Money & Investing - Banks.com

One of the things that savvy investors do in times of a down stock market is to look for bargains on good value stocks. And there are plenty of bargains to be had right now. Plenty of good value stocks are undervalued, and can be bought at bargain prices.

But there are also plenty of the other kind of stocks: bargain basement stocks that could very well turn out to be more “basement.” These are “bargain stocks” that have brand names that you recognize — and might even respect. It may seem like a steal to get Sprint Nextel (S) or Northwest Airlines (NWA) for less than $10, but is it? Or does the plummeting price mean something else entirely for once venerable brands?

Businessweek explains why it might be a good idea to think twice before buying those “bargain stocks” for less than $10 a share:

What’s the big deal about low stock prices? First, there’s a certain stigma attached to a stock with a sub-$10 price—it’s a sign that a company faces big problems. Besides the blow to a company’s pride, there’s a more nettlesome issue: Some institutional investors won’t touch stocks that trade for less than $10, making it difficult to recover from those depths.

Of course, it is possible to find real deals for less than $10 a share. But these are generally start-up companies and other small companies. Most big time name brands that are below $10 are more than likely there because something has changed fundamentally. When buying bargain stocks, it is important to look for companies with strong fundamentals. That might mean that you still pay $30 a share (instead of $45 or $50).

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions.

Tags: stock market, stock market news, investing blog, value stocks,
bargain stocks, investments, NWA

One of the fears I hear regularly is that with stock market volatility — and other upheavals in the investing world — that investing is “too risky” or “not smart” right now.

It is true that some types of investing may not be the best idea right now, especially for beginners. But investing is still a smart choice. It is important to use investments to allow the law of compounding interest to work in your favor. You just have to be careful about what you invest in.

Stocks

If you choose carefully, picking fundamentally sound value stocks, you can actually find some great bargains right now. Buying more while the market is mostly down on most days can mean great gains down the road. Index funds are another way to get into stock investing without exposing yourself to excessive risk (although that risk will always be there). Mutual funds can also offer stock investing diversity with lower risk than individual equities (but watch out for the associated fees).

Bonds

These are considered “safe” investments — when they are government bonds. Federal bonds regularly grow, albeit at a rather stodgy rate. However, they can make good investments in terms of safety, and they generally do better as the economy falters. For better returns (but greater risk) corporate bonds and municipal bonds can be invested in.

Currencies, Commodities and Futures

Currencies are rather risky. When you get involved with FX trading, you should have a high risk tolerance. It is possible to make quite a lot of money on the currency market, but it requires some practice and the ability to take chances with your cash.

Commodities and futures are also quite risky. These require knowledge of markets and savvy decision making. Any number of factors can affect how commodities and futures move, and it is important to know what you are doing and to have a high risk tolerance when you engage in commodities and futures trading.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions.

Tags: stock market, currency market, investing blog, index funds,
futures trading, investments, FX trading

Today’s stock market news involves XM (XMSR) and Sirius (SIRI), the satellite radio providers, both enjoying increases in their stock prices. This is due mainly to the fact that the Federal Communications Commission (FCC) is said to be leaning toward allowing their proposed merger to go through.

Satellite radio has been plagued by issues in profitability, since subscribers have been slow to adopt the technology. (Disclosure: I have XM radio. My husband got it for the Major League Baseball stations so that he can listen to Yankees games when he can’t watch them.) XM and Sirius are hoping that by combining forces, they can become more profitable together, since their subscriber base will be combined.

This is actually a good idea for the satellite radio providers. Right now, the offerings on each are pretty split. It is hard for listeners to get all of what they want, and many do not want to subscribe to both services. Plus, each service has its own equipment that is incompatible with the other. Since Sirius is doing the acquiring (in a stock swap deal), one would hope that it would also ensure that XM technology would remain valid.

At any rate, Kevin Martin, the chairman of the FCC, does have some conditions. The two main issues are these:

1. Price caps so that consumers don’t end up with huge rate hikes.
2. Other manufacturers of electronics have to be allowed to make products that work with the new satellite radio service.

The Department of Justice has already approved the merger, and there are just a few more wrinkles to iron out.

But the real question is this: Even with a combined force, can satellite radio compete solidly with personal music devices, Internet radio, and even regular, local radio?

image credit: Courtesy Ronald Reagan Library

Disclaimer: I am not an investment professional. This should not be construed as investment advice. All investment carries the risk of loss. Before investing, do your own research and/or consult with an investment professional.

Tags: stock market, stock market news, investing blog, SMXR,
SIRI, investments, satellite radio merger news