Saturday, January 31, 2009

Volume 3, Issue #7

Also in Today's Issue...

Tree farms like this one in New Zealand represent one of the best "alternative" investments around...

     "It's their 401(k)," my brother, who actually lived in New Zealand for nearly a year, told me. "They plant trees, let them grow, and then cut them down when they want to retire."

     When I think back to seeing the rows and rows of these farms, the beauty of investing in timber didn't sink in immediately. But the more I thought about it, the more I realized these farmers have things figured out.

     They don't worry about how the inflation rate is going to affect their holdings. They aren't worried that the Fed is bailing out struggling companies.

     They simply plant the trees, let them grow and know their retirement is taken care of.

     And it will be a comfortable retirement too, based on the historic performance of timber.

     In fact, from 1972 to today, investing in lumber has seen returns of +11% annually. This means an investment of $100,000 in lumber in 1972 would be worth about $4.3 million dollars today.

     In the United States, you can often pick up land for under $1,000 an acre if the trees on them are still small. Within 10 to 15 years, you can thin out your tract and be paid about $500 an acre for the pulp. When the trees are mature in 25 to 30 years, you should get $4,000 to $5,000 an acre for them at current prices.

     Lumber is also a fantastic way to diversify a portfolio otherwise invested in stocks and bonds. Like gold, timber tends to do better during periods when stocks and bonds go down. In fact, its value rose during three of the four largest bear markets of the 20th century. During the highest inflationary cycle in modern U.S. history, 1973-1981, timber returned an amazing +22% a year.

     To access the lumber markets, investors can easily pick up stocks like Plum Creek Timber (NYSE: PCL) or Rayonier (NYSE: RYN). Both companies own massive tracts of timber in the United States and offer solid yields.

     But for investors looking for a more lucrative play, buying actual timberland is as attractive right now as we've ever seen.

     It shouldn't be surprising then that institutional investors like Harvard Management Company, which manages the university's endowment, was bidding on timberland as recently as May 2008.

     What Harvard might be seeing is that despite its long-term performance... despite the likely infrastructure boom we are going to see as part of stimulus packages... despite timberland being a limited resource... lumber prices are down.

     That means there are deals to be found... if you know where to look.

     We recently uncovered some unbelievable prices for timberland when doing research for the StreetAuthority Market Advisor.

     How about small tracts of 200 acres for only $45,000 ($225 per acre)? Or even plots as low as $165 per acre? The absolute best we found was priced at only $29 per acre of timberland -- less than the cost of dinner out for two.

     Now, buying land takes a little more time and investment than simply buying a few shares on the NYSE. But with this low cost per acre and the historic performance of this most basic material, we see right now as the opportunity of a decade.

     We like its potential so much that we recently profiled the potential of timber in our newest report, The Hottest Investment Opportunities of 2009.

     In this report, you'll discover precisely where to find $29 an acre timberland... why one country in particular offers the best haven for American land investors... and a complete list of resources to get you started on uncovering the most attractive timberland around the world.

     Visit this link to learn more.

     Good investing!





-- Tanner Callais
Staff Writer
TopStockAnalysts Digest

TopStockAnalysts
http://www.TopStockAnalysts.com
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