"Look for Best Buy to Recover"

Best Buy( BBY), the largest consumer electronics retailer, took a hit as their third quarter profit declined by 7%. Best Buy attributed the decline due to remolding 40% of their stores. Best Buy's shares declined by 10% due to the news, and their shares closed at $44.96 at the end of Friday. However, this does not mean that you should stay away from Best Buy. Best Buy's revenues increased by ten percent to $7.3 billion. Same store sales increased by 5.5 percent. Best Buy still plans to expand in North America and Canada. They plan to add 1,200 stores on top of 698 stores they currently have. In 2005 they have opertaing margins of 5.3% higher than industry averages. These are encourging numbers.
Don't be fooled by the increases in their selling and administrative expenses. These increased because of the remolding and higher labor costs. These numbers should fall in the fourth quarter. I believe that Best Buy will be in line with analyist expecations of earnings of $1.08 per share. This holiday season, electronics are the hottest gifts. Best Buy should deliver better numbers in the fourth quarter, and you should take advantage of this buying opportunity.

Satellite Radio

Don't overreact to the downgrades to XM and Sirius Satellite Radio by JP Morgan and Bank of America. This week JP Morgan and Bank of America downgraded XM and Satellite Radio because of valuation. The firms both stated that Sirius's subscriber growth will decline after the first quarter of 2006 since the mania of the arrival of Howard Stern will fade. Sirius's shares declined by 10 percent this week due to the downgrades. I will say that this will be true. The fourth quarter of 2005 and the first quarter of 2006 are extremely important of Sirius. They have two positive forces going for them: 1 The holiday season should boost sales and 2 Howard Stern will add subrscribers. These two quarters will add subscribers but and the growth for 2006 will not be as high as these two quarters. I do exepct Sirius will continue their strong growth in 2006. These downgrades should be viewed as an excellent opportunity to buy Sirius satellite.

"Saving now rather than later"

Congress and President Bush are pushing for major changes in the tax law to encourage people to save their money. Currenty Americans spend more than they make. The savings rate in America is negative 1.5%. However, there are several retirement accounts set up today.

Here are some of the retirement accounts avaliable today:

1 Individual Retirement Accounts (IRA)- There are two types are IRA's, a traditional IRA or a Roth IRA. A traditional IRA allows individuals under the age of 50 years old to contribute $4,000 of their earned income into a individual retirement account. There are phase outs when individuals make over a certain amount they cannot save as much. The advantage of a traditional IRA is that the amount saved can be deducted on your tax return. For example, say a person makes $40,000 a year. If the person saves $4,000, the person will only be taxed at $36,000. The person can take out the money saved in the account when they reach the age of 59 1/2. However when the person withdraws from their account they will be taxed.
A roth IRA is similar to a traditional IRA. A roth IRA has the same contribution limits as the traditional IRA. The difference is the individual cannot deduct the amount they saved from their income. The advantage is when they are 59 1/2 they will be able to withdraw their contributions without being taxed.
Which IRA should I have?
A roth IRA would be best for a younger individual. The amount contributed to the account could grow tax deffered for 20 or 30 years. A roth IRA would also be best for an individual being taxed at a low tax rate, but when the individual begins withdrawing from the account being taxed at a higher tax rate.
A traditional IRA would be better for individuals being taxed currently at a high tax rate. The person would be able to deduct more. When the individual retires the person would be taxed at a low rate. The amount they take out would be taxed at a lower rate.

401(k)'s are another retirement accounts offered by employers. Say an individual makes again $50,000. If the person contributes $5000 the person would be taxed only at $45,000. Employers will normally match the amouts the person saved. Some match the employees 100%. The amounts individuals can save for 401(k)'s are higher than IRAs.

IRAs can be set up for anyone that earns income. Individuals can set them up at their banks or even on the internet. I currently have a Roth IRA at Ameritrade. I manage my own account. I currently have 2 ETFs, Microsoft, Sirius Satellite Radio, and Chesapeake Energy.

