Parchayi.com - Personal Finance Simplified

I just ran a morningstar X-Ray on Parchayi and my investments now and the stocks are exactly 60/40 US/International. International investments are 48% in Asia (more than 2/3rds in India) and 34% Europe.

The portfolio is still heavily large cap weighted after I sold off all my stake in Panera Bread. I still haven’t reached my simplification goals to reduce the number of stocks and funds owned because I can’t decide what funds to dump.

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In the last post I talked about biodiesel as fuel of the future and mentioned the upcoming Accord diesel. Currently most of the diesel vehicles in the US are trucks, vans and Mercs, however this is changing. Volkswagen is bringing the Jetta TDI to US (was supposed be here this month but keeps getting delayed) before the Accord. Next in line is the Maxima diesel and BMW diesel models of most of their cars. Rumors are there will even be a corvette diesel!

Mileage for diesels rivals that of Hybrid vehicles of similar size. However considering that diesel in the US is about 15% more expensive than gasoline, that advantage might not be much unless the biodiesel refineries popping up all over the country cause a glut of cheap biodiesel and B100 or B99 are usable with future cars.

Here is one blogger who keeps up with the diesel happenings in USA

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Most people will answer ‘Ethanol’ to the question, but I say Biodiesel is a worthy adversary. Modern upcoming Biodiesel refineries can produce biodiesel that meets or beats all diesel standards, has lower sulfur and is biodegradable. Also diesel cars have upto 40% better fuel economy and to top it all biodiesel can be made from waste. Currently biodiesel is manufactured from plant based oils but Nova Biofuels, a startup (I own a few shares which got hammered today after NBF posted it’s 10Q results) has constructed refineries which accept a variety of feedstocks to produce high quality biodiesel. Currently biodiesel is only used as an additive to petroleum derived diesel, however if you can make a biodiesel that can’t be differentiated from the petroleum kind and it costs the same, why not? Many big corporations are also investing in Biodiesel, including ADM (I also own stock in ADM - one of the very few stocks I own that has not been severely beaten in the last few months).

The problem with biodiesel, you ask? So far only commercial and military vehicles use diesel. There are very few diesel cars in the US. But that is probably about to change as more manufacturers, including Honda (2009 Honda Accord Diesel) and GM plan to launch diesel cars. There are rumors that the 2009 Accord diesel will get 52mpg! So even though diesel prices have hit a national average of nearly $4/gallon, diesel might make sense. And cheap biodiesel may just be the answer. There is already a network of crazies who home-brew their own diesel and will probably be ready to buy diesel cars?

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Forbes billionaire list is out and four out of the top ten are from India. I’ve been hearing rumors for several months that Mukesh Ambani might top the list but he came in at no. 5. Anil Ambani follows close behind at no. 6 and K P Singh who I have never heard of before is at no. 8. Laxmi Mittal is at no 4.

The crown was taken by Warren Buffet from Bill Gates this year.

Mumbai ranks no. 7 in the top cities with 20 billionaires living in Bombay. The top city however is Moscow with 74 Billionaires!

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In case you missed it the first time around, now is an even better time to get into financials. WB now sports a dividend of 8.3%. It is unlikely that the bank will cut its dividend and even if it halves the dividend to 4.2% that is still better than the best non-promotional savings rate you can find. The best I found was Amboy Direct at 3.75%.

Also it is likely that the Fed will continue it’s rate cuts and bring down savings rates even further and making large financial stocks even more attractive. e.g. BAC (6.75% Dividend). Even Citigroup after it’s dividend cut yeilds over 5% now (not that I’m recommending it, just pointing out the dividend).

If you feel uncomfortable about financials, maybe you cna look at other dividend paying stocks which have been battered - MO - 4.1%, KFT - 3.45%. Even INTC is paying 2.5% at current prices. So if it pays dividend and is unlikely to cut the dividend, you are probably good for the long run. For the next year or two however, be prepared for a rough ride.

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I finally started doing my taxes. I’m using taxact again this year (because it is free) like I did last year but taxact won’t let me import last year’s data unless I pay for the Deluxe version. Anyway so I filled out my information again. It is a pain in the ass calculating the purchase price of stock I sold because I bought it at various times over the past few years and it was even more difficult with the India Fund because I bought and sold funds in ther rights and repurchase offers.

Last year I compared tax returns from TaxAct and TaxCut and found the return to be identical. This year Taxact has calculated that I owe 2000 to the taxman :(, hopefully Taxcut will calculate something nicer. This plus some other unforseen expenses and a stock market that seems to be going nowhere this year are probably going to make it difficult to meet my annual goal but I’ll keep it intact hoping that some of my web/consulting ventures will make up for things.

P.S. Keep a watch here for coupons for Taxcut and Turbotax. I’ll post them if and when I find any.

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Now that the market is taking a downturn, what should one do? I’m mostly hanging on to what I have and buying internationals and financials at every major drop. Now is a good time to get into India Funds which are way off their highs. Also both Wachovia and Bank of America do not plan to cut dividends (at least so far) and this might be a good time to get in. Just wait for drops like today and buy.

Another promising area looks to be tech - GOOG, AAPL are well below their highs and may be good buys now. I’m hanging on to my stock and might get some more if they fall further.

* Disclaimer: I own WB, AAPL, GOOG, IFN and INP. Take this advice at your own risk.

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