Unusual Investment Strategy Misfires 30 Years Later

It's not a strategy that typically comes up in investment planning: plant a field of pine trees. But as the Wall Street Journal reports, it made much sense to thousands of Southerners about 30 years ago, thanks in part to a federal incentive to reforest the land. "If you work and you didn't want to put all your money in the stock market, you'd buy 40 acres and plant trees and they'd be ready to cut by the time your kid went to college," explains a timber broker in Alabama. "It's like a 401(k)." One problem: Three decades later, the trees are ready to harvest, but a glut of timber hardly makes it worth the effort. The price of Southern pine is down 45% since 2007.

"We figured we'd plant trees and come back and harvest it in 30 years and in the meantime go into town to make a living doing something else," says Clayton George of Mississippi. The 57-year-old isn't sure whether to harvest or hang on and hope prices rebound. In the meantime, some of his trees already have gotten too big for local mills and would have to be pulped instead, which brings even less money. Those getting pinched aren't just individual landowners. The nation's largest pension fund—the California Public Employees' Retirement System—once bought $2 billion worth of Southern timberland, but the fund had to sell much of that land over the summer at a loss. Read the full story. (More trees stories.)