Timber can withstand ill economic winds

Timber is the ultimate crisis-friendly investment: if you don't like the look of prevailing prices, just leave the trees to grow. And right now, timber is relatively undervalued, says Eoin Gleeson. Here, he examines the sector and finds out the best way to invest.

"This is the most positive housing report in ages," crowed Patrick Newport of market analysts IHS Global Insight. He was referring to news that sales of single family homes in the US leapt 11% in June analysts had expected just 2.3%. Stocks in housebuilders surged as the news lit a fire under Wall Street.

No sector had been more impatient for this news than timber companies. The collapse in home construction has been devastating for much of the industry, with planks piling up in mills as homebuilders went to the wall. And with no furniture companies calling in orders, pulp mills across northwest America have been abandoned.

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Eoin came to MoneyWeek in 2006 having graduated with a MLitt in economics from Trinity College, Dublin. He taught economic history for two years at Trinity, while researching a thesis on how herd behaviour destroys financial markets.