Timber Investments Cut Down Portfolio Risk_1

Post on: 20 Август, 2016 No Comment

Timber Investments Cut Down Portfolio Risk_1

By Porter Stansberry (DailyWealth | Original Link )

In the last three years, precious metals have soared.

Theyre soaring in response to a prediction Ive been making since 2008 – that the U.S. government will do everything in its power to prevent a deflation in asset prices. This includes the shameless printing of dollars in order to prop up our rotted banking system which is the plan, according to the Feds most recent statement, out last month.

As a result, gold – the real money wealth hedge – is within $150 of an all-time high. And while Im a proponent of owning gold and silver bullion to protect yourself from a dollar crisis, theres another excellent way to get out of paper dollars and into productive, real assets.

Its a long-held secret of the worlds wealthiest people

Buy timber.

Timber has long been a hedge for the wealthy against inflation. In addition to providing good risk-adjusted returns, timber has also been a non-correlated asset. In short, when stocks fall, timber usually doesnt. And because you only have to cut down your trees when prices are good (timber doesnt spoil), timberland is generally a low-volatility asset.

The best way for individual investors to buy timber is through the well-established, large timber real estate investment trusts (REITs): Plum Creek (PCL), Rayonier (RYN), and Potlatch (PCH).

Because these companies are structured as REITs, 90% of what they make goes to shareholders in the form of a dividend. They all yield at least 3.3% right now.

In terms of long-term performance, lets look at two five-year charts for Rayonier. First, we have the price appreciation of RYN (the black line) plotted against the Vanguard REIT exchange-traded fund (VNQ, the blue line). VNQ holds apartment, shopping center, and office REITs.

Notice the boring timberland investment has done far better than developed real estate.

Timber Investments Cut Down Portfolio Risk_1

Now, lets take a look at how RYN has done against the entire S&P 500 over the last five years.

Again, the dumb trees have done better than the smart people. Investors with RYN in their portfolio have done extraordinarily well.

With Fed Chairman Ben Bernanke ready to print money should the economy remain sluggish, its vital that you have a portion of your wealth in crisis hedges in real assets like productive land, gold, and silver.

Above $1,700 per ounce, gold is screaming at you to do this right now. Start your crisis hedge program with gold and silver bullion.

And consider timber. As you can see from the charts above, its a time-tested way to get out of cash and conventional equities and earn higher returns, with much less risk.

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