Geoffrey Lordi

CUT vs. WOOD: Timber ETFs Square Off

The problem with CUT & WOOD is that they don't track timber, per say, but timber and paper companies, as the index states. A .76 correlation to MCAFE and a .69 to (I assume, based on your statistics) the S&P or equivalent - even over 15 years - is not a low correlation value. In fact, both of these ETFs have traded in near lockstep over most major measurement periods since their inception.

I certainly do not disagree with the premise of owning timber, and our neutral fund regularly invests in highly non-correlated assets. But raw land, for those inclined, gives folks an (arguably) better non-correlated appreciation than these two, largely mainstream, equity trackers. Even Plum Creek (PCL) - a favorite of fellow portfolio builder R. Nusbaum - exhibited a .91 correlation to the S&P over the last year, with WOOD at .99 and CUT at .96.

Multiple Asset Class Short-Term Returns

I second sbenard's comments: I've used LSC, as well. Great utility in its flexible L/S schedule.

5 Tactics for 2008

Ellen,

Indeed, you are correct. We have owned both - Singapore (EWS) and Sweden (EWD) - concurrently, and separately, over the last few years.

Best,
GL

5 Tactics for 2008

User 114747,

Thanks for reading my article.

As I noted, a very high r^2 does not offer a traditional hedge, per say. Still, my investment return, including dividends, in EFA last year was more than triple that in our holdings of VTI.

While much of that gain multiple was due to the favorable currency denominations of many of EFA's tracked holdings, that (circularly) was *the* reason that EFA does provide a type of hedge - while many companies in the VTI might garner a reasonable percentage of their earnings from international business, nearly all of EFA's constituents do so. My sincerest apologies if I wasn't clear enough in my explanation.

And regarding my other hedges - consider them, or don't. I know what works for me, and as long as I am further building our funds (I am), then we should each take whichever path best works for us.

Best,
GL

5 Tactics for 2008

Hello, NARSpin,

Thanks for your comments.

I have used SKF before, and feel it is a good tool. It certainly provided some ballast during the steepest declines in banking, though I haven't been recently inclined to use it, caring to put together some cases for other investment possibilities instead.

Best,
GL

5 Tactics for 2008

Hello, NoFate,

Thanks for your comments.

Yes, I am holding IYR, even as I consider a moderate position in SRS. The reasoning behind it is this long/short strategy has worked for me in the past with other tracking etfs as a sort of counterbalance. If I implement correctly, I should see some dampened volatility.

Another reason is that I've been long IYR for a considerable period of time, and although I suppose I could have sold some as long term gains prior to December 31, I didn't really have many losses to offset this year.

Best,
GL

5 Tactics for 2008

Hey, folks,

Regarding the currency hedge section above...I meant that we already have exposure to the Euro (FXE) through our holdings such as Unilever, and to the Yuan through some of our PRC holdings. Although the FXY does indicate the CurrencyShares offering for Yen investing, I'm not sure how FXY got attached above to the China side of things...

Thanks for reading!
Geoff