The College Investor

With the Super Bowl coming up on February 7, 2010, you may want to take advantage of potential short-term gains related to the big event.

For example, the two weeks leading up to the Super Bowl have the highest percent of TVs sold, compared to any other time frame of the year.  This may bode well for TV makers such as:

- Sony

- LG

- Panasonic

It may also bode well for retailers, such as Best Buy.

Super Bowl Sunday is also known for parties.  This could help retailers such as, who also may see a boost in TV sales:

- Wal-Mart

- Target

Something to keep in mind!

- Robert

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Sometimes the best thoughts on investing are ones that involve what to avoid. Here are a few of my thoughts on sectors to avoid, and their respective stocks.

First, when I look at companies to avoid, I look at the economy. The first thing most financial advisers tell people who need to cutback is to cut their cable. Not only is this a frivolous expense, but most shows can be watched online. Therefore, I stay away from cable companies such as Time Warner and Cox Communications. This does NOT include all communications companies, as I do like Frontier Communications. This company has a great dividend and its access lines are franchised, which essentially gives it a government sanctioned monopoly.

Next, a good rule of thumb is to stay far away from airline stocks. There is way too much competition in this sector, which just pushes prices down. That in-turn makes it very difficult to be profitable. We have seen this for years, but people still keep investing in airlines. The only time I would buy an airlines stock is if several, and I mean several, US carriers went under to eliminate the competition.

Finally, I stay away from companies I don’t understand. Warren Buffett has expanded on this thought many times, but it is very valid. The best example of stocks I don’t understand are tech start-ups. When Google first started, I would never have invested. I wasn’t until it had a proven revenue model that I became interested in the company. Selling ads is something I understand, search is something I don’t understand. The same holds true with many new companies. Twitter, for example. If they go public, my question would be how are they going to make money? If they say selling ads, I would stay away because it has been done with Google.

As you look at companies to invest in, use common sense. My motto is, be the best at something, be the worst at nothing, and be above average at everything else. If a company does not fit that criteria, don’t invest!

- Robert

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As you may have read here, Sharebuilder is one of my favorite brokerage firms for long-term strategies because of their automatic investment program which allow for $4 trades.  However, as mentioned in the article, they get you on the back-end with $9.95 real-time trades.

However, on Monday, November 30, they will be offering a 20% commission rebate on all $9.95 trades, which will give you $1.99 back for each trade.  While this is still only gives an effective commission of  $7.96. it is still a savings.

Furthermore, with the end of the year in sight, it is a great time to look at your portfolio and see if your investments are balances and focused where you need them to be.  It is also a great time to think about tax implications.  Made some great profits earlier this year, maybe sell a loser and offset those earlier capital gains?

Happy Thanksgiving!

- Robert

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According to Pat Dorset, director of equity research at Morningstar, high-quality blue chips present the best opportunities now. He likes these 10, all of which offer above-average dividends.

Source: Morningstar

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In 1962, a young portfolio manager named Warren Buffett bought a textile mill company in Massachusetts named Berkshire Hathaway. Instead of using the cash generated from the business to expand or pay out a dividend, Buffett started buying stocks with the cash.

The rest, as they say, is history, as the Oracle of Omaha has stacked gains on top of gains to create one of the world’s largest conglomerates, which has come to own hundreds of businesses thanks to its chairman’s once-in-a-generation ability to pick winning stocks. In his 47th year as head of Berkshire Hathaway, Buffett now manages a portfolio of stocks worth more than $50 billion.

Warren Buffett is a proponent of value investing, which focuses on stocks that are undervalued compared with their intrinsic value. Financial metrics such as price-book ratio, price-earnings ratio, return on equity and dividend yield carry the most weight on Buffett’s scales. In addition, he seeks out companies that have what he calls “economic moats” — high barriers to entry for a competitor that might wish to invade the market and erode profit margins.

Buffett has proved beyond any doubt that he is one of the greatest investors of our time. His holdings are reported to the Securities and Exchange Commission several times a year, so investors who wish to copy his moves can do so with ease. This is made even easier by the fact that Buffett tends to hold stocks for a very long time, which means you don’t have to worry about constantly trading in and out of positions to keep in line with his holdings.

If you would like to keep tabs on what Buffett is investing in, check out http://warren-buffett-portfolio.com/ or CNBC’s Buffett Watch.

Also, if you would like to really get some insight into one of the greatest investors of our time, I strongly encourage everyone to read The Snowball: Warren Buffett and the Business of Life. The book also makes a great Christmas gift for the College Investor at home!

- Robert

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