I have been a fan/holder of Plum Creek Timber (PCL) for clients since before I started this web site. I’ve written about it a few times over the years and I just continue to hold it.

I’ve known about the stock going back to my days at Lehman Brothers from 1989-1991 when it was still an MLP.

I think I first read about the diversification benefits of timber/lumber sometime in the mid 1990s.

The chart shows PCL in blue compared to Rayonier (RYN) in red and the S&P 500 over the last year. In the last few years PCL has had periods where it has been ahead of RYN and periods where it has lagged RYN. Ditto the S&P 500.

What I think is important is that in the last 12 months while SPX has dropped about 10% PCL is up about 10% plus it has paid a decent dividend. If I had had RYN instead it would have delivered almost the same effect.

Most of the time PCL doesn’t do a whole lot but this has been a period where holding it paid off. That it might lag at other times, like maybe if the stock market is doing very well is ok too. The reasons to hold it are for the dividend and the hope it can zig when equities zag.

If you own stocks or other products that you hope deliver what PCL has done over the last year you should realize there will be periods where it is dead money but assuming the story has not changed it is likely that selling out because it is dead money for a while will likely turn out to be a mistake.

Last 5 posts by Roger Nusbaum

• The Big Picture for the Week of November 15, 2009 - November 14th, 2009
• Process Drilldown - October 23rd, 2009
• Sunday Morning Coffee 10-18-09 - October 18th, 2009
• A Little Followup From This Morning - October 8th, 2009
• Wednesday Roundup - October 7th, 2009