Often overlooked in a tech biased market, the value of timberland as an investment has risen faster, with less volatility, than any sector of stocks as measured by the Standard & Poor’s 500 Index. Since 1987 alone, the Timberland Index, a record maintained by the National Council of Real Estate Investment Fiduciaries (NCREIF), has risen roughly 15 percent per year, in contrast to an annualized return of 9.61percent for the S&P 500. This past year prices have risen 40 percent, and futures prices have jumped 49 percent, making lumber the best-performing commodity on the CME. The fact of the matter is that inflation has never been a match for timber, which has risen steadily when compared with overall prices for more than a century.

Producers of timber-related products have traditionally owned vast acres of timberlands to guarantee access to the supply of trees necessary to make their products. Gradually more of these companies are separating from their tree acreage by selling it to investors and companies with the financial and timber management skills to capitalize on production. Thus, manufacturers guarantee access to supply by entering into resource contracts with the new owners. The contracts are almost always made at prices that allow manufacturers to hedge movements and volatility in timber values.

For investors looking into this sector, timber exchange-traded funds, (ETFs) might prove an attractive option. Two small-cap timber ETFs are Claymore/Clear Global Timber Index (NYSE: CUT) and iShares S&P Global Timber & Forestry Index (NASDAQ: WOOD). Both ETFs invest in timber REITs, as well as businesses related to the industry such as paper and packaging. ETFs offer something of a security blanket for those investors that want to lessen the risk of a single company. For instance, CUT is made up of companies globally that own or lease forest land and harvest trees for lumber and other wood-based products.  CUT gained over 28 percent in 2012 and has a dividend yield of 3 percent. It has a market capitalization of $203.13 million. WOOD has a market cap of $234.69 million. There is no dividend yield for WOOD as of yet.

Bear in mind that the cash flow attributes of timber are comparable to those of zero-coupon bonds. Investors have got to wait years for the investment to mature. Trees are planted and depending on the type, they are harvested within 15 to 30 years. Portfolio managers provide diversification and dividends by purchasing tracts of land with differing harvest maturities. That is one of the advantages of a timber ETF option.

There is a better than average growth in the sector today that has been shaped by a multiple factors such as added demand from Asia, reduced supply and a slowly improving housing market. The majority of industry executives and analysts are bullish based on predictions of continued solid growth in housing starts in 2013.

Timber investing has proven to be especially appealing during bear markets. During the Great Depression stocks plummeted more than 70 percent but timber gained 233 percent. In 2008, when the S&P 500 lost 38 percent, the NCREIF Timberland Index gained 9.5 percent. It is especially beneficial as an effective tool for portfolio diversification, since its cost movements have a very low parallel with most other segments; less than +0.1. If for nothing else, timber is a great way to play the housing recovery, no matter what investment route you take.

President Barack Obama had little time to savor victory on Wednesday after voters gave him a second term in the White House where he faces urgent economic challenges, a looming fiscal showdown and a still-divided Congress able to block his every move.Despite a decisive win over Republican Mitt Romney in Tuesday’s election, Obama must negotiate with a Republican majority in the House of Representatives to try to overcome the partisan gridlock that gripped Washington for much of his first term.The Democratic president’s most immediate concern is the “fiscal cliff” of scheduled tax increases and spending cuts that could crush the U.S. economic recovery if it kicks in at the start of next year.The prospect of Obama and Congress struggling to agree on the issue weighed heavily on global financial markets on Wednesday and helped send Wall Street stocks into a post-election swoon.Obama also faces challenges abroad including the West’s nuclear stand off with Iran, the civil war in Syria, the winding down of the war in Afghanistan and dealing with an increasingly assertive China.At home, Obama’s triumph could embolden him in his dealings with the Republicans, who were in disarray after failing to unseat him or reclaim control of the U.S. Senate, an outcome many conservatives had predicted. Their party is now headed for a period of painful soul-searching.Voters gave Obama a second chance despite stubbornly high unemployment and a weak economic recovery, but they preserved the status quo of divided government in Washington.Obama’s fellow Democrats retained control of the Senate and Republicans kept their majority in the House, giving them power to curb the president’s legislative ambitions on everything from taxes to immigration reform.This is the political reality facing Obama – who won a far narrower victory over Romney than his historic 2008 victory over John McCain when he became the country’s first black president.He headed back to Washington on Wednesday after basking in the glow of his re-election together with thousands of elated supporters at a victory rally in his hometown of Chicago in the early hours of the morning.”We can seize this future together because we are not as divided as our politics suggests,” Obama told the gathering.Before leaving Chicago, he visited his downtown campaign headquarters to thank staff and volunteers.Romney, a multimillionaire former private equity executive, came back from a series of campaign stumbles to fight a close battle after besting Obama in the first of three presidential debates.But the former Massachusetts governor failed to convince voters of his argument that his business experience made him the best candidate to repair a weak U.S. economy.

