Is This Guy For Real?

[bmichaud]

Lol wow that really was a dumb question. Thank you for the info though!

[turar]

Thanks for the timber recommendations guys.

[CorpRaider]

Hey no recommendation on my part.  Just saying if you're looking at hard assets due to inflation fears, timber and/or farmland to me make more sense to me than gold, all else being equal.  WEB probably thinks KO will kick the ___ out of timber in any inflationary environment.  hah! 

 

Nah BM that was my bad, portfolios has an obvious meaning on this board and it ain't tax law comic books.

[Guest ajc]

I recommend you read "Guns of August" because ALL of the arguments you made were made before WWI as well.  The world was very globalized then, especially Europe.  Many rulers were intermarried, there was essentially a ruling family across most of Western Europe.  War was thought to be impossible, commercial ties were strong, and the mood at the time was that the world had progressed beyond war, especially a European war.

 

I'm not saying we're heading to a global war, but I'm saying that all this talk of why a global war is impossible is just history repeating 100 years later.  We've forgotten the lessons of the past.

 

Appreciate the suggestion, Nate. Looks like an interesting read.

Added.

[yadayada]

Well Germany was really desperate after world war 2 after being milked. And quite a bit of smart people saw that one coming. Havent heard anyone talked about a world war so far.

 

This may simply be because in a globalized world, these opinions are almost impossible for the mainstream media to voice.

 

Look at Bloomberg, or JP Morgan, and you quickly realize that the world has changed from one of pre-WW1 localized economies to one of worldwide (often lateral) ownership.

With that, comes the risk of repossession and retaliation for the smallest of perceived slights.

 

Any real talk of a potential war between China and Japan on the opinion page of the Wall Street Journal would therefore quickly result in huge diplomatic pressure against the US government as well as screws being tightened on News Corporation and Rupert Murdoch personally.

More trouble than it's worth, so it's cheaper to not discuss it. That way you avoid the accusations of nationalism, racialism and political interference as well as holding onto your foreign assets and business.

 

If you want to seriously find out more about the odds of a large-scale global conflict, you're better off visiting some looney-tune websites from time to time and sifting through the mountain of crap for the 1 or 2 worthwhile geopolitical insights you're likely to find every couple of weeks...

 

I recommend you read "Guns of August" because ALL of the arguments you made were made before WWI as well.  The world was very globalized then, especially Europe.  Many rulers were intermarried, there was essentially a ruling family across most of Western Europe.  War was thought to be impossible, commercial ties were strong, and the mood at the time was that the world had progressed beyond war, especially a European war.

 

I'm not saying we're heading to a global war, but I'm saying that all this talk of why a global war is impossible is just history repeating 100 years later.  We've forgotten the lessons of the past.

Now you have nukes. There is globalization. My grandparents rarely left town, and America was a far away place. There was nowhere near the level of globalization you have now. It is also the information age. You need to badly fool a large amount of people to get into another world war now. There is now way more to lose then before world war 1.

 

And there were plenty of people talking about an imminent world war 2 before it happened. I mean can you imagine if you had the internet back then? No way people would have been that ignorant. Living conditions simply SUCKED for alot of people even in the west. We now have more to lose, and easy acces to alot of information.

[Morgan]

Just out of curiosity oddballstocks, and maybe this is a silly question, but how would you go about actually harvesting the timber to sell? Hire a company to do 50 acres? Hire a team, rent the equipment and give it a go?

 

Just thinking about it here - if you can buy land for 1k/acre and the timber is worth 5k/acre(?) and it costs 2-3k/acre(?) to harvest it you could definitely make some nice money. Especially so if you used some leverage.

[rkbabang]

Now you have nukes. There is globalization. My grandparents rarely left town, and America was a far away place. There was nowhere near the level of globalization you have now. It is also the information age. You need to badly fool a large amount of people to get into another world war now. There is now way more to lose then before world war 1.

