|
Published: September 8, 2010
"Steve, where do you find all these weird investing ideas?"
I hear that all the time...
Rare gold coins, tax certificates, virtual banks, timberland
investments... You name it, I'm not afraid of it. If I can
easily understand the risks and I can easily understand how
great a deal it is, then I'm interested.
If you're just sticking with stocks, you're missing out. You'd
be surprised at what has performed really well over the last
decade... I'll tell you today.
But first, where do I find these ideas? I look hard for them!
Seriously...
It really started for me in the late 1990s,
when all the "normal" investing ideas were terribly overpriced.
Stocks were a terrible deal. I didn't think they'd do well over
the next decade.
So I started looking for assets that had performed well the last
time stocks went into a bear market. My "template" was the
decade of the 1970s...
As you probably know, gold and oil were top performers in the
1970s. Good performers that you may not think of included
high-end collectibles (like art, rare coins, and stamps)... and
farmland.
This time around, amazingly, the results are no different...
Since the start of 2000 (specifically, from December 31, 1999 to
June 30, 2010), the same assets that performed well in the last
great bear market in the '70s have performed well in this great
bear market.
Meanwhile, just like the 1970s, stocks haven't even kept up with
inflation.
Take a look:
|
 |
Farmland -- the second-best-performing asset -- was the real
surprise on the list to me.
The total return on farmland (including income from farming and
price appreciation) was an astounding 263%, based on data from
the National Council of Real Estate Investment Fiduciaries (NCREIF).
Also, astoundingly, farmland has only had one "down" quarter
since the NCREIF started compiling data in 1992... In the fourth
quarter of 2001, farmland lost only -0.01%.
Why farmland? When food prices go up, farmland prices go up.
There's no shortage of mouths to feed -- on this side of the
globe or the other.
And as an added benefit, farmland returns have little
correlation to the returns on stocks and bonds. Farmland didn't
fall in a single quarter during the financial meltdown.
But how can you play it?
In the stock market, you can play farmland indirectly, through
fertilizer stocks... Brian Hunt shared a strategy on
fertilizer company Mosaic (NYSE: MOS).
Brian wrote: "One can earn yield on farmland by owning this
stock and performing the income strategy of selling covered
calls on it... near-the-money calls will throw off an 11%
instant payout here. Beats sitting on a tractor..."
Individual stocks in the U.S. that own a great deal of farmland
are hard to come by.
Of course, the best strategy for making gains over the next
decade might be to start from the bottom of the list above
instead of the top... That way you're buying what's out of
favor.
What's out of favor now? Based on that list... it's tech stocks.
-- Steve Sjuggerud
Editor
Daily Wealth
Note: This article originally appeared on
Daily Wealth
|
