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  • Archive for August, 2010

    Timberland Investments


    2010 - 08.31

    A timberland investment is essentially an investment in a forest. This can be a natural old growth forest or a man made forestry plantation. More often it is the latter that is chosen as a timberland investment. In the world of finance these types of investments provide a natural way to diversify holdings.

    There are a lot of advantages to timberland investments, to begin with there is the potential rising demand for specific wood types such as eucalyptus, also as the trees mature they gain in value. In addition there is also the routine rise in value of both trees and land.

    According to finance experts a timberland investment can have a negative correlation to some paper investment options. In other words investors can balance gain and loss situations by pursuing timberland holdings, which act as a kind of natural ‘hedge’.

    As with any other kind of investment investors should display due diligence when checking that the value of what they are buying is just as high as what they are paying for it. For a reliable and trustworthy forestry management specialist it would be worth having a look at Cambium, Greenwood Management and the Phaunos Timber Fund. Each of which have an excellent reputation for safty and security of investments.

    There are many reasons for choosing to invest in a timberland; some investors are betting that over time, rising demand and value will produce steady, moderate gains. Others are hoping that the value will suddenly spike and produce quick, high returns. However, regardless of reason, professionals have pointed out that diversification of holdings including timberland shows durability over time, especially in volatile markets.

    The Timber Investment Blog is sponsored by Greenwood Management. For more information on investing in Timber please click here.

    Brazil Gains International Economic Status


    2010 - 08.30

    A potent sign of Brazil’s new economic status is the $14 billion loan it made to the International Monetary Fund, during the global financial crisis last year. This represented an amazing reversal of fortune as Brazil was facing its own financial crisis just eleven years prior. Brazil was forced to devalue its currency and ask the IMF for a $42 billion loan, which was one of the biggest ever rescue packages given out by the lender.

    Now, while the developed world worries about stunted economic growth and excessive debt, Brazil is flying an abundance of the former and very little of the latter.

    “We were one of the last countries to go into the global crisis,” Luiz Inácio Lula da Silva, Brazil’s president, told the Financial Times shortly after his country lent the money to the IMF. “And we have been one of the first to come out.”

    This year alone the Brazilian economy is expected to grow by 8% and in some areas it is expanding by as much as 10%. Unemployment is at a record low and the country’s net debt at 42% of GDP is at a level which would make much of the developed world green with envy.

    A result of all this good fortune is the flood of foreign capital flowing into Brazil, just last year the central bank imposed a 2% tax on short term capital inflows to attempt to stem the boom. This proved largely ineffective as the real continued to strengthen.

    Compared to the rest of the developed world Brazil seems to be the only silver lining in a sky of thunder clouds. Emphasising this is the fact that on the same day that the EU agreed to a rescue package totalling $1,000 billion to save the crisis in Greece from affecting the rest of Europe, Brazil’s finance minister Guido Mantega dismissed Europe’s problems.

    “Europe was asleep,” he told a group of investors at an FT conference held at the neo-classical splendour of the Copacabana Palace Hotel in Rio de Janeiro. “But its crisis is not going to hurt Brazil’s economy. There may be some turbulence in financial markets. But it will pass.”

    The Timber Investment Blog is sponsored by Greenwood Management. For more information on investing in Brazil please click here.