The Forest for the Trees

Last week, Nashville’s Mayor Briley had a rare stroke of genius. I mainly view this guy as small little wimpy man with no compass and no fortitude. However, he really surprised me when he cut a deal to cash in 16 cherry trees in exchange for $10,000 and 200 new cherry trees. For those keeping score at home, that’s a return of 1,150% on trees plus the 10-large in pocket. That is some colossal deal making!

The people of Nashville, however, revolted. Who knew our city had a row of cherry trees downtown that drew visitors from around the world, led to a nationally televised 4-day event, and brought in $125,000,000 in revenue to our city businesses? Oh wait, this is the NFL draft I speak of…

Nonetheless, the NFL needed to move 16 trees (or 20, or 21, or 10, depending on which news station you listen to) to make room for a massive stage for the NFL draft later this month. Briley’s plan was to cut them down, mulch them up, spread the mulch in the parks, and replace them with newer trees donated by the NFL. An additional 200 trees were going to be donated for area parks in the process, and the city made the 10-large on the deal as a little cash for our troubles.

The tree huggers were NOT having it, and pandemonium ensued. Now a compromised has been reached where the trees in question will be uprooted, moved to a “holding area”, and re-planted when the NFL leaves town. Cursory research into transplanting trees tells you this should only be done in winter when the tree is dormant, not in the spring when it is budding. Essentially, we’ll waste a lot of time and money to kill the trees. Oh, and 3 of them are dead already…

Take the gain, Mr. Briley. Grow a set of acorns and stand by your decision. Trading 16 trees for 200 trees and 10-grand is a swinging deal, especially when parlayed alongside an event the is going to cram $125M into our coffers! You’re swinging a big stick here!

Investing In Trees

Looking to invest in timber like Mayor Briley? Aside from buying some land and harvesting the tress (which I suggest you do in the middle of the night given this recent local furor), your best bet will an industry-specific ETF. Essentially there are 2 ETFs that cover the timber industry, $CUT and $WOOD (I am not making these stock symbols up).

$WOOD 4-star Morningstar Rating. 2.52% yield. 12.76%/year average annualized return over the last 10 years.

$CUT 4-star Morningstar Rating.3.01% yield. 13.01%/year average annualized return over the last 10 years.

I’ve owned $WOOD for quite some time and mentioned it here. It’s part of my commodities exposure that I keep around 5-10% of my total allocation. I definitely wouldn’t recommend putting all your cherries in one basket; however, timber is worth taking a look at for exposure to a sector with a slightly different correlation to the market as a whole, with decent long term returns and a small dividend to boot.

Timber (orange & green) versus the S&P500 (blue) over 10 years

Conclusion:

Alright – that’s all I’ve got on trees and making money off of them. As the ever-capitalist I have to think folks in Nashville will come around at some to view the forest instead of the trees. In the meantime watch for Mayor Briley to continue to turn a blind eye to violent crime as he spends his time promoting transgender cookie shops. We’re in trouble until we cut this guy out of office. We need to transplant him to Portland where he’d be able to put down roots and really prosper…

Until then – keep chopping wood! Cheers!

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: