woodstove

Related to timberland / timber harvesting, is lumber distribution, which firms tend to make an ok margin on timber pass-thru, ie somewhat inflation indexed. My preference nowadays is TBL.NT, the notes of Taiga Building Products, which are presently near par but yield 14 pct. I prefer the notes to the common, which has some trading potential though; I'd rather have the cash flow. Another distribution company is HWD.UN, which distributes hardwood lumber; I've owned them in the past, not at present though. Volatile, housing linked. Big thing with timberland itself, is avoid intermediaries. Too much can get lost in hands of managers / organizers. If you really want to do a long term investment, consider buying the land yourself. Maybe not when interest rates are low though; have to search bargains. My preference re land, though, has been productive cropland; again, like getting that annual income.

Ha! Interesting about the Norkraft mill. Thanks for posting that. All who were asking about who's the next Warren Buffett may have been asking the wrong question ... Fibrek might be the next Berkshire Hathaway! Seriously, I have a great deal of trouble reconciling the book value of the mill assets, vs the amount being spent to maintain them in semi-competitive operational status. Clarification most welcome.

One other bit on this topic ... the issue of new shares in the rights offering, has changed the share price at which the company can issue shares to redeem the debentures, if it chooses that route. Don't know that number, and irrelevant if the debs are redeemed with cash.

Thanks for posting that article link. Very interesting. I have some WMT, think it is good buy under $50, and even at $52 is still good buy. There's a concept in Walmart's Aug 17th Q2 earnings press release, that I've not seen before, and wonder if someone can explain it to me. The idea of "leveraging operating expenses". Does that mean delaying payables, increasing inventory turns, so more working capital is being provided by merchandise suppliers? Or what? The following quote from the press release illustrates Walmart's use of the term. "We continue to focus on our priorities of growth, leverage and returns. ... Our teams leveraged operating expenses for the third consecutive quarter, through their commitment to the productivity loop." And, what is the "productivity loop"?

There is also merit in stabilizing the share price, because Fairfax is not "fort Knox" like Berkshire, able to thumb nose at manipulations. When the short campaign was on, Fairfax was harmed as a business - looked like a less stable counterparty for potential buyers of coverage. So looking more "regular big financial rock" has benefits in getting and retaining business. Also allows for refinancing of some debt from the past, eg retire 7.5-ish pct and replace with preferred issues at 5-ish. Dividend is part of the expectations for Fairfax now. Beyond that, I at least don't cut Fairfax as much slack as might be justified. Sailed too close to abyss a decade ago, some unwise acquisitions. If I'm going to loan my "mite" to the company, I expect it to pay something out, as a form of discipline on expected return on capital. If cannot make minimum 4 pct return on capital, then would rather the company shrink by continually returning 4 pct regardless. If can make more than 4 pct (as have done on average over long time), then fine with me if retain excess over 4 pct for additional capital.

Mostly these five: akt.a, imo, brkb, ffh, tbl.nt

"I'm not a economist ... I just play one on TV" ?

The list of occurrences seem to be after-the-fact reports of crimes against property. I used to work, in a civilian admin capacity, for a Cdn city police force. Most policing service requests (90 pct) are not in regard to criminal matters, and most of the criminal matters are crimes against property, and generally capable of being dealt with in non-emergency mode. I think it probable that Oakland, as well as most other cities, is overwhelmed with non-emergency calls to 911. Encouraging the public to use 911 calls only for genuine emergencies (ie "emerging", ie action right now is necessary to make a difference), is not a bad move. It is far, far from needing to go "survivalist", either urban or rural.

Maybe more like when the number of rights not taken up is posted, and calc can be done about dilution ... ie not just end of week. But just guessing on my part. This has been very educational to watch!