Obama has pledged to increase tax rates on Americans earning more than $250,000 as a part of his “balanced approach” to deficit reduction – something Republicans still vow to resist.

• Death toll reaches 38 across US and Canada
• Obama tells East Coast: America is with you
• Governor Christie: devastation ‘unthinkable’
• New York’s stock markets to reopen Wednesday 
• More than 8.2 million people without power
• Fire rips through Queens destroying 50 homes
• Levee breaks in New Jersey causing evacuations

A tradition of candidates keeping a low profile while opponents bask in the limelight at their party conventions has frayed in recent elections.This year, that custom will be all but ignored as President Barack Obama and Republican Mitt Romney compete to be heard amid the cacophony of campaign noise on Twitter, YouTube and the 24-hour news cycle.In a phenomenon known as “convention counter-programming,” the two White House hopefuls will campaign at full speed during each other’s conventions to try to grab some of the attention from their rival.

Obama’s campaign is laying out an aggressive agenda for next week when Romney will be officially nominated in a blaze of media attention at the convention in Tampa, Florida, to the acclaim of thousands of delegates.In an trip aimed at tweaking the four-day Republican gathering, Vice President Joe Biden will hold campaign events in Florida next week. Biden had even planned to turn up in Tampa itself on Monday and meet Democratic supporters only 9 miles from the convention venue but he later canceled, citing a burden on local emergency service dealing with Tropical Storm Isaac.

First lady Michelle Obama is appearing on “The Late Show with David Letterman” on Wednesday, the same night as vice presidential candidate Paul Ryan presents himself to the American public in his acceptance speech at the Republican event.

‘MAKE THE MOST OF EVERY DAY’

As aggressive as the Democrats will be next week, Romney and his team also have no intention of just letting Obama enjoy rallies and partisan speeches uncontested when the Democrats meet for their convention in Charlotte, North Carolina, from September 4 to 6.Senior advisers to the Romney campaign say it never entered their minds that they might take time off during the Democratic convention.Romney and Ryan’s schedules are still being firmed up for that week.

For the next couple of days the greatest influence may be the options market, which is seeing heavy volume in August call and put options clustered around the 1,400 level for the S&P 500. If the index closes at or very close to 1,400, those options expire worthless on Friday. That means market-makers have an incentive to try to make that happen, or ‘Pin’ the index at 1,400.

The S&P 500 was up seven of the past nine sessions but the volume has been extremely light due to summer holidays and a lack of news from Europe. About 4.79 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well below last year’s daily average of 7.84 billion.

“I think we are facing technical resistance at 1,405, which is the level of closing highs in early May. We haven’t been at that level since, and until we have a catalyst to move significantly above this, the market is likely to consolidate,” said Randy Frederick, M.D.  of Active Trading & Derivatives at Charles Schwab.

Shares of Deere & Co lost 6.3 percent to $75.10 after the world’s largest agricultural equipment maker reported a lower-than-expected quarterly profit on Wednesday, citing weak sales in China, India and other emerging markets. Rival Caterpillar Inc slipped 0.3 percent to $87.61 as the biggest drag on the Dow.

The Dow Jones industrial average – DJI was down 7.36 points, or 0.06 percent, at 13,164.78.  The Standard & Poor’s 500 Index – SPX was up 1.60 points, or 0.11 percent, at 1,405.53. The Nasdaq Composite Index –  IXIC was up 13.95 points, or 0.46 percent, at 3,030.93.

In economic data, U.S. industrial output expanded 0.6 percent last month, the fastest pace since April. Manufacturing notched another solid advance, hinting at underlying resilience in an economy that has struggled to establish momentum.

The New York Fed’s general business conditions index for August missed expectations and contracted for the first time since October 2011. Meanwhile, Labor Department data showed consumer prices were flat in July for a second straight month and the year-over-year increase was the smallest since November 2010.

