At first, timber may seem like an unorthodox investment, or one that has little investment potential, but both of those assumptions are false. Others may ward off this asset given the recent weakness in global housing markets, but that assumption is also unfounded. In fact, timber’s performance has been very strong throughout its history; the price of timber has risen by an average of 5% for the p
ast century, and those gains include strong performances during some of the worst markets in U.S. history. “During America’s last major inflationary period – from 1973 to 1981, when inflation averaged 9.2% – timberland values increased by an average of 22% per year” writes Larry D. Since the beginning of the 20th century, timber has outpaced the S&P 500 and has risen by approximately 15% each year since 1987 (save one bad year during the U.S. During the Great Depression, when stocks fell roughly 70%, timber investments soared by more than 200%. Moving forward to the most recent recession, the S&P dipped more than 35% in 2008 while the wooden commodity actually gained 9.5%. At a time when investors are starting to lose faith in stocks in general, those numbers are very enticing. It seems that with each passing day analysts and individuals are calling for the next stock market crash, giving timber’s proven track record some added flash as far as investment potential is concerned. Another major draw to timber is its rising demand all around the world. is the largest consumer, but that is predicted to change as emerging markets are stepping up their needs for wood-based products. The next three decades are predicted to see timber use double on a global scale, leaving investors plenty of opportunity to cash in on a developing trend. Another boost for timber is the shrinking supply of forests around the world. Though wood is a renewable resource, global forest lands are dropping on an annual basis, making wood scarcer and its price jump.
