Parchayi.com – Personal Finance Simplified

I have read/heard several bad reviews of investing based on Jim Cramer’s recommendations in Mad Money. This reminded me of Seinfeld and following Kramer’s advice – which he had plenty to offer. Anyway, so I was hunting for sites that follow Cramer’s picks and came across this – Cramerwatch.org – Cramer vs. Leonard the Wonder Monkey (‘We record his Lightning Round recommendations as he makes them on TV, and then we have our monkey make recomendations at random on the same stocks. We then wait 30 days, and see who came out on top.‘). So Cramers recommendations are basically of no real use over 30 days.

Some more research reveals that somebody even wrote a paper on the effect Cramer has on individual stocks. In case you are interested in doing your own research, TheStreet.com tracks all the stocks Cramer mentions – it is his website after all. All I have to say is, finally do your own research before investing your money. Cramer and everyone else who gives you any recommendations is just a starting point for doing your own homework.

I saw the movie ‘Thank You For Smoking’ and realized that ATF = Alcohol, Tobacco and Firearms companies – the root of all evil – are possibly good investments to consider. Personally, I wouldn’t invest in Tobacco and Firearms companies directly (can’t really do much about the holdings of my funds) but Alcohol is a different ball game – I might consider. So last Sunday, I spent fifteen minutes of my snowy (the first snow of the season) Sunday afternoon researching Alcohol stocks – not an easy task I must say. And now while I’m stuck at the Airport at Kansas City, MO thanks to a bird strike on the plane that is supposed to take me to Columbia, MO – I finally find the time to put this on the blog.

In Yahoo! Finance Alcohol stocks fall under two categories – 1) Brewers, 2) Winers and Distillers and information is generally not easy to find. Google Finance fortunately puts all of them under on category – Consumer/Non-Cyclical > Beverages (Alcoholic).

So the largest Alcohol stocks are:
Diageo plc (ADR) – DEO
Anheuser-Busch Companies, Inc. – BUD
Companhia de Bebidas das Americas (ADR) – AmBev – ABV
Quilmes Industrial (QUINSA) S.A. (ADR) – LQU
Brown-Forman Corporation – BF-B
Molson Coors Brewing Company – TAP
Constellation Brands, Inc. – STZ
Compania Cervecerias Unidas S.A. (ADR) – CU
Vina Concha y Toro S.A. (ADR) – VCO
Central European Distribution – CEDC
The Boston Beer Company, Inc. – SAM

Here is some research done for you. You can pick what to invest in or wait for Part Deux for my picks – it may be a while before the part two so you are better off doing your own research.

A friend of mine who graduated with me was refused an interview at a DC company because his GPA was less than 3.5 and he used the term ‘GPA whore’ for the company. Thus leads to the birth of my new term – ‘Credit Score Whoring’ ^TM (CSW) – trying to artificially raise your FICO Credit Score for the purpose off showing off.

I have tried some techniques of CSW successfully (YMMV – take this advice at your own risk) before applying for my home loan in 2005 and here I will describe my method. Be warned that the process takes several months to several years, a strong will, some degree of discipline not to go overboard and atleast a decent credit score to start with (>= average). The first thing to understand that to have a good credit score, you must have debt or atleast have had some debt in the past and you must pay on all your debt in time all the time. So let’s start.

Step 1: First calculate your current credit card debt = D. Next calculate your credit limit of all your credit cards combined = L. Note: If you already have credit card balances that you cannot pay off in full, pay those off first before trying this out.

Step 2: Apply for a 0 intro APR (on purchases and balance transfers) and no fees card from one of the offers you get in the mail (such as the Discover® Gas Card). Transfer all your balances to this new card. Only use this card for a while for everything – you have to get your D/L > 0.2. If you cannot get one card that offers this open two card accounts – one for purchases and one for balance transfers.

Step 3: Now that you have only one or two cards to pay, pay slightly more than minimum to the cards each month. Put the rest of the payment in a high yeild savings account instead of paying your credit card (do not touch this money because you will have to pay your bills later). Be warned, your credit score will temporarily decrease as you rack up debt on these new credit cards. And do not use any other credit cards.

Step 4: At the end of your 0 APR period. pay off the entire balance of the credit card(s). In about one month, notice the huge increase in your credit score .

Rinse and Repeat – Go to Step 1. In this process if you end up with too many cards, just merge all the cards form the same bank into one account – preferably your oldest account with that bank because length of your having a credit account is very important.

Why This Process Works
Your credit score depends on the following things:
- Low D/L (Drastic reduction of D/L = drastic increase in score)
- High L (never close credit card accounts, always merge)
- Paying more than minimum each month (even if it is just 1$ more than minimum)
- Not having balances on too many credit accounts (no more than two)
- Using credit cards (stop using your debit card, cash, checks – use credit cards, earn free cash back and improve your score)

This is from my own experience over the last 6 years and I repeat – YMMV (Your Mileage May Vary) and use this information at your own risk.

