THE FRIDAY E-MAIL REPORTS OF 08/03/01*

REARRANGEMENTS AT JMV&CO

The great increase in U. S. wealth was explained by Paul Romer, Professor of Economics, Stanford Graduate School of Business, and reported in the Summer 1998 Journal of Applied Corporate Finance.  Prof. Romer said, “How can it be that we’re wealthier today than people were 100 years ago?…If you add up all the things we own, it is clear that the underlying quantity of raw materials has not changed over time…The total physical mass here on earth is the same that it’s ever been, and now we have to divide this up among a much larger group of people…

“There’s only one explanation for this increase in wealth.  We took this raw material that was available to us and rearranged it in ways that made it more valuable…  So it’s not the raw material, or the mass of the things here on earth, that really lies behind economic success and high standards of living; it’s this process of rearrangement.  And what lies underneath this process of rearrangement are instructions, formulas, recipes, methods of doing things – the things that accountants classify as intangible assets…Growth takes place when companies and individuals discover and implement these formulas and recipes.”

We think his words are especially applicable to us.  Although Jim Vardaman still works five and a half days every week, he is 80 years old and, even with a new steel left hip, may not be able to maintain this pace for another 25 years.  Many of our managers have given superb service for 20+ years and want to assure good futures doing the same thing.  We also want to give better service in some areas of SE U.S.

Finally, we have developed a new area of electronic skills.  The Internet has expanded our contributions a great deal.  Our two sites provide free access to the equivalent of 50,000 pages of information on how to make money growing trees.  We’ve switched from a quarterly mail newsletter that precipitated an average of 98 responses/week to a weekly e-mail newsletter that precipitates about 700/week and enabled us to make timely publication of valuable articles by Keville Larson, Jon Caulfield, Chuck Slaybaugh, and Sara Baldwin.  By developing free registration for timber buyers and forestry advisors and low-cost ads for timber sellers, we have begun to reduce transaction costs in land and timber sales, and we see great opportunities to expand such services.  Finally, all of us recognize the enormous need to increase liquidity of timber and land investments for all investors, particularly individuals and small companies.  Consequently, we are rearranging as explained below.

Subject to the approval of each client, we have sold the JMV&CO practice in our former territory around Meridian, Mississippi, to Goforth Forest Management, Inc.  This new organization includes Ricky Goforth and his two sons.  We are pleased that it will not decrease the value of services to former JMV&CO clients.  Ricky started to work with us in 1973, became our Meridian manager in 1975, and was a member of our three-man Executive Committee.  Few foresters in SE U.S. have his talents and experience.

We are calling all JMV&CO clients served by that office to be sure that this change suits them.  If it doesn’t, we will continue to serve them as usual with other JMV&CO managers.  In some  cases, clients may want to discuss anticipated operations with Jim Vardaman and benefit from his 50 years of experience and membership in the Loblolly Pine Growth and Yield Cooperative.  Their wishes will govern our actions.

We have offered the same arrangement to all JMV&CO managers.  Many of them are 40-50 years old and men of substance.  We’ll follow the same procedure with those who accept and continue to practice as usual with those who elect to stay with us.

Over the past 25 years we have gathered important data on about 300,000 landowners and 4,000 timber buyers, stored them on our computer, and developed software for analysis.  We have figured out how to make these available to other forestry advisors, including many JMV&CO competitors.  We’ve also developed low-cost capabilities to produce and host Internet sites for them and timber buyers.

We’ve done lots of work to increase liquidity for PPIC’sâ, the Pine Plantation Investment Contractsâ that we often write about.  Our Liquidity Insurance Contract insures that PPIC owners will be able to sell their contracts at any time and allows other investors to earn fees for providing this liquidity.  These are complicated matters that have great potential, and we now have time to work on them.

The thinned, fertilized PPIC LA87040MMB, on which all cultural work has been done and all trees are sawtimber, is for sale.  The required down payment is $56,285 and will increase by 1.1% each month plus year-end payments to Col. Boatner or for inspections.  For detailed information on cash flows, click on http://www.vardaman.com/greensheets/t&f.htm and http://www.vardaman.com/greensheets/mbf$1va.htm

Our tracking report for this site appears at http://www.vardaman.com/report/  It showed that 551 unique visitors logged on last week.  We also tracked visitors for the 14-day period ended at 2400 yesterday; it showed 1,020 unique visitors, 179 of whom spent an average of 4 minutes and 50 seconds on Sara Baldwin’s article.

New Fees for Listing Sales

We charge $25 each for standard listings of land/timber sales on www.se-timbersales.com.  Listings evoked this interest in the two weeks following 6/8/01: sale #968 was visited 9 times for an average of 1 minute, 26 seconds each; sale #969 was visited 8 times for 56 seconds; sale #970 was visited 11 times for 4 minutes, 3 seconds.  Lengths of visits depend on what’s offered and how well the seller presents it.  Once such visits occur, the visitor can print it out or store it in his cache without being recorded.  If you want to list your sale in the standard way, e-mail it to us as usual.  When you see that it has been posted properly, send us a check for $25.

New tracts of timber and land listed on http://www.se-timbersales.com this week were these:

Our tracking report for this site appears at http://www.se-timbersales.com/report/  It showed that 298 unique visitors logged on last week.  Buyers can now edit their own listings as needed on www.se-timbersales.com.  Click on the green “Edit Listing” button on the “Buyer Listing” page.  You will be prompted for a username and password.  If you don’t know yours, e-mail us at jacksonms@vardaman.com or call us at 1+800+455-4568.

*This report was e-mailed to 3,572 persons indicating interest in it; we will send one each Friday until yo u tell us to stop.