In this Commentary, Josef Naegel and James Macmillan-Scott consider the strategies that can help protect your wealth from the market disruptions that require constant vigilance and action. Stability in times of distortion A turbulent year is ending. Markets continue to be distorted by a vast wall of money which is disconcerting to the investing world and governments alike. Short-termism in investor behaviour has dominated markets for far too long. Next year [2026], for the first time, we might observe an erosion of real wealth (even for the tech bros), as sustained inflation is exceeding GDP growth in many of the leading economic regions and valuations driven by media hype are not sustainable. This is the time for real assets. When we think of real assets we think of land – and land, we must remember it is not a fixed but a permanent asset because it has no lifetime. This is a mistake made by many. Another mistake is to forget that the way land is used and managed will strongly influence how severe climate will impact food, water, biodiversity and people’s lives. Nature appears to be the last bastion in our digital world – an antidote to daily crises, new risks that are emerging from technology/AI, market volatility, geopolitical shifts, fake news and media manipulation. With these disruptive elements, we believe a material cushion of long-term investments based on productive and developed land is more essential than ever. The pivotal role of capital and land in investment strategies The idea of managed investment has altered dramatically since the end of the Second World War and has gone through many phases – Modern Portfolio Theory, debt vs equity, derivatives, structures, early to late stage and now it is a vast, $100trillion, business of great maturity and professionalism. This process of development has seen many changes in thinking and sentiment and has driven the creation of new asset classes, where few existed before. During this process, the horizon for investment and evaluation criteria have altered considerably, as have the consumers of investment management and advice. Debt was originally the staple of professional investment – a position which changed as equity and higher risk securities were demanded by retail investors and also by professionals seeking alpha. Once the dam was breached, new asset classes proliferated and novel forms of investment were developed, including derivatives and structured products. Initially, debt represented around 95% of professional/institutional portfolios and equity the remainder. The balance shifted quite quickly after the war and accelerated as new theories on investment management emerged. If we look now at the mix, one asset class is often missing, even in the most sophisticated and protection driven portfolios – and that is land-based investment. It is our contention that this is often a mistake. The following is a commentary that attempts to make the case for a change in emphasis. Where did all the money come from? We won’t go back too far in history – we are all aware of the pre-capitalist position where land was wealth and the polarities of society reflected this. But what happened in the capitalist transformation was a dramatic shift as a labour force was increasingly needed for industry and land was commoditized. The early C19th experienced this shift, which had developed – since the late C17th – funded through the creation of the great multiplier, fractional reserve. The early C18th capital explosion (South Sea/Mississippi), born from this infinity machine, allowed for the capital and wealth creation that catalysed and paved the way for the Industrial Revolution. Then, by the mid C19th, railways were penetrating to the US West Coast and Eastern Europe – this was the largest and most intense investment boom in history – creating vast wealth and building an infrastructure, which allowed the Industrial Revolution to travel across continents in the time it took to lay the tracks. The factories – that Revolution’s productive assets – appeared like mushrooms as soon as Adam Smith described the division of labour in 1776. Mechanisation displaced human and animal labour leading to the creation of very large industrial plants, where machines drove sweated and child labour with their never-ending energy. Late C18th legislation shows the enormity of the problem, which pitted industry against social good, as humans were increasingly used as automata. Great cities expanded swiftly – built with materials created in factories, whose principal fuel was coal. Blackened buildings and squalid slums are the indelible Dickensian image of the period, as population grew at a speed not previously seen in history. World population growth through history Source: World Population Bureau What did this mean to the socio-economic structure, where this capital/ wealth/ population growth was taking place? Initially the changes were limited to resource rich locations, but this quickly changed as the railways, themselves industrial products, drove the rapid spread of industry. By the late C19th the work had been done. Capital now dominated thinking – bankers in London and New York flourished in a world, which was still largely agrarian. The agricultural revolution ran in parallel to the industrial revolution, creating the required extra food resource through mechanization