VARDAMAN VIRTUAL FORESTRY COMPANY

The Most Direct Link to Knowledge Workers in the Southeast Forest Economy

WHAT TO DO ABOUT BIG CHANGES IN PRESENT AND FUTURE FORESTRY INVESTMENTS

We have written frequently about the flood of new techniques now becoming available as a consequence of the forestry research that began to pick up speed about 25 years ago. We have so far said little about the role of molecular biology in all this, because it is just beginning to play a part, but the changes deriving from it will double or triple the tempo of change, mainly because it enables us really to understand what is taking place inside trees and therefore to exploit their vast untapped potential, e.g., one family of improved loblolly pines, through genetic improvement alone, already grows 40% to 50% more timber than woods-run individuals. All these changes erect a formidable hurdle before timberland investors.

The first big task for them is to understand what the scientists have learned. Their problem was best described by Richard Feynman, a Nobel Prize winner in physics in 1965, when he appeared before BBC cameras and a group of students, "When you ask why two magnets repel, all I can say is that there is a magnetic force that makes the magnets repel and that you are feeling that force...But I really can't do a good job - any job - of explaining magnetic forces in terms of something else that you are more familiar with because I don't understand it in terms of anything else that you are more familiar with.

"Sometimes the explanations of physics can look very easy because you'll ask me a question the explanation of which requires only knowing something that you already know. Then I can explain how it works. Other times you want more details and the explanations involve something that's true but you don't happen to know about.

"I must, in order to answer a question satisfactorily, always bring it to a point that either you understand it, or I have to say that this is an element that you'll have to learn in order to be able to understand. Because, you know, people have been studying this for a long time, asking these kinds of questions - that's what science is. And if you ask that four hundred years of such an activity should come down to things you can understand in a few minutes, you're asking a lot. If it's something easy to understand, it was discovered early; if it's something that was discovered later, then you're going to have to learn some of the concepts that have been found out - about the world being made of atoms, about electrical forces, and so on. It looks complicated because you are not used to it, but it's the way it is, and I can't help it. Okay?"

We at JMV&CO know what he is talking about; most of us, in spite of scientific training and experience, started out knowing virtually nothing about molecular biology, for example. But we work hard studying new scientific techniques because they are of paramount importance and because we want to explain their investment aspects to our clients. When we reach the required level of expertise in each one, we begin to write about it in the Green Sheet and discuss it in private reports. If these seem heavy going at first, stay with us, and you'll become as excited as we are. So to fulfill JMV&CO's proper role, we first promise to learn everything that all of us need to know about these subjects.

We do this mainly in two ways. First, our individual managers consult frequently with 14 scientists (names upon request) on our advisory panel about scientific problems that come up in daily operations and then share their knowledge over the JMV&CO computer network. Second, Jim Vardaman travels regularly over our area and, on average, spends more than one day a month in face-to-face meetings with scientists.

Every three years (and again in May 1996) JMV&CO stages a two-day seminar in Atlanta at which six scientists present formal papers on their specialties and then collaborate in assessing the combined impact of new findings. All JMV&CO managers and about 35 affiliated investors participate in the seminar. We'd like to open it to the public, but space doesn't permit; as a substitute, we publish the proceedings.

On the other hand, after we have acquired this expertise, we can't help investors unless they, on their part, make an effort to learn something about the subjects. As Dr. Feynman pointed out, we can't explain 100 years of research findings in a few minutes; the investors must learn some of the concepts before they can understand what we are saying. Therefore, we ask in return that all timberland investors, including you if you own a tract, put forth a strong effort to understand what we are reporting. And the time to start is now. Most of these new techniques cannot be applied to your present stands; they will require a major shift in your situation if you want to get the big gains.

To those who join us in this effort, we issue a warning: "Be prepared for surprises." You will hear and read much that contradicts conventional wisdom. After all, would you really expect a new discovery merely to confirm what laborers in the field already knew?

We will recommend practices that others will denigrate or laugh at. Because of this, we make the second promise: We will invest a major part of our personal net worths in the same practices that we recommend to you. (Details of a partnership of which Jim Vardaman owns 76% appear nearby.) We have more than an intellectual acquaintance with these practices. If we ever become mere agents with a bright idea, we'll tell you in advance.