 

And there were plenty of people talking about an imminent world war 2 before it happened. I mean can you imagine if you had the internet back then? No way people would have been that ignorant. Living conditions simply SUCKED for a lot of people even in the west. We now have more to lose, and easy acces to alot of information.

 

After Obama goes on TV and explains why America has no choice but to go to war and pulls on all the patriotism strings that where installed in every American's brain during their 13+ years of government indoctrination.  60+ percent of Americans (including many here on this list) will agree.  Once again there will be American flag stickers on every pickup truck and the military will have a field day recruiting all the lower class kids right out of high school.  Talk of bringing back the draft will turn serious. While no one is paying attention to anything but the war government at home will increase in size and scope in all kinds of ways....

 

Even many years later after the unmitigated disaster is years in the past, the veterans will be honored as some type of heroes for their "service". 

 

It's the same old story.  The same old song and dance. 

We will be fooled again.

 

--Eric

 

[oddballstocks]

Just out of curiosity oddballstocks, and maybe this is a silly question, but how would you go about actually harvesting the timber to sell? Hire a company to do 50 acres? Hire a team, rent the equipment and give it a go?

 

Just thinking about it here - if you can buy land for 1k/acre and the timber is worth 5k/acre(?) and it costs 2-3k/acre(?) to harvest it you could definitely make some nice money. Especially so if you used some leverage.

 

Yes, I'd hire a company to harvest it.  In Pennsylvania and West Virginia a state forestry officer will do something called a cruise for free, that's how you can estimate value.  The key is really tree size and type.  Small trees are worthless for anything other than pulp.

 

I don't remember the price per board foot on this anymore, at one point I had a little formula I used to estimate value based on the types of trees and amount of land.

 

Ok, I Googled my blog, I remember writing about this at one point, here's what I had dug up:

 

If you give a small tree 10-15 years to grow they can fetch about $500 for pulp, and mature trees (age 25-30 years) 4-5k an acre at current prices.  So at a purchase price of $36k, sitting for 25 years and selling the wood for $225k ends in a return of about 6.7%.  Factor in the ability to sell the land for probably close to the purchase price and we have a 7.2% gain over the life of the investment.  There is probably also a value to the mineral rights which I'm not including.  This is a great number for something completely uncorrelated with the markets.

 

That's per acre, so if you buy an acre for $500 and it has enough trees that are palpable you get your money back on the first harvest, minus harvest expenses. 

 

I'm in my early 30s, I had always thought this would be a great retirement.  Purchase 20 acres, plant hardwoods, let them grow until I'm 60 and then harvest.  In the meantime I can take my kids there camping or whatever and enjoy the land.  A possibility of a small amount of hunting lease revenue might exist as well.

 

Time is running out for me to plant a new stand if I want to see it harvested.  If I don't act in the next five years or so I will be planting work for my sons to take care of, and they might appreciate the land and eventual payoff, but it's also inheriting a headache.

[matjone]

Comparing those numbers with the ones you've put up investing I don't understand why you'd mess with it.  That's like 7% less than the bottom range of the returns you've said you've achieved and also less than the average return on stocks over time.

[oddballstocks]

Comparing those numbers with the ones you've put up investing I don't understand why you'd mess with it.  That's like 7% less than the bottom range of the returns you've said you've achieved and also less than the average return on stocks over time.

 

Yeah, that's very understandable, and it might help to expand on this a little.  I'm giving up a big secret here, but what the heck...

 

I have a master plan for this, trees are part of it.  In PA there are sheriff sales at a certain point in the year, they are for places that are delinquent on taxes, you pay at auction and get the property free and clear of liens.

 

Northern and Central PA are mostly forested and empty, many of the areas are filled with "camps" essentially small buildings or trailers sitting on a few acres.  It's not uncommon for these places to fall into a sheriff sale, an owner passes away or has hardship and it's easier to just let it go.  You can get a cabin plus a few acres for about $1k, these are actual transaction details from a friend's family member's transaction.