and rationalization. The land became a factory. A factory, which was a poor relation to the industrial plant whose genesis was engineering genius – but that spewed smoke and created products that were the components of more machines – and at each step revenues flowed, capital was created and multiplied. Common land had been part of life since cultivation was established – and common rights, since time immemorial, prevailed and were understood. This was changing slowly but when the industrial and agricultural revolutions arrived, they were swept aside – starting in England in 1801 with the Enclosures Act. Logically land would become more valuable, and this did happen initially; the landed estates and their owners lived through a period of sudden and vast wealth and small holders began to sell out. But this was a transition, not a new order. Land values very quickly lost the race with industrial assets – they just could not keep pace. The First World War finally ended the landed estates dominion – wealth now resided in the industrial capital creating machine – land became almost a nuisance and after the Great Crash the end of landed power was, almost, complete. The Second World War completed the process – land increasingly became a utility with high cost and obligation and limited return. But then society was being totally and permanently re-structured – landed power giving way to the arbitrary and shorter-term view of finance. The Second World War also realigned the geopolitical balance of power – leaving Europe devastated, Japan in submission, Russia a hollow shell and China and the US potential industrial monsters. Largely physically unscathed, the United Sates shifted from wartime production to a consumer-driven economy, demand released by the savings of GIs, the GI Bill itself and the incredibly rapid increase in retail investment (brokerage came to Main Street). This allowed industry to transition to consumer goods and new white goods became a necessity, so that capital-intensive sectors boomed as funding became available. The retail investor chased new issues by big auto and new technology; the era of equity had begun. That quickly drove the next wave – the fixed income market suddenly found its feet and companies and governments could readily borrow to fund infrastructure and growth. Obviously farming and the land was still a necessity – but not necessarily a local one – the bread-basket regions were productive but could not compete with industry and the consumers’ infinite demands that sought product globally. The 1950s and 1960s were the messy but liberated transition from the old world to the new. This was clear not just economically but in fashion, music, science and life in general. In many developed countries state welfare and universal education were introduced – the social good was recognised, advertising became a powerful machine and the media developed as a tool of commerce driving consumers to expect and demand more, thereby creating the need for more investment and spending. And more was available – the 1970s witnessed the world of finance reaching a peak in innovation. The Eurobond changed the face of global debt markets and derivatives evolved from an arcane science known only to options traders to a quant driven monster manipulating cascades of triggers, which only the newly available computers and their operators could unravel. The age of finance had arrived and money was omnipotent, this time not only driven by the reciprocal of the reserved fraction but by formulae, structures and algorithms, which created booms and busts on a scale never before imagined. Which brings us to today – through dot.com booms, derivatives miracles and structured product busts, all dependent on the increasing availability of – and demand for – capital. In the years from 2000 to 2005, just before the CDO implosion caused by bankers’ hubris and hidden/obscured risk, the real estate markets in the west increased in value by $40 trillion, equivalent to the underlying GDP of those countries. We now live in a world where every problem is solved with money (read, debt). This is evidenced by the response to the Great Financial Crisis, the global pandemic and the helicopter funding, which sprayed money over the fires. Printing money has become Governments’ knee jerk response to every issue. The wall of money is now our biggest problem. There is now more than $350 trillion in debt globally. What is terrifying is that nearly 50% of that huge total is issued by non-bank financial institutions, not just governments (just over a third is). The pile doesn’t decrease at maturity; it is rolled or refinanced. We need all that money as the system now has an entitled public and political class, which demands that their needs are met – needs that have become rights. We can’t look at the long term anymore because the short term is so greedy and needy – requiring so much attention and, as we said, the money isn’t going away. Does that mean the long-term asset is not interesting – no, of course not. It just means that it’s not like a CDO-based SPV, where there are myriad fee creating opportunities, as the security is born and matures and (in many cases), dies. Nor is it subject to high velocity trading, where it is co-mingled with all other commodities in a maelstrom of activity, where difference is the driving