Friday, December 18, 2009


Abnormal Returns has an article about a "stealth decade-long bull market" in farmland.

I looked at farmland this summer and concluded that it is in a huge bubble. Prices were bewilderingly high. I would love to own some, but I will have to wait for a crash.


eh said...

Maybe farmland entered a bubble when commodities went thru the roof, and it has yet to correct. Also the biofuel fad probably had an effect. The trouble with farmland is that unless it is strategically located -- e.g. in Calif where they're in a race to pave everything over -- its value is, I imagine, determined by what you get from working it.


Apparently, no more flat rate options trading at OptionsHouse. I thought it was too good to last.

CP said...

Yeah, I didn't put a lot of thought into why there is a bubble, just that there IS one.

I looked at the cap rate for farmland: (farm rents-expenses)/land price.

The yields I saw were lower than treasuries - made no sense.

And yes, I am talking about very rural midwestern land with NO development potential.

PD said...

carbon credits

CP said...

Unless you think a new carbon credit scam can increase the NOI of farmland by about 5x, the acreage prices just don't make sense.