 

You end up with a few acres of timber, and land to grow a small stand, and potentially a cabin.  The cabins I can resell as camps to people in Pittsburgh who aren't going to the sales.  A camp for $1k at a tax sale might go for $15-20k on Craigslist, a dumpy one for $5k.

 

I want to go up there, buy a few camps, sell off the decent ones and grow trees on the rest.  The ones that I sell double/quadruple or more my initial investment right way, then I get the timber kicker for some point down the line.  The return from the trees is about 7%, but from the whole process much higher, I would expect maybe 50-100% returns a year or more, which is attractive.

 

If you talk to people who have experience with the area (and someone on this board who also writes an OTC blog does..) it's not uncommon to buy large plots of land with a big house and make enough from the timber harvest to essentially pay for the property.  It's the old buy the assets get a business for free, up there it's buy the land get a nice house for free.

[yadayada]

Now you have nukes. There is globalization. My grandparents rarely left town, and America was a far away place. There was nowhere near the level of globalization you have now. It is also the information age. You need to badly fool a large amount of people to get into another world war now. There is now way more to lose then before world war 1.

 

And there were plenty of people talking about an imminent world war 2 before it happened. I mean can you imagine if you had the internet back then? No way people would have been that ignorant. Living conditions simply SUCKED for a lot of people even in the west. We now have more to lose, and easy acces to alot of information.

 

After Obama goes on TV and explains why America has no choice but to go to war and pulls on all the patriotism strings that where installed in every American's brain during their 13+ years of government indoctrination.  60+ percent of Americans (including many here on this list) will agree.  Once again there will be American flag stickers on every pickup truck and the military will have a field day recruiting all the lower class kids right out of high school.  Talk of bringing back the draft will turn serious. While no one is paying attention to anything but the war government at home will increase in size and scope in all kinds of ways....

 

Even many years later after the unmitigated disaster is years in the past, the veterans will be honored as some type of heroes for their "service". 

 

It's the same old story.  The same old song and dance. 

We will be fooled again.

 

--Eric

Yeah but there has to be incentive. Middle class has gotten very rich and much better informed over the past 90 years. I cannot see an incentive in the immenent future for attacking a large country. It would completly destroy the economy, and there are enough liberals to block this.

 

I can see how the US can attack some shitty small country, but not another first world economy. There were huge incentives before world war 1 and 2. You dont have that now. Maybe if the US falls of the cliff tho, but then it seems more that China has incentives to attack the US. But then you have to explain to your people why its good to get half your country nuked. And im not sure if it can get bad enough in the US to make it worthwhile for china.

 

Did you know 2500 nukes were exploded between world war 2 and now? Both countries have super advanced stealth bombers, and it would be a question of time before one got through and manages to nuke like 8 huge cities in a row. You didnt have that in world war 2 (except for japan, and see what happened there). This would also make land on land battles vs two huge countries impossible. And once you win the war you would have a giant problem supressing all the guerilla attacks and rebuilding your economy. So there would have to be a waaaay larger incentive to start a war now then 60-80 years ago.

[CorpRaider]

LOL a post about Gold (it was gold right?) mutated into two threads; one about global thermonuclear war and the other about timber.  hah!

 

EDIT:  I suppose it is primarily my fault for coming out of left field with the timber talk.  Thanks Oddball for sharing your wisdom.  I had read a couple of articles about timber's long-term (as in predating financial assets) ROI running at 7-8% real, of course there was a spike during the bubonic plague.  hah.  But I have used 6-7% as a sort of shorthand/indicator for the rate I want to see timber REITs yielding before I get interested.  I figure I can let them keep a % off the top for me not having to look in lumber jack trader weekly.  But your strategy of stacking the tax sales is much slicker (as usual).

[bmichaud]

hahahah I actually intended for it to be more about the war part. I was just noting he has made good calls on gold, but if you dig a little deeper, he will tell you he has called every major turn in every major asset class for the past 30 years, so.....