criteria, not stability, real return, security and prudence. Fee enhancement is one aspect that short-term investing provides. Long term investing has many more facets – where calm, careful and patient investors look for and find stable, competitive and predictable returns from assets, which protect against inflation and provide a value chain of benefits to themselves, others and to our environment. The investment thesis – a crucial real asset for capital preservation Land creates value in a stable and continuous way and provides enormous benefits to the investor but also to the community and the environment. Economics and long-term benefits indicate that productive land is a real good, which should be part of any investment thinking. However, developed land is a limited resource. Remember the old Mark Twain saying: “Buy land, they’re not making any more of it”. This is true in principle but, for the purpose of capital preservation, much depends on where. We would argue that reliable jurisdictions (typically Anglo-Saxon frameworks) and stable political environments are crucial. The increase in value and total return over the next 50 years on a risk-adjusted basis will be very competitive. The charts below highlight the unique attributes of land, using southern U.S. timberland as a proxy, with a low-to-no correlation to other asset classes such as equities, gold or bonds. We believe that this key aspect of ‘non-correlation’ becomes increasingly vital for asset management. Additionally, over the same period, land has significantly outperformed other assets, risk-adjusted, due to its inherently low volatility. We view this as a key advantage for investment portfolios in a world of increasing volatility and risk. In the example of global stock markets, future risks include several factors, which could trigger volatility or a significant correction. Most commonly-cited threats are high market valuations, persistent inflation, overdependence on technology related assets and AI sectors, geopolitical tensions, rising debt levels and a potential ‘confidence cascade’ – a situation where a single shock leads to widespread investor panic. By contrast, forestland’s unique characteristic of biological growth ensures a base level of asset appreciation regardless of market volatility, political events or other global disruptions. U.S. South Timberland = NCREIF Timberland Property Index, South Region S&P 500, Standard & Poor’s 500 Index, Investing.com Ex-U.S. Equities = Morgan Stanley Capital International EAFE Index (Europe, Australasia, and the Far East mid- and large-cap stocks) Intermediate Term U.S. Bond = ICE BofA 7-10 Year US Corporate Index Total Return Index, St. Louis Federal Reserve Gold = Gold futures contracts, Investing.com. Source: Adohi Partners, LLC If one is convinced of the need for a properly structured investment portfolio to maintain some base of long-term, non-correlating assets, does it make sense to include only negative-carry precious metals and commodities, or also to include positive-carry land, which can benefit from multiple productive uses – timber, farming, environmental, development, etc? We firmly believe in the latter. Case studies Nominal versus real returns using the U.S. as a specific and detailed example in wealth preservation An important aspect to understand when we are looking at returns is that many of us delude ourselves by thinking mainly in nominal terms, whereas the real returns are crucial to preserve wealth. To illustrate our point, US timberland is a good case study due to its size and market depth. By itself, timber has never been a true inflation hedge, even though some observers have said the opposite for years. When inflation rises typically so do interest rates. Eventually, this reins in borrowing with the effect of killing homebuilding and remodelling activity. This depresses the price of sawtimber. As overall economic growth slows due to high inflation and concomitant lack of investment, it depresses markets for pulp, paper, cardboard and other products that use wood fibre as an input. As a consequence, pulpwood prices decline. This happened in a significant way in the early 1980s, when U.S. inflation peaked at 14.5%, and unemployment rose to over 7.5%. Timber prices fell broadly and remained largely depressed in both nominal and real (inflation adjusted) terms until the middle of that decade before eventually recovering. But also measured in real terms, the value of underlying land assets was largely flat and where values did decline, it occurred to a much smaller extent. The value of a capital asset over time is ultimately driven by the income it can produce. Timberland values are historically characterized by the income the land is capable of producing, not the land or timber in isolation. The value of the ‘dirt’ (underlying land) normally tracks timber prices with a lag of several years. When timber prices rise or fall, land prices eventually follow. Because this process occurs over a period of years, land prices are by nature much less volatile than timber prices. However, land prices tend to be more responsive when timber prices are rising rather than falling. Even during periods of declining timber prices, land prices can remain almost flat. For example, during the first half of the 1980s, when Southern pine timber prices fell, real ‘dirt’ values in Georgia were virtually unchanged. There are two reasons for this: first is the lagged relationship between the price of timber and the land already described; second, even when timber prices fall, biological tree growth remains positive. This leads to a constant and predictable addition to timber volume on a given hectare through time, plus an increasing percentage of timber that becomes more valuable as it moves from small, low-value pulpwood into larger, high-value sawtimber. From an investor perspective, it is important to understand that real returns and the factors, which drive them, are a more relevant indicator of investment return potential than simply focusing on nominal returns. New Zealand as a case study Foreign investment is often needed in farming and forestry because these sectors are capital‑intensive, slow to generate cash and increasingly technology‑driven, while many rural regions lack sufficient domestic savings and expertise to fund and manage the necessary upgrades on their own. External capital can accelerate productivity, structural upgrading and environmental improvements, but it also brings risks around land control, social impacts and ecological pressure if not properly regulated. New Zealand is such an example where the economy is capital constrained. Investing in land there can offer exposure to a stable, developed economy with strong rule of law and diversified land uses (residential, lifestyle, farming, horticulture, tourism), but it is tightly regulated for overseas buyers and highly segmented by region and land type or use. New Zealand land can be very attractive to investors, who take a long-term view on agricultural and forestry exports (but you need to be prepared to navigate a relatively complex approval regime). Summary This commentary attempts to answer the question – what strategy can help protect your wealth from the market disruptions that require constant vigilance and action? The answer – invest in land/forestry assets to create a cushion of stability and comfort. To do so: Requires safe jurisdictions with robust property rights and legal framework to lower risk. Assumes that in this type of investment, returns do not rely on leverage. Means knowing the land which underlies farming and forestry is an increasingly scarce commodity, providing a relatively stable store of value. Needs Due Diligence – this is absolutely essential in acquisition. Recognises the land needs to be managed correctly with effective operators on the ground. Indicates understanding that relative liquidity is vital – in many countries exit may be harder that entry. Allows the investor to protect wealth – wealth preservation involves thinking and acting with a longer-term focus – including multi-generational planning. “They took all the trees and put ‘em in a tree museum – and they charged the people a dollar an’ a half just to see ‘em” Joni Mitchell, from ‘Big Yellow Taxi’ If you have any questions about the Commentary, please contact us. Josef Naegel Partner josef.naegel@craigmore.com Jonty Armitage Director of Investor Relations jonathan.armitage@craigmore.com About the authors Josef Naegel Josef Naegel is a founding partner of GlenSilva GmbH and a partner in Craigmore Sustainables Group. GlenSilva is an investment advisor to institutional clients and family offices on forestry, farmland investments and natural capital strategies. Josef is a member of the Investment Committee of the Adohi Forest Partnership (US). He also sits on Craigmore’s Forestry Investment Committee, having worked with Craigmore for nearly 15 years. James Macmillan-Scott James Macmillan-Scott is an affiliate with historically deep family roots in the land. He has spent most of his career in finance, including Deutsche Bank in New York where he was Head of Equity and Asset Management, in Paris in technology banking in the 90s then structured/renewables finance in London. A Professor in the Faculty of Finance at IE University Madrid, James is also President of the Factum Foundation, a global charity pre-eminent in the application of advanced technology in cultural preservation. Disclaimer This document may not be copied or further distributed to any person or published, in whole or in part, for any purpose. The responses expressed herein are those of Craigmore Sustainables LLP and are subject to amendment or revision at any time based on market and other conditions. Forecast and forward-looking statements are based on the reasonable beliefs of Craigmore Sustainables LLP and are not a guarantee of future outcomes. No representation or warranty, express or implied, is made as to the fairness, accuracy or completeness of the information or opinions contained in this document. This is not an offer or solicitation for the purchase or sale of any security and should not be construed as such. Any performance indications are estimates only and actual results may differ materially from those described herein. This article should not be construed as marketing or promotional material of any Craigmore products. Craigmore products are only suitable for ‘Professional Investors’ as described by the Financial Conduct Authority in the FCA handbook COBS 3. We may collect limited contact information on you. How we store, use and secure that information can be found in our Privacy Policy. Published: 16 January 2026