As long as we're discussing policy options, I'd like to recommend the home improvement tax credit that was in effect in Canada, Feb-2009 thru Jan-2010. It was tax-neutral in the first approximation, and put money and activity into the hands of lots of ordinary folks, eg laid off from manufacturing jobs, doing roofing and such. Here's the calc: Suppose $X normal activity in home improvments. Offer 15 pct tax credit on home improvment spending between $1,000 and $10,000 for the year, ie potential tax expenditure up to $1,500 per household. Increases activity level to $2X, so tax expenditure is 0.15*2X = 0.3*X. Taxes take about 30 pct of commercial activity, so the extra $X of activity produces 0.3*X tax revenue which would not have arrived in the absence of the stimulus. Result: tax neutral, economy stimulated fast, some folks working instead of sitting idle. The present "Canada's economic action plan" has taken longer to ramp up, and is just now beginning to produce significant economic benefit. Projects were slow going first year and a half, mostly paying for architects, planners, approval process and other initial work. Now it seems like everytime you go near some socially-midsized institution eg a university, there are cranes all over the place. Ontario brought forward 5 years of infrastructure spending plans into 2 years, and that is in mid-stage presently.

Thanks for sharing your report Vinod. Nice work. I bought WMT yesterday morning. Comfortable below $50. For exactly the reasons you mention in your report. Your work-thru of scenarios is much more detail than I did, and I like your analysis a lot.

Glad to see the thread's title has changed to match the new symbol!

Managing business risk, suggests sticking with 26 pct, and not pushing for 49 pct. The latter has political risk, as winds shift. The former is reasonable participation, plenty of profit, it's a huge country developing rapidly. India does not want colonial rule in whatever guise.

Here's an interesting suggestion for stopping the flow of Deepwater Horizon well. http://arxiv.org/abs/1006.0656

Mr Peak's comments are very sane, and much to the point. Thanks for posting them. We've seen a massive oil release before, ie at the end of the 1st gulf war in 1990-ish, when the Kuwaiti wells were dynamited. The difference is that in Kuwait, the releases were on land, and hence localized. A release into the ocean spreads. I think land drilling is where the safe haven is, for investors in oil companies and drilling services.

I've no data, but here's an interview with him. Haven't listened to it myself as audio on laptop has gone wonky. www.ceoclips.com/companyclip.aspx?id=272

Hi Ubuy2wron... My full service broker knows very well that I use other brokers. He has about 25 pct of my stockholdings. And we often discuss ideas; possibly some of my feedback on things he sends me, or mention of my best ideas, has been helpful perspective when advising his other clients. The original deal was that I would buy thru him if he brought me the idea; we have drifted from that over the years, as ideas go back and forth, and I often buy something thru him that was not brought forward by him, but in practice I think we are about even on favours. And he (his firm) gets a reasonable level of commission income from my account. It is my belief than neither of us feels cheated. ws

Emotion aside, there are benefits of each - full service and discount. I used to be with full service, switched some funds to discount, but still use full service. Discount - cheap if doing vanilla trades, don't second-guess (good and bad to that, though!) Full service - better for buy/sell debentures/notes/bonds, excellent research reports (discount "research" is a joke) sometimes with good ideas if look laterally, and good source for facts not for recommendations. Can negotiate fee schedule with full service. I also think the particular request for 10-Ks and 10-Qs was not best use of their time, in today's wired world. Guess it depends on what you have been receiving in the past though. If they used to provide that service to you, and suddenly withdrew it, would be upsetting. The full service does provide good info though - eg I use Nesbitt Burns, and they do some great digging into various industries, gather and make available stuff that in theory I could get by reading lots of trade pubs, and spending many weeks learning considerations about but it is efficient to let their specialist do that. And there are certain info sources that are very costly to subscribe to, and the full service analyst does that and, if good as many are, can share important highlights among the report reading clientele.

Wow - thanks for that re the paper battery/capacitor. Sounds like a really useful capability. Something that struck me is an article in March-2010 Plating and Surface Finishing magazine, about a technique for plating copper onto common plastic substrate - need a subscription so cannot reproduce here, but can perhaps find other info online by looking for author names - Y.Zhang, P.T.Tang, H.N.Hansen, J.S.Nielsen, with or assoc with Dept of Mech Eng at Technical Univ of Denmark, Lyngby, Denmark. The article in P&SF is "Electroless Plating on Plastic Induced by Selective Laser Activation". Essentially use a wobbly laser to etch surface of the plastic with lots of "defects", ie roughness, then activate with palladium chloride to cause palladium to be trapped in rough surface, then let copper plate onto the palladium and grow on itself. End up being able to draw a circuit on a piece of plastic. There are some really amazing technologies coming along.