 

I forgot to thank Mr. B for the excellent piece on war BTW!!  8)

[rkbabang]

Now you have nukes. There is globalization. My grandparents rarely left town, and America was a far away place. There was nowhere near the level of globalization you have now. It is also the information age. You need to badly fool a large amount of people to get into another world war now. There is now way more to lose then before world war 1.

 

And there were plenty of people talking about an imminent world war 2 before it happened. I mean can you imagine if you had the internet back then? No way people would have been that ignorant. Living conditions simply SUCKED for a lot of people even in the west. We now have more to lose, and easy acces to alot of information.

 

After Obama goes on TV and explains why America has no choice but to go to war and pulls on all the patriotism strings that where installed in every American's brain during their 13+ years of government indoctrination.  60+ percent of Americans (including many here on this list) will agree.  Once again there will be American flag stickers on every pickup truck and the military will have a field day recruiting all the lower class kids right out of high school.  Talk of bringing back the draft will turn serious. While no one is paying attention to anything but the war government at home will increase in size and scope in all kinds of ways....

 

Even many years later after the unmitigated disaster is years in the past, the veterans will be honored as some type of heroes for their "service". 

 

It's the same old story.  The same old song and dance. 

We will be fooled again.

 

--Eric

Yeah but there has to be incentive. Middle class has gotten very rich and much better informed over the past 90 years. I cannot see an incentive in the immenent future for attacking a large country. It would completly destroy the economy, and there are enough liberals to block this.

 

I can see how the US can attack some shitty small country, but not another first world economy. There were huge incentives before world war 1 and 2. You dont have that now. Maybe if the US falls of the cliff tho, but then it seems more that China has incentives to attack the US. But then you have to explain to your people why its good to get half your country nuked. And im not sure if it can get bad enough in the US to make it worthwhile for china.

 

Did you know 2500 nukes were exploded between world war 2 and now? Both countries have super advanced stealth bombers, and it would be a question of time before one got through and manages to nuke like 8 huge cities in a row. You didnt have that in world war 2 (except for japan, and see what happened there). This would also make land on land battles vs two huge countries impossible. And once you win the war you would have a giant problem supressing all the guerilla attacks and rebuilding your economy. So there would have to be a waaaay larger incentive to start a war now then 60-80 years ago.

 

All true of course.  I'm just always skeptical of "it can't happen here", "it can't happen again", "things are different now" type arguments.  Technology changes, weapons change, but for the most part, people don't change.  I bet the average American thinks we can wipe the floor with China and wouldn't need much convincing if national pride was at stake.

 

I hope you're right.

 

[yadayada]

hahahah I actually intended for it to be more about the war part. I was just noting he has made good calls on gold, but if you dig a little deeper, he will tell you he has called every major turn in every major asset class for the past 30 years, so.....

 

I forgot to thank Mr. B for the excellent piece on war BTW!!  8)

Im not sure how a war between countries will happen.

 

But read parkinson's law. He studied how bureacracy gets bigger and bigger. The government is essentially getting more innefficient and more expensive every day. Some day this will come to a stop. When people making 50k a year pay tens of thousands in taxes and dont see much of their money back, you will have uprising. So I think he might be on to something there. Not sure if this will happen soon tho.

 

But the government is essentially a huge monopolistic corporation that is getting bigger and more inefficient. And nothing is making it stop because it doesnt have to compete with anything. It isn't really held accountable. Corporations will go broke, but what happens when a government cannot handle things anymore?

[Orange]

After the US response to 9/11, every country knows that if they nuked an American city, our government would do everything in its power to wipe them, as well as their allies, off the map. And the American people would be behind it, even left wing American liberals value the life of US civilians way more than innocent foreigners. Why would you want such a gigantic, battle ready superpower doing everything in its power to end you? Even insane dictators have too much desire for self preservation. I see large scale nuclear war (at least against the US) as an extremely rare possibility in our lifetimes.

 

With that being said, it's probably still the leading risk to the extinction of our species.

[yadayada]

hes also saying oil will bottom out next year below 70$. ANd then peak big time in the years after. I could see how it peaks, but not sure how it could bottom.

