Max Frost column: Long-term thinking will give you buying power

9:50 PM, Feb. 22, 2013  |  Comments
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Long term, think LONG TERM!

While timing can be important, the best idea is to invest well and try to time it only as absolutely necessary. A classic example: having bought 30-year treasuries 30 years ago, when interest rates were out of sight, now would be the time to cash in as long-time, high-yielding treasuries are maturing. However, do not exchange them for current 30-year treasuries or in 30 years they will be worth much less in buying power. You will get your money back. But, due to inflation, they will be virtually worthless.

? Housing: There is little doubt that housing is picking up again across the country. Some areas more, some less. In the Southwest, houses were built by speculators who are either selling them now at a great loss or tearing them down.

You might want to sell later, but buy now while prices are still on the lower side. First-time buyers should buy now as interest rates are extremely low. Those who hold mortgages above 3 or 4 percent ought to consider refinancing as banks can make money even at the low rates because they can borrow from the Fed for next to nothing. They want to refinance for you because they will always keep a spread between what they are paying the Fed and what the consumer pays to them. Do them and yourself a favor.

? Employment: This is getting better but has a long way to go. What I have a problem with is mergers and acquisitions. Big companies buy out small businesses and rehire folks at lower wages. This does not help the economy at large, only a few. Besides, no one hires until they must.

? Stocks: Buy the best, buy high quality for the long-term portfolio. It will pay off many times over. But if quality is there and you can reinvest the dividends, you will make money in the long and the short run. Buy quality.

? Gasoline: Does the high cost of gasoline have you ticked off? The answer is not what the media tells you, but what insiders know: The hedge funds are buying up the futures in crude oil and holding until they figure they have enough return and have dragged others into the plan. Then they sell and prices go down. It has very little to do with refineries or war or anything else, just an example of the magic of the old trick of quick hands. Hang on, when prices get too high, they will come down.

? Silver and gold: Currently, they got a little ahead of themselves, and many who have made substantial profits and some who have not are cashing in their positions in order to get into the stock market. Wow, what an opportunity for the long-term holders who can add to their positions at lower prices.

Get it? Buy now if you don't have any, and/or add to the holdings you have. Have you noticed the full-page ads in the papers? Those folks who are willing to buy your load of silver and gold aren't doing you any favors. They know how high these two desirables are going to go over the coming years. You should only sell when we hit huge interest rates again, similar to the late '70s and early '80s. Really high.

What's your take on the Packers Family Night change?

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Football fans

If you've ever answered "Who has the ball?" with "It's halftime," you might recognize The Airhead. Check out the characters in our cartoon gallery of oddball fans.

Special Reports