Wood (incl Timberland, Timber, Plywood, Lumber etc)

[winston]

THE ULTIMATE WAY TO OWN REAL ESTATE by Brian Hunt

More proof that "there's safety in trees" today...

Timberland is one of the long-term investor's best friends. Trees grow constantly. Harvesting times can be put off until prices are strong. And timberland prices aren't correlated to the stock market, so it's a nice diversifier.

For a picture of timberland's "friendliness," we present the long uptrend in Rayonier. Rayonier is one of the few publicly traded timber plays available to the U.S. stock investor. Rayonier and its uptrend have survived the worst credit crisis in generations, a huge bear market in commercial real estate, and a 20% decline in the broad stock market.

During all this misery, Rayonier has managed to gain 44% over the past three years and throw off steady dividend payments. For more proof of the tree thesis, Rayonier's contemporary, Plum Creek Timber, reached a new all-time high in July.

It's business as usual for what could be the world's best way to own real estate.

[winston]

not vested

The Ideal Investment to Own, Based on History By Steve Sjuggerud
Friday, September 16, 2011

What's the ideal investment?

Today, I'll tell you how to define "ideal" investment… what the ideal investment has been over history (you will likely be surprised)… and I'll show you the easiest way to invest.

Let's get started…

Is the ideal investment the one with the highest potential returns? Actually, no…

Some "options" trades, for example, can make hundreds of percent returns (or even thousands of percent returns).

But you can also wake up one morning and see the value of that option has literally gone to zero overnight. When the potential returns are ridiculous, the risks are usually ridiculous, too.

So is the ideal investment the one with the least risk? No…

No risk equals no return.

The ideal investment is the ideal mix of these two things… The ideal investment is the one with the highest return, relative to the amount of risk taken.

We have a rough measure of this in the investment world. It's called the "Sharpe Ratio." The higher the Sharpe Ratio, the more return you get relative to the risks you're taking.

Take a look at the returns and Sharpe Ratios of a few major investments over the last 20 years:

A few things immediately pop out…

U.S. small-cap stocks had the highest return, by far. But they had extremely high risk (measured by annual volatility). So they didn't have the highest return relative to the amount of risk taken.

High-quality, "investment grade" corporate bonds were the more ideal investment over that 20-year period… They had half the return of small-cap value stocks…

But they delivered that return with less than a quarter of the volatility. But bonds pay nothing today. And maybe they won't do as well going forward.

If you're willing to look beyond stocks and bonds, you can find some investments that are even more ideal…

Timber, for example, has a history of high, stock-like returns with low, bond-like volatility. Using the same time period in the table, timber had a compound annual return of 11.8%, with risk (annual volatility) of only 7.9% – for a Sharpe Ratio of 0.96. That is hard to beat…

That makes timber an ideal investment, based on history.

In the past, I've flown around the world with timberland experts looking at timberland investment opportunities. It looks like it might be time to dust off some of that timber research…

I am not alone in thinking this…

Famed investment manager Jeremy Grantham believes "managed timber" will be the best-performing asset class over the next seven years (based on his most recent Seven-Year Asset Class Forecast at www.gmo.com). That's not the best performer based on the Sharpe Ratio… That's the best performer, period.

In his latest quarterly letter, Grantham wrote: "For those with a long horizon, I am sure well-managed forestry and farmland will outperform the average of all global assets."

The ideal investment is one with high returns relative to the amount of risk taken. If you're willing to look outside the traditional investments of stocks and bonds, you can find some REAL ideal investments.

Timberland should be near the top of that list. Two easy ways to play it are through the exchange-trade funds "CUT" and "WOOD," which hold a basket of timber REITs and timber-related stocks.

Both funds have fallen dramatically in recent weeks. But when the uptrend returns, I may be a buyer.

Source: Daily Wealth

[winston]

This could be the world’s greatest “alternative” investment for big, safe long-term returns

Source: The Stansberry Research Investor Education Center

http://thecrux.com/this-could-be-the-wo ... 37gMXBU%3D

[winston]

Malaysia: Weak CPO dampens timber stocks’ outlook

Sustained high demand for logs will keep supply tight and prices firm.

PETALING JAYA: Timber companies are benefitting from rising log prices and a cheaper ringgit but weaker crude palm oil (CPO) prices are keeping some analysts wary about their immediate prospect.

Affin Hwang Research said it was “neutral” on the timber sector.

“With palm oil inventories at a 21-month high, the plunge in crude oil prices and likely record South American soybean harvest have added further pressure on CPO prices, impacting Ta Ann Holdings Bhd and Jaya Tiasa Holdings Bhd, which have CPO mills,” the brokerage said.

