User talk:Tolusa

Welcome to this wiki!

Hi Joseph, Welcome to this wiki and thank you for your contributions. They're much appreciated. –BigSmoke 12:29, 6 April 2011 (UTC)

Objectivity of this wiki

Hi Joseph, On April 6, you sent me a mail with some helpful, critical observations on the objectivity of this wiki. You raise some good points and I'd like to give these some attention (or at least some screen time) on this wiki. Therefore, I'd like to ask your permission to copy your message here so that we can answer it publicly and to allow others to comment (or learn from your comments) too. Personally, I thought your email to be most well-balanced and polite, so I see no problem in publishing it, but I wouldn't want to do so without your permission.

Thank you for your interest,
BigSmoke (Rowan) 21:14, 12 April 2011 (UTC)

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Meanwhile, I took the liberty to add your email here to be able to respond to it in public as you ask some questions that touch on the basic assumptions on which we operate this wiki.

If you're not comfortable with this we could make it anonymous or rewrite our reply to be a FAQ or "about this wiki" section. Please let us know.
MonkeyBoy 13:18, 13 April 2011 (UTC)

Email from Joseph from Thai Orchid to Hardwood Investment Wiki founder (Apr 6, 2011)

Hey Rowan,

I'm a son of a timber / forestry guy, so we have that in common. I think you've done a great service by creating the structure for Timber Wiki. And obviously your family has a long history with some of the companies there.

Do you think the wiki could use some... objectivity? As a reader, I felt uncomfortable when you claim a company is a con or a scam without evidence. Without evidence, the claim lacks credibility. This is the same for calling a projection unrealistic.

For example, my company (Thai Orchids) does not make claims about projections. Internally, based on growth rates and expected future prices, we expect to have more than 6-8% yearly gain (though obviously we would never claim or guarantee it). The reason we expect higher growth is because of superior technology and clonal selection resulting in fast growing plants and superior quality and quantity yield. So... while I agree that some projections made by companies may be overly optimistic (but by what rule?), there could be cases where seemingly high projections have a rationale and some evidence behind it.

To make it more objective, I would consider highlight parts of companies that make them look suspicious, e.g., undergoing liquidation, has bad press in NL newspaper (with link), criticized for sales techniques, has 68 hectares, without necessarily calling them suspicious or "safely conclude this is a scam".

For projections, I would say, "Company X claims 14% return. This is falls in the 97% quantile of actual returns for tree species Y. The company claims higher return because of reasons A, B, and C". The numbers will speak for itself.

What do you think? Just my two cents. I don't mean to criticize when this is a lot of work on your part already. I think it's a great resource and just want to offer my opinion on how to make it an even more credible and thereby more helpful resource.

Best, Joseph

Response from Hardwood Investment Wiki

"Do you think the wiki could use some... objectivity?"

In the past 15 years in the Netherlands most of this business has been destroyed by amateurism and swindlers. A lot of people have lost a lot of money. As a result most possibilities, if there where any, for entrepreneurs and investors have disappeared.

We have decided not to try being truly objective but to adopt a rather skeptical attitude because this best reflects our own opinion on the subject. This wiki is first and foremost concentrated around unregulated individual (tropical) hardwood (and other woods) investments offering direct ownership. We highly doubt the value of these kinds of investments schemes as it has been historically proven they, most commonly, only bring profit to the creators and not to the investors. We measure these schemes against opportunities, information and security provided by professional collective investment schemes, professional forestry companies and maybe even professional organizations offering "do-good" investments. Our goal is to gather professional information on the subjects that we cover on this wiki.

We don't intent to promote this business but try to make potential investors be aware of the real risks involved. We highly doubt that there are any valuable investment possibilities added, particularly for small non-professional private investors, by these kinds of schemes, that aren't already being covered, better and more safe, by professional collective investment funds.

The fact that most of these companies target exactly this group of small non-professional private investors, and don't seem to be able to raise much interest from the professionals, give these schemes even less credibility. Seeing no restraint on the side of companies luring people into this and separating them from their money, we see no reason to restrain ourselves in warning people by any means possible. This may cause some companies to lose a few potential investors but I highly doubt that any professional investor or investment company would depend upon the information on this wiki rather than on the information gathered by their own assessment procedures.

"As a reader, I felt uncomfortable when you claim a company is a con or a scam without evidence. Without evidence, the claim lacks credibility."

