The past week has seen a number of factors combine to push timber prices and forestry stocks higher, with the most notable force coming from Hurricane Sandy. The superstorm wreaked havoc on the East Coast, as its destructive path reached 1,000 miles across, leaving millions of homes and businesses damaged and powerless. Estimates of the damage have come in at a staggering $50 billion, making Sandy the second most expensive storm in U.S. history, behind Hurricane Katrina [for more timber news and analysis subscribe to our free newsletter].
Buying and owning hard assets like farmland and timberland has been a popular investing method for many years. Unfortunately, it is too costly and difficult for the average retail investor, so it is often left to those who have access to a significant capital base. For those who can invest in land, it can often be one of the best investments you will ever make, as the potential for profit is quite large [for more commodity news and analysis subscribe to our free newsletter].
Jeremy Grantham, famous for co-founding the Grantham Mayo Van Otterloo (GMO), has made a series of forecasts that investors may want to pay attention to. Grantham has become a household investing name with his uncanny predictions of numerous asset bubbles as well as his general knowledge of the financial world. According to Mr. Grantham, the next seven years will see timber outperform all other asset classes. The prediction laid out a 6.5% annualized return for this commodity, while other asset classes lagged behind [for more timber news and analysis subscribe to our free newsletter].
The benefits of commodity investing have been well-documented in recent years, as this asset class has become a more widely-accepted part of every investor’s portfolio. These assets are typically used for their appeal as inflation hedges as well as their low correlation to the overall stock market. When most investors think of these kinds of assets, big name commodities like gold and silver come to mind, yet their are a number of other options that present equally compelling investment theses. One of those investments is timber, a commodity that has proven its worth over time [for more commodity news subscribe to our free newsletter].