Data from the National Association of Home Builders showed homebuilder sentiment rose in August to 37, its highest level in more than five years, and above the 35 in July. The PHLX housing sector index – HGX rose 0.3 percent.

Stock markets sank Monday after Spain’s borrowing costs rose to record levels for a third consecutive trading day on concerns that a deepening recession and the financing problems of its regions would force the government to seek a full-fledged bailout.The yield, or interest rate, on 10-year Spanish government bonds hit 7.5 percent Monday before retreating, having breached 7 percent on Thursday — a level that many analysts fear could eventually shut Spain out of public markets and force it to seek a Greek-style bailout.The concern, though, was that Europe would be hard-pressed to find the money to salvage an economy the size of Spain’s — the euro zone’s fourth largest after Germany, France and Italy.

Wall Street opened for trading with a skid, with the broad Standard & Poor’s 500-stock index down 1.5 percent and the Dow Jones industrial average off more than 200 points in early action.Adding to the worry were fresh signs that the patience of the E.C.B., the International Monetary Fund and the European Union — known as the troika of lenders to Greece — was running thin. In recent days, the lenders have signaled that a decision on giving any more money to Greece, which is verging on bankruptcy and has survived on funds from European taxpayers for the last three years, will hinge on their assessment of how well the government has complied with austerity and other requirements linked to its loans.The financial market pressure is reviving tensions between Spain and its European partners, amid growing calls from the government in Madrid for the European Central Bank to buy Spanish debt and help temper the country’s borrowing costs.

Wall street is worried about spain !!!

Hopes for new action from Europe and the Fed sends stocks surging;Hope that European leaders will take steps to ease the region’s debt crisis sent stocks surging to their best day this year.peculation that the Federal Reserve could make another move to help the flagging U.S. economy also drove traders out of bonds and into stocks Wednesday after weeks of losses.The Dow Jones industrial average surged 286.84 points Wednesday to close at 12,414.79, its biggest gain since December 20.Companies whose stocks have been clobbered the most over the past month had the best gains. Homebuilders rallied, helped by a strong earnings report from Hovnanian Enterprises and rising applications for new mortgages. Hovnanian’s CEO said he sees signs that the housing industry may be entering the early stages of recovery. The Mortgage Bankers Association reported that applications for mortgages rose 1.3 percent last week, largely a result of more people trying to refinance their existing loans.

A speech by a Federal Reserve official also added to speculation that the Fed may take more steps to bolster the U.S. economic recovery. Dennis Lockhart, president of the Fed’s Atlanta regional bank, says weak job growth over the past two months highlighted the “halting and tenuous” recovery. If the trend continues, “further monetary actions to support the recovery will certainly need to be considered,” he said.

Facebook, founded eight years ago by Mark Zuckerberg in a Harvard dorm room, will add about 85 million shares to its IPO, floating about 422 million shares in an offering expected on Friday, the source told Reuters, declining to be identified because the information was confidential.The expanded size, coupled with Facebook’s recently announced plans to raise the IPO price range, would make Facebook the third-largest initial share sale in U.S. history after Visa Inc and GM. Facebook declined to comment on the increased IPO size, which was first reported by CNBC on Tuesday.

Facebook Inc will increase the size of its initial public offering by 25 percent, a source familiar with the matter said, and could raise as much as $16 billion as strong investor demand for a share of the No.1 social network trumps debate about the company’s long-term potential to make money.Facebook raised the target price range to $34-$38 per share in response to strong demand, from $28-$35, according to a Tuesday filing. That would value the company at $93-$104 billion, rivaling the market value of Internet powerhouses such as Amazon.com Inc, and exceeding that of Hewlett-Packard Co and Dell Inc combined.The increased price range made it very unlikely that Facebook shares would double on their trading debut as they might have if the company had come out at the low end of its initial price range, Wolff said. He expects a first-day gain of about 10 percent.Facebook’s IPO comes as some investors worry the company has not yet figured out a way to make money from a growing number of users who access the social network on mobile devices such as smartphones. Meanwhile, revenue growth from Facebook’s online advertising business, which accounts for the bulk of its revenue, has slowed in recent months.

With some 900 million users, it had $1 billion in net income on revenue of $3.7 billion in 2011.