Betting (on) the farm
Gates’ purchase of farmland in North Dakota initially raised concerns because of a Depression-era law that prohibits corporations and limited liability companies from owning farmland in the region.
North Dakota’s Agriculture Commissioner Doug Goehring previously told KFYR-TV — a television station in Bismarck, North Dakota — that many people weren’t thrilled about the news.
“I’ve gotten a big earful on this from clear across the state, it’s not even from that neighborhood. Those people are upset, but there are others that are just livid about this,” Geohring said.
However, the anti-corporate farming law does allow individual trusts to own farmland if it is leased to farmers — and that’s what Gates’ firm plans to do.
On Wednesday, North Dakota’s Attorney General issued a letter saying that the purchase complied with the law.
A recession-resistant asset
You don’t need an MBA to see the appeal of farmland.
Markets can go up or down, but no matter what happens, people still need to eat.
That makes farmland intrinsically valuable.
And it just so happens that Gates’ good pal Warren Buffett also likes the asset.
In fact, Buffett bought a 400-acre farm in Nebraska back in 1986. “I needed no unusual knowledge or intelligence to conclude that the investment had no downside and potentially had substantial upside,” Buffett later wrote.
At Berkshire’s annual shareholders meeting earlier this year, Buffett mentioned farmland again as one of the two assets he’d buy instead of Bitcoin.
“If you said, for a 1% interest in all the farmland in the United States, pay our group $25 billion, I’ll write you a check this afternoon,” he said.
No need to be a billionaire
While the ultra-rich have been acquiring farmland, you don’t need to be a billionaire to get a piece of the action.
Publicly traded real estate investment trusts — that specialize in owning farms — allow you to do it with as little money as you’re willing to spend. You don’t need to know how to work the farm, either — just sit back, relax, and enjoy the dividend checks rolling in.
Gladstone Land (LAND), for instance, owns 164 farms totaling 113,000 acres. It pays monthly distributions of $0.0454 per share, giving the stock an annual dividend yield of 2.5%.
Then there’s Farmland Partners (FPI), a REIT with a farmland portfolio of 185,000 acres and an annual dividend yield of 1.8%.
If you are looking for options outside the stock market, there are investing services that allow you to invest in farmland as well.
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Fine art as an investment
Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.
That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.
Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.
And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.
On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.
Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.
Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.