Thursday, January 05, 2017

Millionaires are investing in farms as a safe bet in an economy that they think may collapse

Financial whiz kid Brian Luftman has been
investing in farms (Courier-Journal photo)
Millionaire investors are purchasing farms as a safe bet in what they think is an uncertain economy, Jere Downs reports for The Courier-Journal in Louisville. For example, Mississippi's Barry Gollott, a self-made millionaire, has bought farms in Alabama, Kentucky and Chile. He told Downs, "In a doomsday economy, farms are where the food has to come from. The way we are going, I think default is inevitable."

Conservative investors like Gollott "are finding safety for their assets in the farmland investor pools assembled by American Farm Investors, a Lexington, Ky. investment firm conceived in the ashes of the 2008 Great Recession," Downs writes. American Farm Investors was created by Brian Luftman, "a financial whiz kid who once traded derivatives in the cattle pit of the Chicago Mercantile Exchange," sometimes making as much as $200,000 a day.

Luftman, who said he bought an Illinois farm in 2008 for $4,800 per acre and sold the farm three years later for $8,800 an acre, told Downs, "Because the market was so scary, so tumultuous, and the banks were on the verge of collapse, I bought a farm." Luftman, who now acquires one to two farms annually, said that "when he looked around for a company that managed farmland for investors like himself," he couldn't find one. So he created American Farm Investors in 2011.

"To date, the annual financial returns on the nine farms purchased and managed by AFI mirror or exceed results achieved by investors in the bond market," Downs writes. "Unlike stocks and bonds, farmland is something an investor can touch, or visit. Unlike volatile securities, farmland's been appreciating in value an average 5 percent annually." (Read more)

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