Diversification is the most important concept to any investor. It corny to use the phrase but it is a good one, "don't put all your eggs in one basket." Exchange traded funds are the newest investment tool to sweep through the investing world. ETFS offers investors diversification. Exchange traded funds are like mutual funds. One of the most popular exchange traded funds are called Spiders. This exchange traded fund has all 500 stocks that make up the S&P 500 index. Investors invest in this ETF because they do not want to beat the market, they just want to match the return of the market. ETFs are different from mutual funds because they can be traded like stocks. Stocks price changes by the second in a given day of trading. However, mutual funds price changes only at the end of the day. The mutual fund adds all the prices of their stocks subtracts the liabilities and divides that number by the number of shares the fund has out on the market.

Although there are ETFs that track American stocks, there are many other stocks that track foreign stock markets. Investors should not just limit their investments to just American stocks. Many investors are not familar with stocks outside of the US. ETFs are the best way to invest in foreign markets. Instead of just buying one stock, buy an ETF that has hundreds of stocks in its porftolio. Investors do not have to be familiar with the stocks, only if the they think a general market will do well.

There are many ways to make money by having exposure to foreign markets. One ETF, EWJ tracks many different stocks from Japan. That ETF is up 16.30% this year. EEM is an ETFs that invests in emerging markets. That is up 26.47% this year. EWA has Australian stocks and that is up 14.41%. There is an ETF that tracks almost every country and almost every market. The point is investors should look to foreign markets because there is money to be made there. Thuis will add to your return on your portfolio.

Sirius satellite radio (SIRI) is one of the most talked about stocks and one of the most heavily traded on the stock market. In case nobody heard of Sirius, here is a brief describtion of their business. They offer 65 channels of commercial free music and 50 channels of news, sports, commedy, weather, traffic, weather, and varoius other channels. They offer different types of music stations including: 60's music, 70's, 80's, 90's, all Elvis, rock, country, classical, rap, jazz, Latin, and many others. They have broadcast NFL, NBA, NHL, and NASCAR(IN 2006 or 2007). They charge $11.95/month. I have been a subscriber for just under a year and I have no complaints. It sounds stupid to pay to listen to music that is free on regular radio, but once I got Sirius I would never go back to regular radio.

Sirius is one of the most riskiest investments a young investor can make. The stock was trading at $7.00/sh (down .13 or 1.82%) at the end of Monday. I made three different investments of Sirius, purchasing shares at $2.26, $6.19, and $5.97. I have owned the shares for about one year and I have made about 30%. Sirius is a risky investment because they are a relatively new company. The company is still growing but the comapny has yet to make a profit. The company lost about $700 million last year. However this is expected in a young company. Sirius's rival XM satellite radio (XMSR) lost $650 million last year. What makes the companies intersting are the increasing growth in their revenues and subscribers. Last year Sirius had revenues of $66.85 million. In the third quarter of 2005, they had revenue of $66.83 million. Their subscribers are expected to reach 3 million at the end of this year.

I expect Sirius to begin to takeoff at any moment. Their holiday sales should increase because of the anticipation of Howard Stern. Stern is expected to join Sirius in January of 2006. Their sales and their stock price should get a bump from the anticipation of Stern. This is the type of stock a young investor should begin with. If the stock is a success, a young investor should make a good return. If the stock is a flop, the young investor should have plenty of time to recover from the investment. A young investor should begin with risky stocks. Older investors should stay away from this stock because a loss would be devistating to their retirement accounts. I believe that both Sirius and XM satellite radio are good investments. This is the new growing industry and both companies will make profits in the next 5 years.

Hello readers! My name is Kevin and I am a 20 year old student at Youngstown State Univeristy. I am creating this blog to discuss investments. I have been investing in the stock market for just about 2 years. I have invested money I have recieved from gifts and from working. This blog will discuss anything that is new in the investing community. It can range from news from the Federal Reserve, to industries, taxes, or individual companies. I will discuss anything that is news that can help you make money. I do not proclaim to know all the answers so please do not base any investment decisions on my comments alone.