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Financial analysis depends on two basic concepts from utility theory. One, we prefer more money rather than less. Two, we prefer dollars today rather than dollars tomorrow. Not only do these principles hold for everyone from kindergarteners to investment bankers, more…
How do we value bare, naked forestland? Timberland investment models and appraisals often use a special application of net present value (NPV) called bare land value (BLV). Also known as land expectation value (LEV) or soil expectation value (SEV), BLV more…
In 1990, Nobel Prize-winning economist Daniel Kahneman and two colleagues published a study documenting how we can “overvalue” things we already own (D. Kahneman, J. Knetsch and R. Thaler, “Experimental Tests of the Endowment Effect and the Coase Theorem,” The more…
A few notes and two questions to ask when applying and interpreting IRR. Internal rate of return (IRR) reflects the compounded return produced by an investment or capital project. IRR is best used in tandem with other measures, such as more…
Albert Einstein, the smartest guy most of us never met, said, “The hardest thing in the world to understand is the income tax.” [Fascinatingly, this quote, along with others, can be found on the IRS website here.] Taxes matter in more…
The book Forest Finance Simplified includes a chapter titled “What Opportunities Exist for ‘Getting Smart’ In Forest Finance?” It lists six skills and topics for students seeking work in the timberland investment sector and for forestry professionals looking to broaden more…
This is the fourth in a series of excerpts from Forisk’s Q1 2017 forest industry analysis and timber price forecasts for North America. All equity indices tracked by Forisk – timberland and otherwise – produced positive returns in 2016; only more…
This is the third in a series related to Forisk’s Q1 2017 forest industry analysis and timber price forecasts for North America. Each quarter, we look back and evaluate the performance of previous forecasts and earlier models. How did Forisk’s more…
This is the first in a series related to Forisk’s Q1 2017 forest industry analysis and timber price forecasts for the United States and Canada. Forecasts of business and market conditions support a range of capital allocation and strategic planning more…
How well capitalized are mills in a given market? How viable and likely to succeed are announced greenfield investments in the U.S. forest products industry? This is an important concept for understanding risk, returns and future market prospects in a more…