot of orders for Heinold in second option hogs.”
In 1977 he and a partner left Heinold and bought into ag-based futures broker Packers Trading Company.
Crouch always has traded throughout an eclectic career that has spanned six decades and has focused on every aspect of agribusiness. He has farmed, traded, raised cattle, bred racehorses, brokered customer orders and owned clearing firms and feedlots.
In the mid-1970s, he opened the first Pig Improvement Company (PIC) multiplier in the United States and bought a horse farm. PIC began in England in the 1960s, dedicated to providing genetic improvement in pork breeding.
He moved to Kentucky in the mid-1980s to dedicate more of his time to breeding horses, which he did quite successfully, breeding several million-dollar winners and earning an induction into the Harness Racing Hall of Fame. But it wasn’t until 2010, at an age when most traders would be retiring, that Crouch launched his commodity trading advisor, TKC Investment Services.
TKC is a discretionary program that trades grain and livestock markets on fundamentals, but Crouch understands the impact of systematic trading. “Fundamentals always will win out,” he says. “Do I pay attention to technicals? Absolutely. More so today than ever. There is nothing worse than being right on the fundamentals and losing money because somebody wanted to move 2,000 [lots] because the technical said something.”
He doesn’t care for the high-frequency traders that are beginning to dominate the markets, but says they can be exploited. “If you are patient, those people will make big mistakes. That is why I work 20 hours a day, that is the reason I am up at 3 (o’clock) in the morning waiting for the London guys to come to work,” he says. “I call them the pinstripers. The pinstripers never stepped in a pile of hog manure in their lives. They make big mistakes, and if you are up working you can take advantage of them.”
Crouch grew up in the salad days of the industry and his longtime customers understand how he trades and trust him. “I am a little more aggressive than some people,” Crouch says. “When I get a move, I will push the envelope a little bit. I will have a drawdown that will be bigger than some people like, but the way I look at it, it is the end of the year that counts.”
That was apparent in 2011 when he suffered his worst drawdown, 70%, thanks largely to a volatile corn market. The drawdown was sandwiched between equally impressive up moves, and the program closed the year down less than 10%. TKC is up a gaudy 200% this year through August, thanks to his deep knowledge of ag markets.
“I personally drove [more than] 3,000 miles this summer on weekends looking at crops,” Crouch says. “It is one thing for me to call you in Springfield, Ill. and you tell me what you think. As a farmer it is something different for me to see with my own eyes. I don’t know how many rows of corn and beans I have been in this summer, but I saw what was happening early on and I was able to make a pretty good play out of the grain market.”
He also understood this year’s drought, which he says is the worst he has ever seen, and its impact on livestock. Because of it, he made a killing on long hog spreads.
Most of his trades are spreads. “I am a directional trader; I use spreads to minimize risk and soften the volatility,” he says.
He is not too old to learn lessons, and he doesn’t want to repeat the drawdown of 2011. “I have learned to not be quite as aggressive with the fund, but I like to add to winners and I am [very] quick to pull the trigger on a loser.”
Crouch says he has three great loves: “Farming, breeding great livestock and trading commodities.” All three of those passions worked together to help him earn huge profits this year.
And in a long career that he has enjoyed thoroughly, he is back to doing what he loves most. “I really am enjoying what I am doing. I love the challenge of the marketplace. I love matching my knowledge and wits with the market,” Crouch says. “All traders have had ups and downs in their careers; the main thing is always have money to come back and play tomorrow.”