Sounds like "The Daytraders of Graham and Doddsville".

Hi oec, My "experience" is only 1 pct of what a person who actually farms would have. I'm only a landowner who rents to a farmer, and have some relatives who are farmers who sometimes explain stuff to me, and sometimes go to fairs and open houses - but that is NOT experience! You perhaps should ask tyska who is actually farming in the prairies. That said, I would not personally invest in that Sprott thingie. Not enough margin in farming to pay a slice to a middleman. And the terms of an agreement can change - remember income trusts? Remember 20 pct taxes on land purchasers by foreigners? Remember nafta and changes to supply management? Lots of changes come along over time, that can be used as excuses by insider control folks to "explain" poor outcomes for outside passive minority investors. Finally, the Sprott thingie seems a bit insulting to me. A friend (now retired) was responsible for the farming operation on a nearby reserve. He is Indian. What is that idea implicit in the Sprott fund that Indians cannot run professional farming operations? Ticks me off. A friend in a nearby township, who's in a position to know, said that the largest landowner in their township is now some Toronto law firm. There is a lot of money going towards land purchases. Prices are ridiculous. Probably on the "they're not making any more" theme. But suckers are born every minute, so there are always lots to be sold to. Your mileage may vary. But that's my cynic's view.

About 7 pct cash yield, that was mostly the result of luck, buying at a time when 8 pct cash yield looked not as good as 10 pct GICs. And partly being willing to tolerate uncertainty - our offer was put in for the residual land after a couple of 50-acre lots were mapped out to be severed, and was subject to the seller being able to obtain permission of govt for the severances - so took about 6 months to resolve. And we were willing to take the residual land without a survey - on a so-many acres "more or less" basis. It turned out to be 7 pct more, ie another lucky circumstance. Yield nowadays would be only 2 pct, ie land prices are unreasonably high considering productive capacity. That will change someday. If you want to get an idea of prices, drive around, see which real estate agents are listing farmland on signs at interesting-looking places, and chat with them. Their business is built around chattiness, and it is not a burden for them to talk to potential future buyers. I recommend debt-free purchase to the extent possible. Debt is a real killer. If GICs are 10 pct, mortgages are going to be much higher than that. Friends in mid-20s recently bought in the country, just 1 acre, and decrepit house - which they have/are fixing up. They have regular jobs for income, youth, energy, and stable marriage - all, if not essential, certainly very helpful. Raising garlic, a few chickens, etc. They will do fine. My wife's parents moved to country from big city a couple generations ago, similar circumstances, and had a great life - but had regular jobs, raised small herd of beef cattle. All the benefits of country life. I remember the mortgage-burning ceremony when they finally paid it off. My own experience with farming is limited - we farm-sat once for three weeks, and I encountered the wonders of what can go wrong with electric fencing - the fencer broke, a weed-chopper type which means it has enough current to cut down weeds as they grow to touch the wire, and by the time I got the parts, the weeds had grown enough to ground out the fencer. So I ended up scything the weeds on a perimeter of a very large pasture. A quick way to make sure the weeds have been scythed enough is to touch the fence to see if current is flowing thru. I just strongly recommend a source of income. The lottery might work if you can organize that. Value investing might be easier though. And your best asset is yourself - youth, brains, capacity for hard work, positive outlook. Rural life is great. Another way to get a feel for it is to go to some of the country markets or the fall fairs, the little ones, and get in conversation with people. If you mention your goals to others, sooner or later you meet someone who will have some information that will help you.

