The equity markets have seen a significant run since mid-March on hopes that government stimulus will spark an economic recovery during the second half of 2009. The market is currently pricing in a "V" shaped recovery. When the market realizes the recovery will be slow and more "L" shaped, the markets will sell off drastically to adjust for the lower growth expectations.

Bear markets last longer than most investors expect. The last bear market lasted 15 years (1967-1982), which could mean that stocks will not reach a new high until 2022.

Reasons why the economic recovery will take longer than expected are:

- Conditions for consumers, which make up 70% of overall US economic activity, continue to deteriorate. The US consumer is still over leveraged and is focused on reducing debt and saving money. This is evident by the savings rate increasing to 4.2% from -2.7% in August 2005.

- Housing inventory is still high at roughly 9 months compared to the historical average of 4 to 5 months. The excess inventory may not be liquidated until 2011.

- Commercial real estate will be the next shoe to drop. There are 6.9 million less workers than in December 2007, which means there is a lot of free office space. Standard & Poors expects 160,000 retail stores to be closed over the next 12 months. Refinancing of CMBS is a huge concern if the capital markets do not open up (over $1 trillion needs to be refinanced over the next 18 months).

- The job market will remain weak until mid-2010 and peak in the low double digits. The economy cannot have a substantial recovery until the unemployment number starts to decline. The Federal Reserve Bank of Atlanta estimates the real unemployment rate is 16%, not the official 9.4%, if persons who have dropped out of the labor pool are counted.

We are also concerned over the increasing deficits, which are not sustainable. The deficit for fiscal year 2009 may reach $1.85 trillion by September 30, according the Congressional Budge Office. Fitch Ratings estimate that US Debt to GDP ratio will increase to 83% by the end of the year, the highest level since WWII.

Another big concern is the U.S. government's response to this crisis. Some of the reasons the Great Depression was prolonged was due to poor government response. Mistakes the U.S. government made during the Great Depression were: 1) raising interest rates and contracting the money supply, 2) raising taxes, 3) increasing regulation, and 4) restricting international trade. Unfortunately our present policy makers are making 3 of the same 4 mistakes. The U.S. government has been quick to lower interest rates and pump the economy with liquidity, but higher taxes, regulation, and protectionism will only prolong an economic recovery.

So where should investors put their money? There are many opportunities available to investors, but we believe farmland is one of the best places to put your money. You want to invest where the fundamental are improving, not declining. The fundamentals for farmland are very bright due to the world's growing population, rapid growth in emerging markets, and continued demand for ethanol and bio-fuels. The outlook for the U.S. economy is slower growth, more regulation, and higher taxes.

Finally, investors should identify an asset class that has provided consistent long-term returns. Farmland, through current income and capital appreciation, has done just that. Over the past 20 years, farmland has provided investors with an annual return of 12.5%. Over the past 100 years, farmland has displayed only three brief periods of negative returns (1930s, 1980s, and 2008).

We believe that farmland is the best place for investor's money to be right now, as it is well positioned to outperform in the current state of the global economy. Remember that regardless of how the economy is doing, people need to eat.

- Colvin