Parchayi.com - Personal Finance Simplified

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.

Here is a list of some ridiculous dividend yeilds from Financials

Some of these dividends have always been growing (e.g. BAC has raised dividends for 30 straight years). I would expect Bank of America and Wachovia to continue paying their dividend and even raise it as usual in 08. Citigroups ability has been called into question and I wouldn’t bet on it but that dividend will probably continue.

As for the other banks, do your own research. But in any case if you are looking at financials, now may be a good time to buy.

The Bombay stock exchange breifly crossed 20,000 twice before closing below 20,000. Is 20,000 here to stay or are we headed in for a wild ride and headed back to 18,000? Noone can tell. For now, I have unloaded my India funds and taken some profits. I will get back in at dips. However they maybe a while coming if the current pace continues. It took only a few weeks for the massive gains.

Along with India, China has also posted spectacular gains. Thanks in part to India (INP) and China(FXI), my mimf2007 contest portfolio is up more than 50% for the year.

Recently I ran across an interesting new ETF - FNI - First Trust Chindia - exposure to both India and China in the same fund - that’s nice. The only problem with this fund is that it invests in ADRs, not directly in the market. The problem with that is that there are not that many Indian ADRs to select from so the fund basically invests in all of them. I don’t know what the case for Chinese ADRs is, however. FNI has done well since it’s inception this year (obviously) but ADR premiums and discounts swing wildly and make for too much volatility. Inspite of that I might consider a position in FNI with some of the proceeds from my IFN and INP sale to gain some China exposure.

The BSE Sensex was up nearly 600 points yesterday, it’s 10th straight day of gains and 10th straight record close! The last few months have seen the market go up a couple of thousand points and it shows no signs of slowing down. However the index has also seen thousand point drops when it has risen so fast in the last couple of years. Eventually though it has always recovered and reached new highs very quickly.

I sold all my IFN in the India Funds rights offer and am waiting for dips below 50$ to buy some back. However this time around I might consider INP or FNI instead. I do own some INP already and it has given me spectacular returns. This has been an expensive year for me with travel, immigration and other expenditures, however my exposure to emerging markets is keeping me on track to meet my net worth goals for the year.

IFN will payout $56.4285 per share of IFN and from my account at scottrade it seems that they accepted all my shares!! So the rights offer was a great deal and I hope to buy some IFN back in time for the dividend after they deposit the money in my account. As of Friday (the day of the offer), the discount on IFN was nearly 12%.

I hope you made some money reading this blog!