[CorpRaider]

Sounds like a typical blowhard prognosticator.  I'm going to cast my lot with WEB and an outlook for this country that is just a bit above trendline for the (much) longer term performance of the Dutch and British systems.

[Green King]

War is a human condition and as certain as greed and fear in the markets.

 

Yes but some are or I hope are stronger than the other. Like fear over powers greed. I think I instinct for species survival over powers or need to war. If major powers goes to war there is always a chance for Mutually assured destruction to occur and I think the major powers of today will not touch the thought of it. This is not going to be WWII were everyone get full utilization from government contracts and he demand for infrastructure is created from the bombings. GM Ford IBM etc make a lot of cash and gets new technology and capacity built from artificial demands  created by the government.

 

Besides we have move to a globalized market what's the point ? I just what resources we need.

[oddballstocks]

http://freebeacon.com/chinese-naval-vessel-tries-to-force-u-s-warship-to-stop-in-international-waters/

 

Yes, we are so much smarter and more civil now...this time is different, it can't happen again...

[rkbabang]

http://freebeacon.com/chinese-naval-vessel-tries-to-force-u-s-warship-to-stop-in-international-waters/

 

Yes, we are so much smarter and more civil now...this time is different, it can't happen again...

 

:(

 

Note the tone of the article (China is starting shit in international waters), but also notice that China's ships and planes aren't anywhere near the United States, yet US is over there in force.  Keep this in mind if it ever gets to the point where the equivalent of "we had no choice" or "they started it" is claimed by US politicians.

 

[turar]

Exactly, imagine China complaining that the US "harassed" Chinese military ships that were merely conducting "surveillance" of US aircraft carriers in the Gulf of Mexico.

[Cardboard]

And this:

 

http://freebeacon.com/iranians-pull-out-of-nuke-talks/

 

And this:

 

http://freebeacon.com/russian-official-threatens-to-nuke-u-s/

 

Even if this is not appearing for the most part in mainstream media, you can see that there are always some form of tension between powers. It just takes one incident to escalate things.

 

Cardboard

[Cardboard]

By the way, this thinking of: "Bring the soldiers home" simply does not work. While one might think that the U.S. should mind its own business and stay away from the Japanese/Chinese fight over inhabited islands, IMO this whole episode is about testing U.S. resolve in supporting its allies. And never forget that China still has deeply in mind to eventually bring Taiwan into the fold.

 

They own a massive amount of U.S. treasuries, they are getting stronger militarily including through cyber warfare and have to deal with their own issues at home: property bubble, massive need for more and better jobs and large cultural differences. It is pretty easy to imagine a scenario where they become more agressive.

 

The U.S. being the big boy in town simply can't just walk away unless you are willing to abandon your friends. So this cat and mouse game will go on. Unfortunately, it just takes one captain, one jet fighter to get something much worse going. Remember the incident in the Gulf of Tonkin that started the Vietnam war?

 

Regarding the Russians and Iran, this is hypocrisy on steroids. The Russians have zero interest in seeing flowing more Iranian oil. Being friendly with the Iranians gives them a buyer for their weapons and technology and helps reduce terrorism risk at home but, if tension, sanctions or even some conflict occurs around the Straight of Hormuz never forget how much they would benefit.

 

Cardboard

 

 

[turar]

In geopolitics, there are no "friends". The US has no friends, neither does China. There are allies that are expendable if needed. Just ask Europeans in the wake of NSA scandals. Same for Russia and Iran. Russia simply needs to continue asserting its zone of influence, which includes Iran. And same for China.

 

China will be getting stronger and stronger in the coming decades, that is inevitable. They will keep asserting their power more and more aggressively, but slowly and in small steps. They have passed the US in many areas, or are equals, and are not stopping at that. The US will need to get used to that, or risk economical pressure, or WW3 as the worst outcome. Fortunately, Chinese are not led by populists the way the US is, and I believe their leadership is more rational.