Trader’s Narrative

More than a year ago the Chairman of investment firm Grantham Mayo and Van Otterloo (GMO), Jeremy Grantham got a lot of attention for a long research report that he issued titled: “All the World’s a Bubble”

You can read the complete article in the link above - including graph. The only asset class that escaped Grantham’s critical eye was a very peculiar one: timber.

Most people wouldn’t even think of timber as an asset class or imagine that in the past 30 years it has beaten every other asset class, including the usual suspects of equity, bonds and real estate.

Now that more than a year has gone by, I’d thought it would be interesting to take a look at the timber stocks which I mentioned. These were my ideas, as an extrapolation of Grantham’s thesis, and not actually his suggestions.

Not a terribly impressive performance but for two things. First, when compared with how the market has fared, the relative returns are quite good. The S&P 500 Index lost 21% from the day that I mentioned Grantham and suggested these timber stocks:

Acadian Timber (ADN.un)
TimberWest Forest (TWF.un)
Sino Forest (TRE)
Rayonier (RYN)
Plum Creek (PCL)

Second, keep in mind that the performance shown is simply the capital gain (or loss) and does not take into account that some securities pay dividends and others distributions which would have improved the performance. For example, Rayonier’s return of 13.89% increases to 17% approximately.

As well, since some of the stocks are Canadian and others American, there is a foreign currency wrinkle added to the mix.

GMO
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