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6th Edition of “Forest Finance Simplified” Now Available!

Forisk Press recently published the 6th Edition of the Forest Finance Simplified book by Dr. Brooks Mendell

Forest Finance Simplified distills forest finance themes into a question-and-answer format for those who want an accessible reference or introduction to forest management decision-making and timber investments. This handbook succinctly helps readers do the following:

  • Identify and communicate key financial issues for a given forestry or timberland investment;
  • Differentiate and explain the pros and cons of traditional approaches to financial analysis;
  • Analyze, rank and benchmark the value and performance of forest management activities and timberland investments; and
  • Avoid common errors associated with forest investment decisions.

The 6th Edition includes additional content on comparing timberland investment vehicles, benchmarking timberland investment performance, making forest management decisions, and evaluating the use of leverage for timber investments.

The book is available here.

Stories 2017: How Did It Go?

In 2017, I began submitting and tracking my fiction writing in earnest. How did it go?

  • From August through December, I submitted versions of 11 stories 23 times to 13 different outlets. 
  • By December 31, I pocketed 14 rejections and one acceptance (6.7%).
  • That one story (see below) got picked up and (supposedly) translated into Gujarati and republished in Sarjan Magazine.
  • Also, one of the rejected stories received “Honorable Mention” in an Alfred Hitchcock Mystery Magazine flash fiction contest.

A few of the rejections came with encouraging notes from the editors, which I appreciated and subsisted on to some extent.  (Thank you, Mark and Ron!)

2017 Stories

On October 2ndMicrofiction Monday Magazine published “Art Imitates Death” (microfiction: 87 words; 1 minute read). My thanks to editor Gayle Towell. Please enjoy.

How to Read an Annual Report (if you only have 20 minutes)

Quarterly financial statements and annual company reports are the language of investors and executives. At the end of the day, the results of managerial business and capital allocation decisions get translated through audited financial statements, which, like haikus and box scores, require interpretation and translation. While investors and analysts claim to like transparency, the reality is the reading and interpreting of financial statements requires practice and patience (and interest).

Warren Buffett, for example, has interest. He reads 500 pages per day. He says that, while others may enjoy Playboy, he prefers annual reports and financial statements. (No comment).

Annual reports can yield valuable information, even if you are short on time. Reviewing annual reports can better prepare you for working with customers, suppliers, and your markets. They can yield insights, benchmarking and market intelligence. If you had 20 minutes, where should you focus? I think “L-L-C” to prioritize three things with the goal of understanding how a business makes money, how the managers/leaders think (and who they are), and the overall performance of the firm.

  1. Letter: read the Chairman/CEO letter. While some write this off as “fluff”, it always included business highlights (and lowlights, reasons, and excuses; make sure to know the difference). The letter will include noteworthy investments and efforts, and usually discusses the strategy and the business model.
  2. Leadership: understand who runs the company, including the Board of Directors. Look at the makeup, backgrounds, and skills of those who control the company. This can be especially relevant in smaller firms, and recent changes to the Board can highlight firm priorities.
  3. Cash: confirm how cash is generated and used, including financing. Are the core operations generating cash? How is the company using that cash? How are they financing investments into growing the firm? The ability to review the Statement of Cash Flows can benefit from a brief tutorial, but it is straightforward once your eye knows where to go. At the end of the day, numbers need to match.

If you have more time, read the Business Description to confirm the business model, business segments, key customers and exposures.

The Math of Investing and Our Unease with Rational Thought

Professor Richard Thaler won this year’s Nobel Prize for Economics, in part, for research confirming that we (humans) believe we are smarter and more rational than we actually are. Asked how he plans to spend the $1.1 million prize money, Thaler replied, “I will try to spend it as irrationally as possible.” [Should he call, please let him know I stand ready to help.]

Reading Thaler’s research raises issues relevant to investing. We may believe we have superior insight into the value of an asset or the wisdom of a strategy, and that this belief in our own insight – as opposed to subjecting the insight to a suitable gauntlet of tests – gives license to act and a means to profit. This encourages us to overweight our assessment of values and market plays, while discounting the reality that hundreds or thousands of other (humans) are looking at the same data at the same time and coming to similar conclusions.

When too much capital chases too few assets, it creates its own momentum. And this momentum of the institutional conscious can lead to overvaluing assets. So when we prophylactically ask whether any asset is priced above or below its intrinsic values, we should assume the icy logic and rationality of Dr. Spock and look to the math.

Click here for a longer post that applies this thinking to timberland investments.

Communicating in Public: How to Make Effective Impromptu Comments

At times, you will feel compelled or asked to share your opinion in a meeting, at a business event or during a conference.  For these situations, a bit of advance planning will reduce the pressure and increase the likelihood of making a valuable contribution.

Effective impromptu comments have specific characteristics. First, they are relevant. Second, they are specific. Third, they are brief.  While many of us know and appreciate natural comedians or gifted story tellers who can talk all afternoon and hold their audiences, most of us benefit by being relevant, specific, and brief.

The PREP approach for impromptu comments advocated by Toast Masters International provides one strategy for putting this thinking into action. PREP stands for Point, Reason, Example, Point.  Make your point.  State the reason for the point. Give an example that supports the point. And close by restating your key point. In Loving Trees is Not Enough, I ask readers to consider this response to questions about the value or purpose of annual training at work:

Point: “Professionals at all levels practice basic skills annually.”

Reason: “We practice these skills to keep them sharp.”

Example: “Look at Major League baseball players.  Each year, teams have “spring training” to review and practice the same fundamental skills being learned by the youngest little league players. And Major Leaguers are the best players in the world.”

Point: “We are professionals and we train annually to keep these skills sharp.”

PREP provides a framework for organizing our thoughts in impromptu speaking situations. Think about how this approach could improve meetings.  How often have we listened to people ramble on without making logical sense or contributing useful points?  This framework reduces anxiety and increases effectiveness by removing the need to figure out how to start, organize, and end our comments.

We can reduce the PREP approach further. First, state a single, relevant point. Second, give a specific reason or example that supports this point. Third, say “thank you” and sit down.  Impromptu speaking success is simply one relevant, specific, and brief comment away.