Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
UK Corona Catastrophe Trend Analysis - 2nd Jun 20
US Real Estate Stats Show Big Wave Of Refinancing Is Coming - 2nd Jun 20
Let’s Make Sure This Crisis Doesn’t Go to Waste - 2nd Jun 20
Silver and Gold: Balancing More Than 100 Years Of Debt Abuse - 2nd Jun 20
The importance of effective website design in a business marketing strategy - 2nd Jun 20
AI Mega-trend Tech Stocks Buying Levels Q2 2020 - 1st Jun 20
M2 Velocity Collapses – Could A Bottom In Capital Velocity Be Setting Up? - 1st Jun 20
The Inflation–Deflation Conundrum - 1st Jun 20
AMD 3900XT, 3800XT, 3600XT Refresh Means Zen 3 4000 AMD CPU's Delayed for 5nm Until 2021? - 1st Jun 20
Why Multi-Asset Brokers Like TRADE.com are the Future of Trading - 1st Jun 20
Will Fed‘s Cap On Interest Rates Trigger Gold’s Rally? - 30th May
Is Stock Market Setting Up for a Blow-Off Top? - 29th May 20
Strong Signs In The Mobile Gaming Market - 29th May 20
Last Clap for NHS and Carers, Sheffield UK - 29th May 20
The AI Mega-trend Stocks Investing - When to Sell? - 28th May 20
Trump vs. Biden: What’s at Stake for Precious Metals Investors? - 28th May 20
Stocks: What to Make of the Day-Trading Frenzy - 28th May 20
Why You’ll Never Get Another Stimulus Check - 28th May 20
Implications for Gold – 2007-9 Great Recession vs. 2020 Coronavirus Crisis - 28th May 20
Ray Dalio Suggests USA Is Entering A Period Of Economic Decline And New World Order - 28th May 20
Europe’s Coronavirus Pandemic Dilemma - 28th May 20
I Can't Pay My Payday Loans What Will Happen - 28th May 20
Predictive Modeling Suggests US Stock Markets 12% Over Valued - 27th May 20
Why Stocks Bear Market Rallies Are So Tricky - 27th May 20
Precious Metals Hit Resistance - 27th May 20
Crude Oil Cuts Get Another Saudi Boost as Oil Demand Begins to Show Signs of Life - 27th May 20
Where the Markets are heading after COVID-19? - 27th May 20
Silver Springboards Higher – What’s Next? - 26th May 20
Stock Market Key Resistance Breakout Is Where the Rubber Meets the Road - 26th May 20
5 Ways To Amp Up Your CFD Trading Today - 26th May 20
The Anatomy of a Gold Stock Bull Market - 26th May 20
Stock Market Critical Price Level Could Soon Prompt A Big Move - 25th May 20
Will Powell Decouple Gold from the Stock Market? - 25th May 20
How Muslims Celebrated EID in Lockdown Britain 2020 - UK - 25th May 20
Stock Market Topping Behavior - 24th May 20
Fed Action Accelerates Boom-Bust Cycle; Not A Virus Crisis - 23rd May 20
Gold Silver Miners and Stocks (after a quick drop) Ready to Explode - 23rd May 20
3 Ways to Prepare Financially for Retirement - 23rd May 20
4 Essential Car Trade-In Tips To Get The Best Value - 23rd May 20
Budgie Heaven at Bird Land - 23rd May 20

Market Oracle FREE Newsletter

Coronavirus-stocks-bear-market-2020-analysis

Gold, Silver, Lumber, Farmland, Foreign Real Estate Alternative Investments To Consider

Stock-Markets / Investing 2010 Oct 05, 2010 - 02:24 AM GMT

By: Lorimer_Wilson

Stock-Markets Best Financial Markets Analysis ArticleChris Mack writes: Are you one of the millions of people who lost money over the past decade in stocks and housing who is now buying bonds, annuities, and other fixed deposit credit based investments? If so you are probably doing so because you think it is the conservative thing to do but, in fact, you are really being a speculator buying an asset far above its intrinsic value with the idea that someone else will pay even more and such action is guaranteed to disappoint. Instead, you should make alternative investments the core of your portfolio.


While there isn’t enough room for everyone to exit bond and equity markets, alternative investments will – if managed correctly – offer sustainable cash flow much higher than what banks or governments are willing to provide. This is especially important for people who are entering or already in retirement and need some stable income to live off of, as well as capital preservation. Below are five suggestions, in no particular order:

Gold and Silver – Alternative Investment #1

Ironically the biggest argument Wall Street and the mainstream media will use against precious metals is that they don’t pay a yield and can’t provide cash flow like bonds can. Now that yields are zero for all practical purposes, that reasoning vanishes. There is no longer an opportunity cost of owning precious metals over bonds or cash. Most importantly, real interest rates are negative, and as long as they are gold and silver will have a powerful wind at their backs. Precious metals can be included in the cash and insurance portion of an allocation, and miners can be included in the equity portion. In addition to rising every single year over the last decade  and appreciating at an annual rate of 18 percent gold has, as I wrote in my last article, the makings of attaining $5,000 at its parabolic peak in the next few years.

Farmland – Alternative Investment #2

Farmland has increased over recent years but there are still opportunities to purchase properties which provide stable income and protection from inflation. A successful investor can expect to lease the land to a farmer for a 4-6 percent annual yield, and historically land values have also appreciated by about 4-6 percent. Effectively the investor could earn an inflation adjusted 5-8 percent with little risk if it isn’t leveraged by debt. Over the last decade, farmland prices appreciated at a rate of 7 percent while the S&P 500 had a negative return. Farmland performed even better when factoring rental or operating income.

Lumber/Timber – Alternative Investment #3

Money does grow on trees when evaluating timber. Investors in forestry have the potential to earn a steady return from the growth of lumber as trees are always growing. Timber is also historically known for being a great inflation hedge. The land itself also appreciates in addition to the lumber. From 1990 to 2007, the National Council of Real Estate Investment Fiduciaries (NCREIF) Timberland Index had an annual return of 12.88 percent – higher than the S&P 500′s annual return of 10.54 percent and with less volatility. Investors could buy stock in timber companies such as Plum Creek (PLC) and Rayonier(RYN) that have dividend yields of more that 4 percent, or they could invest directly in land and lumber projects.

Arbitrage – Alternative Investment #4

Although much more lucrative in the 1970′s and 1980′s than today, there remain several arbitrage strategies that provide cash flow consistent better than a treasury and with less inflation risk. Merger arbitrage funds ARBFX and MERFX have appreciated by an average rate of 4 percent over the last 5 years and investors aren’t dependent on interest rates falling to make a profit.

Foreign Real Estate and Businesses – Alternative Investment #5

While the U.S., Europe, Japan, and other developed countries are expected to see stagnating economies for the foreseeable future, real estate and other businesses in developing nations were much less affected by the credit crisis of 2008 because they didn’t use the same degree of leverage as the U.S., Europe, and Japan. For this reason they will recover faster and offer higher returns.

Conclusion

By focusing on alternative investments it is still possible for investors to achieve cash flow and annual returns between 4 to 10 percent.

Source: http://www.munknee.com/....

Chris Mack is President of Trade Placer (tradeplacer.com) which brings the “Power of Wallstreet on Mainstreet” to its readers and a frequent contributor to both  www.FinancialArticleSummariesToday.com “A site/sight for sore eyes and inquisitive minds” 

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules