Market Perspective

Six Important Trends to Watch – Week 2

Posted by on Apr 17, 2019 in Ned Massie, Perspective | 0 comments

Timberland: Over the last few years, the stumpage value of timber has either been stable or declined. The reasons for this situation are the following: Imported timber is significantly less costly than timber grown here in the United States; The mills that use fiber have diminished in number and are now located so that they have much less competition between mills for the same fiber; There has been such aggressive planting of timber over the last two decades that there is now a surplus of timber compared to demand. Like any commodity, the demand for timber goes through peaks and valleys. The current combination of the three above-mentioned items is not a short-term situation, but rather has some long-term aspects. A stable price for timber means land prices are relatively stable. However, it may take some period of time before the supply versus demand shifts, and we once again see rising timber prices. It is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is...

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Six Important Trends to Watch – Week 1

Posted by on Apr 11, 2019 in Ned Massie, Perspective | 0 comments

Agricultural Land: A recent analysis I read examined agricultural market trends with cash grain farmers. In that report, the analyst stated that: Since 2010 farms have faced increased costs of about 35% In 2014 the value of the cash grains they grow diminished by about 50%. The increased cost is driven by the fact that two large companies control about 72% of the corn and soybean seed sales in the United States. Obviously, a lack of competition means they have exercised their pricing power. As a result, the number of bankruptcies of farmers in the Midwest is increasing and land values in the Midwest have declined. The good news for this segment of the agricultural industry is that there is a new company called Farmers Business Network Inc. It is a start-up that is selling a non-GMO but genetically enhanced seed, at prices that are significantly lower than the two major seed companies, Dow DuPont and Monsanto. The founders of the new company are techies so they are utilizing technology to allow farmers to see the yields other farmers are enjoying from these new seeds. One farmer interviewed indicated he was converting all of his land to seed from this new company because he could be paying less for his seed and getting a higher price for the non-GMO crop. It is critical to remember that land is the source of all wealth. Every product that we humans consume originates with land. Not all tracts of land are equal in quality and portfolio management requires every investor to hold some cash for liquidity. But historically, long term the best investment is...

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The Forces that Will Impact the American Economy and Therefore, the Land Market in 2019 – Week 13

Posted by on Apr 3, 2019 in Ned Massie, Perspective | 0 comments

The Biggest Medical Beta Test in Our History: An article by Alex Berenson in the Wall Street Journal on January 5th, 2019, discussed at length how shrewd lobbying and politicians seeking popularity has resulted in the acceptance of Marijuana (MJ) and MJ derivatives being used for medicinal purposes. I thought we had an Food and Drug Administration (FDA) to control that process. The FDA process is so severe as it strives to protect Americans that the cost of the process makes new drugs expensive. The statistics on the effects of using MJ are a huge source of concern. Studies discussed in the article highlighted significant increases in psychosis and violence. “Popular” does not always mean “safe”....

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The Forces that Will Impact the American Economy and Therefore, the Land Market in 2019 – Week 12

Posted by on Mar 27, 2019 in Ned Massie, Perspective | 0 comments

Energy Market: Electricity: Inexpensive electricity is a strong economic advantage for the USA. Most of the new electrical production has been via natural gas. The natural gas supplies in the United States are huge. What is lacking are the pipelines to move that natural gas to where it can be consumed to benefit our economy. The cost of electricity, however, is increasing because of government subsidies forcing companies to generate electricity using solar and wind power. One recent article highlighted how the cost of generating electricity by solar and wind can be as much as 10 times the cost of generating electricity via natural gas. Tax subsidies are not free, they are paid by the taxpayer. The country in this world that has made the greatest commitment to solar electrical generation is Germany. Germany’s electrical costs are the highest in the world by several times. That cost is now negatively impacting their economy. The question no one is asking is, “why are we Americans squandering our economic advantage of inexpensive electricity in a competitive global...

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The Forces that Will Impact the American Economy and Therefore, the Land Market in 2019 – Week 11

Posted by on Mar 22, 2019 in Ned Massie, Perspective | 0 comments

Energy Market: Oil: In the spring of 2018, we suggested that the supply of oil was much greater than demand. Some readers questioned our statement as the cost of oil and therefore gasoline increased during the year. However, that cycle has peaked and oil is now back in the mid $40s per barrel. Here are the facts you really need to focus on: Inexpensive oil and gasoline is a positive for the American economy. U.S. oil production is now so dominant in the world that it gives the USA additional economic security we have not had for decades. The USA is the only oil producer able to operate at a profit if the price of a barrel of oil is around $40-$45. Low energy costs equal economic growth and security. All good. We expect the cost of oil to rise sharply. But the world still has access to all the oil it needs. Price increases will be the result of price...

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The Forces That Will Impact the American Economy, and Therefore the Land Market in 2019 – Week 10

Posted by on Mar 13, 2019 in Ned Massie, Perspective | 0 comments

Government Debt: A member of the “Economic Growth Party”, I prefer politicians that want to grow the size of the economic pie. I also believe the cruelest form of politics is making promises that cannot be kept. Unfortunately, in 2019 politicians are focused on obtaining power, as opposed to solving problems. Even if the USA government confiscated 100% of all the income of households in the top 2% category of household income, it would not provide enough revenue to fund all of the promises that are being made by the Democrats in 2019. Government debt has doubled over the last 10 years. If The Fed is successful at getting interest rates back to normal there is literally not enough tax revenue to pay the interest and meet our other obligations. Something is going to give and the process will be ugly. I am aware of wealthy individuals whose estate planning now includes moving assets out of their name to the next several generations so that when the “day of reckoning comes” their family is secure. What is your plan to preserve your...

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