Subsidies, or more generally tax policies, certainly do distort choices in farming, just as they do in other industries. Driving thru St Joseph County in SW Michigan, one is struck by the unusual number of irrigation systems installed, and also by the number of small industrial plants in rural areas - compared say to Chatham-Kent in Ontario, which has roughly comparable climate, but has more greenhouse operations and, most recently, a huge crop of windmills planted. Farm economics are not something I've studied, but just browsing around, perhaps the following website will have some useful info: http://www.ridgetownc.uoguelph.ca/research/research_reports_topic.cfm?ref=ECONOMIC_IMPACT One particular report, for instance, presently #16 in that list, Agricultural Economic Impact and Development Study for Chatham-Kent, has more detail than I can deal with. Report #11 on the structure of Canadian farm incomes might be closer to the question of off-farm jobs; I've not pursued that lead. There are going to be major changes in farming due to energy costs. Corn cribs and drying on-the-cob have been replaced by shelled corn harvesting and storage bin drying using natural gas. If natgas pricing goes up, someday the economics will reverse and harvesting may go back to on-the-cob, wind/air drying, etc. There will be opportunities for those who make the new (old) grain handling machinery. The role of an investor in farming, aside from just buying land as an asset and letting a skilled operator apply his expertise to the tasks, would seem to me to be to adjust to the opportunities as the economic, subsidy and other currents shift. It it not that dissimilar to any other focus of investing. There will always be subsidies, ie currents, within the investment ocean. Some will bring schools of fish nearby.

Yes, farming can be profitable as an investment. You have to be careful in deciding what you want from it however. Farming and rural life is enjoyable in itself, desirable for raising kids, etc - but most farmers have to have other sources of income, ie job of some sort. If you're planning to relocate your family to the country, by all means do so, but don't think of the farm itself as an investment, rather a framework for your lifestyle. As a straight investment... - Best to buy when interest rates are high, because land prices are low then. Eg 10 pct interest available on 5-year GICs means farmland cap rates will be 8 pct, say. Gives you a nice appreciation in land price when rates return to normal. Not cash in pocket, because it's so long term you'll never sell, but you'll feel better. I've owned 17 years, and it took 14 years to get purchase price back in cash flow, but land is nominally worth 4x what was paid for it. - Register your farm operation for GST, before you buy the land. You get the purchase tax rebated later. Consult your lawyer and/or accountant at purchase time to be sure you get this right. - Cropland is simplest. No fencing, no early morning calls about livestock straying. - Rent your land to someone who knows how to farm. Don't second guess decisions. In particular, organic is a nice thing, but probably not profitable if you value your time. "Investment farm" does not equal "hobby farm." - Fair rent is about 25 pct of gross value of the crop. I rent for 10 bu/acre soybeans market value, paid in cash after harvest. Does not mean the renter has always to grow beans - that would be poor land management. He farms plenty of other land and might grow beans on that. Having a 10 bu/acre rent on land that is capable of growing 40 bu/acre, means we don't have to renegotiate cash rent. Both he and I can plan long term. - Rent to someone you can trust. So you don't end up with a tire dump, other rubbish, strange crops, etc. Too-high rent usually goes with something unsustainable. - Income taxes are very simple. 4-page schedule for farming income, of which only a few lines are used. Won't need an accountant. Finally, back to the psychic benefit aspect... - Most farmland has some back area, because swampy or not easily accessible. About 6 pct in my case. That is great if you enjoy tree planting, other outdoorsy activities. It doesn't have to be all investment, but I've found it helpful to separate the two land usage ideas.

The market reminds me of a lump of dough, ie bread-making, that has to get punched down. But even so, it contains nutrient value! And not everything for sale in the market is overpriced. Even a generally puffy market can provide some decent opportunities. So yeah, I've been buying the past few weeks - a couple of oil & gas drillers. Looking for nat gas to get less abundant over next 12 months (ref Henry Groppe article, Globe & Mail, Apr 19th), idled drilling rigs to get put back to work, day rates to get opportunistic. Steel prices are going higher and already-built rigs are in some cases worth more than they are being carried on balance sheet. Not anticipating another peak of drilling activity, but merely a return to normal. If not sooner, then later - asset values should provide a margin of safety, share price support even if earnings do not justify above-cost pricing. This sort of trough has happened before, 1999-ish, and those who bought into drillers then ended up pretty happy. Drillers and integrated oils make up about half of my shareholdings in portfolio.