"Con" revers to "pros" and "cons", which can contain all sorts of pros and cons of a certain company / project, but the resemblance is not entirely accidental.

As a response to your email we have clearly stated the "scammers" label is an opinion only. Although the page clearly states on which ground we express this suspicion.

"This is the same for calling a projection unrealistic."

We can state projections are unrealistic when they don't comply with generally accepted and proven projections in the forestry sector and investment scene. Forestry engineers and scientists in this sector have access to large amounts of data, sometimes gathered over hundreds of years. When companies are not using this data it is either unprofessional negligence or deception. We will add more of this data as to create a clear reference.

Professional plantings in temperate climates, on good sites, close to a port, on good soil, well planned and using all advantages large scale forestry projects have, like efficiency of scale, realize about 6 to 9% return on investment per year. We have come across documentation suggesting that (tropical) hardwood plantations incorporating the same ideal prerequisites might have realized a slightly higher return in the past few decades. We will have to look into this some more.

Finally, it has been researched that for the past one hundred years the average return on investment for every type of investment combined, excluding government bonds, interest and cash, has been around 9% annually.

As reality check; In the Netherlands the lucky investors, who invested in companies still in business and slowly starting to make some money on the planted trees, are still hoping to make back their original investment where the majority has plainly lost their money.

"For example, my company (Thai Orchids) does not make claims about projections. Internally, based on growth rates and expected future prices, we expect to have more than 6-8% yearly gain (though obviously we would never claim or guarantee it). The reason we expect higher growth is because of superior technology and clonal selection resulting in fast growing plants and superior quality and quantity yield."

The expected higher growth and yield rate will have to be proven on a 25 to 40 year timescale, which could be considered as the optimum cycle to achieve a viable balance between financial returns and the production of market quality Teak timber. Even when a higher growth rate is achieved it doesn't necessarily translate into the same increase of annual return on investment for investors. If realized, the higher return would, off course, be very interesting for large professional forestry companies.

The development of wood prices has been documented very well historically. I don't know whether you do or don't, but expecting wood prices to increase more then the historical average is a no-no in calculating forestry investment returns.

"So... while I agree that some projections made by companies may be overly optimistic (but by what rule?), there could be cases where seemingly high projections have a rationale and some evidence behind it."

"Overly optimistic" is an understatement for dangerously unprofessional or plainly deceptive.

Historically there were always rationales behind unrealistic projections but they hardly ever turned out to be sound rationales.

"To make it more objective, I would consider highlight parts of companies that make them look suspicious, e.g., undergoing liquidation, has bad press in NL newspaper (with link), criticized for sales techniques, has 68 hectares, without necessarily calling them suspicious or "safely conclude this is a scam"."

For this we have created the "pros" and "cons" properties, and a lot of others, which enable us the generate a factual oversight with the Semantic MediaWiki technology that we are using. And we will, off-course, add as much information and properties as possible as this wiki grows.

"For projections, I would say, "Company X claims 14% return. This is falls in the 97% quantile of actual returns for tree species Y. The company claims higher return because of reasons A, B, and C". The numbers will speak for itself."

You are right off course. We are in the process of adding more actual forestry data to be able to make those kind off comparisons and to have clear reference so people can see on which information our opinion is based. As well as to be able to give factual like insight in the information so people can more easily form their own opinion.

"What do you think? Just my two cents. I don't mean to criticize when this is a lot of work on your part already. I think it's a great resource and just want to offer my opinion on how to make it an even more credible and thereby more helpful resource."

We thank you for your contributions to this wiki, for your email and this opportunity to shed light on some questions you expressed which others might have too.

A final word from the moderators

We don't doubt forestry or forestry investments as such, which are proven to be sound and relatively stable investments. When investing in professional forestry companies with a shareholder structure or through an collective investment fund, that is.

What we highly doubt are small-scale forestry projects run by non-professionals, investment structures which evade regulation by financial authorities by being non-collective and through investing in foreign countries (of which the stability can be doubted) where law enforcement agencies have no jurisdiction, investments being marketed under false pretense of safety and false claims on the ethical, sustainable or socially responsible character of the investment. Our long time experience with these schemes has proven to us that there are no golden opportunities here, no quick fortunes to be made, just plain old boring standard return on investment realized trough hard work and dedication by professionals, just like in any other business.