A google search for ‘financial blog’ got me thousands of blogs, a lot of which tell one persons story of how they will reach their financial goals (reaching a target net worth, getting out of debt etc.). Some of these people actually list out all their holdings in all their accounts (e.g. Neville’s Financial Blog, Beachgirl’s Budget Blog) and a lot just post their networth and/or debt to publicly track their progress (My Open Wallet, Lazy Man and Money).

Personally, I am a little too paranoid to list some of this information online. There is already enough information about me lurking around. But in defense of these blogs, publicly posting how you are doing can be a really great form of discipline to budget, save and otherwise reach financial and other goals faster. I think maybe I can achieve the same without posting $ amounts. Parchayi and me are at about 2.5% of my target net worth for us in liquid assets (i.e. not counting house, car) at retirement (25 – 35 years away). Goal for 2007 is to be at 3.5%. When I get the time I’ll make a graph on the side with progress.

Yahoo Inc. launched a new personal finance portal today as a part of Yahoo! Finance. Yahoo has gotten into the bad habit of launching new interfaces as part of old sites that are not completely integrated. The personal finance portal is much better in that respect as compared to the half-assed effort by Yahoo! Movies to change it’s layout. Only the Front Page made the cut for change in Yahoo! Movies as compared to most of the Personal Finance section.

Anyway, it is a nice move from Yahoo! to have a separate section for personal finance instead of having it mixed in with everything else. Yahoo! Finance is a site I visit everyday and Google Finance or any of the other finance sites have not provided anything in the way of breaking that habit. So go Yahoo! Finance – and please update the appearance of the rest of the site too.

A few days ago, I opened a position in INP (Barclays Bank Zero Cpn ETN(ITR) – see my previous post on INP) increasing Parchayi and my investment in India to 16% of our total investments.

A breakdown of our portfolio (including all stocks and mutual funds) shows 98% investment in stocks, 2% in bonds (via some mutual fund). Of the stocks 61% are US and 39% International. Of the International Stock 60% is in Emerging Markets and 40% in Developed Markets. Currently my target for our portfolio is 50/50 US/International and 60/40 Emerging/Developed so we are off the target portfolio as far as US/International goes, but my international part is exactly on target, by co-incidence more than design. About 28% of our portfolio is in individual stocks and the rest is in mutual funds/etfs.

As an investor it is always nice to have a target asset allocation and periodically check how far off you are. I have shown my breakdown by market but it is also nice to have a breakdown by cap, sector etc. to make sure that the portfolio is properly diversified. For example I realized that our portfolio is heavily weighted towards large cap stocks. So my next order of business is to increase mid-cap holdings. Our individual stock holdings are all in different sectors and the funds we own are mostly index funds that are not sector targetted.

It is a simple task to get all this information and it took me less than 5 minutes to get this information from different accounts.

If you have seen the ads for Real California Cheese, you know what I am talking about. The first thing that came to my mind after hearing about freezing temperatures and ruined crops in CA is unhappy cows and I had to post about it even though this doesn’t have much to with personal finance, except rising orange and lemon prices. I did read somewhere that damaged oranges are still good enough for juice so juice prices may not rise as much.

A recent newsgroup post that I found led me to this businessweek article – The Best E-Broker For You. Their slideshow compares several online brokerages, some of which I didn’t know existed. Here are two more cheap options other than SoGo that I mentioned in the previous post:

Firsttrade – $6.95 per trade market and limit
TradeKing – $4.95 per trade market and limit including broker assisted trades!

Also in the previous post I mentioned something about Trading for Free – Well here comes!!
Zecco – Free stock trades (maximum 10 trades a day up to 40 a month. After that, only $3,50 per trade)
Unlike the other brokerage firms, Zecco seems to be supporting itself partly from ads shown on its website, blog and forums. They also claim to save money from not advertising.

I just saw an ad for these guys on this blog and I had to check them out – !

Now Scottrade is being given a run for its money and if SoGo succeeds, hopefully we will see all around fee slashing and maybe, just maybe the days of free trading will be back.

Over at Yahoo Finance today, I found this article – Negotiate a Lower Credit-Card Rate from the Wall Street Journal. The artice goes on to say that credit card companies will lower your interest rate if you ask for a lower rate. Most of my credit cards are low fixed rate cards, plus I haven’t paid interest to cards for a long time, however I would agree that credit card companies are customer friendly.

I have forgotten to pay my bill on time twice or thrice and I have called and had late fees waived with both Citibank and Chase (or maybe it was FirstUSA before being acquired by Chase). I call and say – ‘ I got my statement today and it has 35$ of late fees. I have never paid late before, can you please waive the fee’ and they have done so without any questions asked. Also in both cases the late payment was not reported to the credit bureaus.