Parchayi.com - Personal Finance Simplified

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.

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.

Tata Motors unveiled the Nano today - its highly anticipated 1 lakh Rs. ($2500 approx) car at the New Delhi Auto Show. The street price after taxes and destination fees will be about 1.2 lakh for the base model. Here are the specs: 30 HP, 624cc engine, Seats 5 (it seems). It has a 4 speed manual transmission and is completely barebones but at over 50mpg (20kmpl), it is fantastic with India’s high fuel prices. Tata also claims that the car meets or beats safety and environmental standards and is less polluting than two wheelers! If the Nano is a success, Suzuki will probably see a significant dent in its >50% market share in India. Their closest competitor the Suzuki 800 is twice the price of the Nano.

More info at Times of India

At the other end of the market, Tata is now the frontrunner for buying Jaguar and Land Rover from Ford. So Tata Motors has got you covered for everything from commercial trucks to the entire gamut of passenger cars and trucks. The stock fell 2.75% in the Indian market today amongst a broader 287 point decline in the market.

Happy New Year to all you readers!

Here is my financial resolution for the year:
Simplify my holdings - Parchayi and me own small amounts of too many funds and stocks. I want to narrow the list down to about 20 by

1. Merging similar funds together in retirement accounts
2. Dumping loser stocks - there are some stocks I’m holding that haven’t done anything much for a while and I need to dump them. I plan on waiting until the time is suitable for increasing holdings of stocks that I already own or I find something that should do better in a challenging 2008 investment environment.

I’m a loyal Blockbuster Online customer (but not a stockholder) and have been following the Blockbuster/Netflix battle for a while now. I applauded the Total Access service, was disappointed when they limited my Total Access DVDs to five per month and now after seeing how Blockbuster works I can comment on all the places they went wrong.

The first thing that Blockbuster did wrong was operate Blockbuster online and the stores separately. The next thing after the Total Access program was the fact the the online-store partnership was structured badly. When I return movies to the store, the store actually mails them out to the Blockbuster online location. I would expect it would have saved blockbuster money if they kept the online operation in the stores themselves.

The other problem for Blockbuster (not the customers) is that with Total Access, a customer can have more than 3 (or whatever their plan limit is) out at a time. And with no late fees at the store and no incentive to return the movie fast, the stores have an even bigger lack of new releases. What Blockbuster can do to make this process easy is rent the in-store movies in Blockbuster online envellopes so that I don’t have to drive back to the store to return it in addition to including the in-store rental in the three out at a time. This might piss off some customers (like me) for a short while but in the long run it will be better for both the stores and the online service because with this method all plans can have unlimited in-store exchanges and Blockbuster can still make money (save on mailing + drive more cutomers to the store). They an also possibly convince more store customers to join the online service by making everything simpler - X movies at a time regardless of online or in store.

What I think would be the ideal situation is that the store be no more than a return and pickup point for the online service rather than a separate entity that seems to be sucking the life out of Blockbuster. They can move to a smaller store format and have kiosks to compete with those fast becoming ubiquitous 1$ per night (with the per night part in really small print) DVD rental kiosks.

Maybe I’m taking a simplistic view and what I’m saying is not as easy to implement as I think it would be - but it could save blockbuster money, get them more subscribers and make their operations more efficient. It would be like running one company instead of two.

There are some good things to say about Blockbuster like their attempts at exclusive deals, their acquisition of movie link and their current Jackass 2.5 deal and I hope they continue on the path in competing with netflix. I am currently a happy customer and if things keep going well, I might become a stockholder.

I just ran an XRay on all our investments today and I was sort of surprised. I knew my International exposure would be less since I sold of a majority of my India funds. However, considering that my largest holding is VEIEX (9% of my portfolio), it was strange to see that my portfolio was still 62% US Stocks and 34% Foreign Stocks making it very similar to my allocation in July inspite of a lot of changes in my holdings. My style diversification is also very close to July’s with majority Large Cap holdings. So I really need to focus on moving some funds around to midcaps and internationals.

I’m waiting for a pullback in India before I dive in again. As of now the premium on INP is >10% while IFN trades at a 15% discount!! I’m not entirely sure which one I would buy. Right now I’m waiting and watching. I did acquire some FNI even though it invests only in ADRs and recently acquired some GOOG and AAPL hoping that next year will bring even more success as the iPhone goes international, Macs gain marketshare, Google takes over even more of the webs advertising dollars and hopefully launches a gPhone.

Wachovia Insiders (including the CEO and other directors) have been buying up a lot of stock lately as the stock has taken a severe beating. The yeild on Wachovia stock is currently over 6.5% and it probably can’t get too much better. So I got myself some Wachovia stock too, which I hope will payoff more in dividends than my savings accounts long term.