Wednesday, September 23, 2009

What have others said about investing in timber?

I thought these excerpts would be of interest to new tropical tree investors. Get involved now and buy some tropical trees at Amazonia Reforestation. The sooner you invest, the sooner you collect your gains.

9 year old Acacia mangium
The Economist, February 5, 2007 - “He plants trees to benefit another generation” said Caecilius Statius, a Roman comic poet. The sentiment remains admirable, but modern investors are putting money into trees to reap benefits in the nearer term. A growing number of rich individuals, endowments and pension funds are including timber as a “hard asset” in portfolios. No wonder. Average annual returns on timber—meaning managed preserves that are eventually harvested—have outstripped those from leading global stock indices, property, oil and gold for the past decade. Worldwide, timber has attracted more than $20 billion of investment from institutional investors. Advocates say managed timber reserves are good for the environment too, preserving biodiversity on lands that might otherwise be logged recklessly.

Getting seedling bags ready
Smart Money - Since the days of Robin Hood and King John, the wealthy and powerful have owned woodland. But about 20 years ago, a few insurance companies and big pension funds started buying forests as a hedge against inflation. For the first time, economists began evaluating timber in terms of total returns and risk/reward ratios. The track record of early investors — and a slew of recent academic research — indicate that timber is a near-perfect asset. Studies show that a diversified timber portfolio would have returned 13.3% annually over the past 40 years, compared with 11.6% for the S&P 500. Impressive, but that's just the beginning. Timberland is also remarkably low-risk, with volatility more like bonds than stocks. And it tends to perform best when stocks and bonds go down, making it a neat counterweight.

Brand new cashew tree plantation
Money Week - China is crying out for timber. Until recently, China had far less forest (roughly 18%) covering its land than other countries. Beijing imposed restrictions on harvesting timber and has thrown its weight behind creating man-made plantations. In the meantime, China has relied on imports to make up for shortage of timber. Imports to China increased tenfold from $53bn in 1990 to $561bn in 2004, with the bulk in recent years coming from Russia. But just as the Kremlin is happy to use its energy reserves to hold economies to ransom, it is squeezing its timber customers as well. Russian export taxes on timber rose to €15 per cubic meter on 1 April and are expected to balloon to €50 next year.

1 comment:

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