Tuesday, January 7, 2014

This Surprise Investment Has Outperformed Google for the Past 10-Years

By Simon Black

Later this year, Google will celebrate its 10th anniversary as a publicly-traded company. And the conventional wisdom is that GOOG has been one of the best performing investments of the last decade.

If you had invested $85 in the Google IPO back in 2004, your investment would be worth over $1,100 today... a 13x return.

Over the same period, the S&P 500 has returned just 66%. And if you had taken the plunge into US Treasuries back in 2004, you would have been paid 4.15% per annum for the last ten years.

In light of all this, Google's stock performance has been undoubtedly stellar.

But there's an entirely different asset class that few people ever consider which has beaten the pants off of Google's long-term performance. It's agriculture.

I thought about this yesterday as I was walking around the orchard here picking fresh, ripe plums off the tree. We'll be starting our harvest soon, and the workers are getting everything ready.

The average plum tree can easily produce over 100 pounds of fruit, starting a few years after you put a well-developed seedling in the ground.

And even on a standard-sized residential lot, you can plant 20+ fruit trees.

Assuming a long-term average price of just $0.50 per pound and a 2004 plant price of $4, investing $85 in plum trees 10-years ago instead of Google stock would have yielded well over $6,000 so far.

Even if you're not a Do-it-yourselfer and allow for harvest costs, loss, pruning, water, and other expenses, you'd still be up more than GOOG. Plus you'd still be grossing $1,000 per year... not to mention the increase in your home's market value.

More importantly, you would be owning (and producing) REAL assets instead of paper assets-- something that can be traded, sold, stored, or if need be, eaten.

And best of all, you wouldn't have had Ben Bernanke and his central banking ilk as your silent partner for the past decade, manipulating stock prices and causing asset bubbles.

The soon-departing Mr. Bernanke may be the all-powerful grand wizard of financial markets, but he has absolutely no bearing on the fruit production of well-maintained trees in your backyard.

It's not just plums, either. Or even fruit trees for that matter.

You could have bought $85 worth of organic tomato seeds in 2004 and grown thousands of dollars worth of organic tomatoes over the last decade from your backyard.

Of course, this sort of notion makes most serious investors laugh. They can't think past their own noses and only know how to follow the investment herd off the proverbial cliff.

And while this missive isn't intended to convince our astute readers to rush out and plant trees, it's at least worth pointing out that there are always profitable options far from the mainstream investment mentality.

Simon Black is Senior Editor  at SovereignMan.com. Follow Sovereign Man on Facebook, Twitter, Google+

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  1. The glaring omission here is that agriculture, such as growing fruit, requires a ton of labor. Putting Google stock in your portfolio and sitting on it requires practically zero. If we're going to ignore labor costs then you might as well postulate gathering wood off the side of the road for free and whittling a million toothpicks per day by hand.

    1. Well, you could do it like so many others do now with apples, walnuts, strawberries and such, it's called, 'Pick Your Own'. It's quite popular.
      "A ton of paid labor", not required.

      I imagine a person could even sell the whole crop to one person or company to harvest.

      Anyway, did you read the article about how sitting is death?

      It might be profitable - in more than one way - to get up and do something, like pick fruit?

    2. You didn't read very carefully. Mr Black said that even if you pay someone to do the picking, pruning etc, you still come out ahead.

  2. If you have fruit trees in your yard you can employ your children who are forbidden by law to work outside the home.

    1. That's my exact plan....plus chickens & goats and having them make cookies and what not to sell to the homeschool crowd where(for now) few DHEC regulators roam.