The research firm had recently trimmed its CPO average selling price estimations by RM200 per tonne to RM2,400 for 2015 and RM2,500 per tonne for 2016 and 2017.

For the financial year ending June 30, 2014, Jaya Tiasa’s oil palm division contributed 42% or RM33.49mil to the company’s pre-tax profit.

The group’s planted area stood at 66,283ha, while Ta Ann had some 36,944ha of planted oil palm land as at Dec 31, 2013.

Affin Hwang has a “sell” call on Jaya Tiasa, as it believes the current stock price has already priced in the expected sharp earnings boost from the company’s palm oil division.

However, sustained high demand for logs will keep supply tight and prices firm.

Subsequent to a shortage in the supply of logs, prices for plywood products are expected to remain firm, although plywood demand had softened in the first nine months.

According to Affin Hwang, the global shortage for logs has slightly lifted the average selling prices for concrete-panel plywood, which rose by 3%, and floor-base plywood, which rose by 1%, to US$540 per cu m and US$685 per cu m, respectively.

It also said Sarawak’s total export of plywood in the first nine months declined by 14.6% to 1.71 million cu m compared with last year.

“The drop was mainly due to slowing demand for plywood from Japan (-13% year-on-year or y-o-y), South Korea (-17% y-o-y) and Taiwan (-17% y-o-y),” it said.

Notably, Japan’s sluggish housing market, coupled with a weakened yen, had led to lower plywood demand.

“Fortunately, Japan has postponed its hike in the consumption tax by 18 months, previously scheduled for October 2015.

“This should help to stimulate consumer spending. Hence, we expect demand for plywood to remain relatively stable and not decline sharply, in light of Japan’s ongoing reconstruction and preparation for hosting the 2020 Olympics,” the research house noted.

At the close yesterday, Jaya Tiasa was unchanged at RM1.89, WTK Holdings Bhd was up one sen at RM1.04 and Ta Ann climbed five sen to RM3.62.

Affin Hwang has a “buy” call on WTK and Ta Ann, with target prices of RM1.70 and RM4.55, respectively.

Source: The Star

[winston]

One of the Best 'Hard Assets' to Own in 2015 By Dr. David Eifrig

To most everyone's surprise, the U.S. dollar continues to surge…

The U.S. Dollar Index has gained nearly 15% in the last six months… an astounding move for a major currency.

While this is great news for the purchasing power of U.S. consumers, it has crushed the value of almost all "hard assets" such as oil and precious metals – which are priced in U.S. dollars.

However, one overlooked commodity has continued to provide my Income Intelligence subscribers with growth AND yield over the past few months… even with a surging dollar.

I'm talking about timber…

Timber is a great portfolio holding because it's a "soft hard asset."

By that, we mean it's a real and valuable commodity. A lot of value investors have an affinity for commodities you can touch… So-called "hard assets," like precious metals, oil and gas, farmland, and other commodities, are perceived as having an intrinsic value no matter what's going on in the business cycle.

Timber is similar. We're always going to use lumber for building, but we have a limited amount of land. However, timber grows…

It's not a strictly limited commodity like gold or oil. Once you "prove" a barrel of oil in the ground, all you have is one barrel of oil. It doesn't grow or multiply. Same with gold. But when you own timberland, it continues to regenerate its value. Compare that with a gold mine, which decreases in value as every ounce of ore is pulled from the ground.

That makes timber both a viable growth business and a hard asset.

As a business, timber has a great cost structure. It has low fixed costs relative to other hard assets.

Once an investor has bought timberland, the upkeep is cheap. If timber prices are low, like they were during the recession, you simply don't cut any wood.

By sitting and waiting for a better market, the reduced supply raises prices. Timber owners don't have a lot of costs they need to pay while they wait. Better still; the timberland grows more valuable as trees grow.

Compare that with a gold mine, which has a massive capital investment in machinery and employees that need to be kept up even if prices are low. It's expensive to shut down a gold mine.

Timberland grows on its own. It's cheap to run. It'll always have demand. The continuous harvesting carves out regular income. It's an ideal investment. That's why timberland values have handily trounced the stock market.

The chart below compares the value of a pool of individual timber properties measured by the National Council of Real Estate Investment Fiduciaries (NCREIF) Timberland Index with the S&P 500 stock index:

And you can benefit not only from rising timberland values, but also from the yearly income.

For example, timber stocks Rayonier, Plum Creek Timber, Potlatch, and Weyerhaeuser all own huge areas of timberland. And since they are structured as real estate investment trusts, they enjoy tax breaks that allow them to pay shareholders high yields. All of them pay dividend yields of more than 3%.

If you're looking to collect income while investing in "hard assets," consider investing in timber today.

Source: Daily Wealth

[winston]

Large-cap timber producer Weyerhaeuser sinks to a new 52-week low.