To the editor:

Your recent article entitled “Isn’t that how the Great Depression started?” contained a quote that greatly concerned me.

You quoted one advisor’s recommendation to “[hoard] our money in simple, protected investments like savings accounts and certificates of deposits (CDs).” This approach is prudent if you know you’re going to need the money within 1-3 years. However, if you’re fortunate enough to have discretionary funds to invest longer than 3 years, then putting your money in savings accounts or CDs that will earn you a meager 1-2 percent at best is not good advice at all – indeed it could prove dangerous. The Federal Reserve continues to pump money into our economy as the national debt climbs. The building threat of inflation could quickly erode savings handled in such a manner.

Day trading to make a quick buck is so profuse in the marketplace. Many have either forgotten or disregarded the fundamentals of long-term investing. However, simple buy-and-hold strategies have been scrutinized lately too. Investing in the S&P 500 index over the last 10 years has barely made any money at all. However, not everyone has suffered the same fate over the prior decade.

At Yacktman Capital Group (www.yacktmancapitalgroup.com), the key ingredient to our successful long-term investment strategy is the price paid at entry point. The risk of loss from overpaying for a security is not eliminated simply through the passage of time, nor is the risk of needing to sell at an inopportune time. We like to extend the phrase to “buy-and-hold until price converges with value.” Buying above average businesses at below average prices is crucial. Good businesses are companies that have low capital requirements and are not cyclical in nature.

It’s difficult to understand why someone would prefer a Treasury yielding 3.5 percent over a wide selection of recession-resistant, high quality, multi-national corporations that are trading at low valuations from historical standards. These companies are growing their assets and are able to adapt to changes in prices and serve as a buffer against inflation. Just because something is labeled as a “bond,” does not mean that it is somehow less risky than a stock.

There are better ways to invest your money over the long-term than simply putting it into CD’s or indexes where you could experience a loss of purchasing power via inflation or have another decade of unsatisfactory returns.

Sincerely,

Will Kruger

Principal and CEO

Yacktman Capital Group, LLC

Lakeway, 78734