Thursday, February 15, 2007

bear run silence

There apears to be a loud silence on the part of the investment advisors of yesteryear. those forums which used to record hundreds of contributions and bullish sentiments are uncharacteristically mum. in fact some 'panelists' have since even changed their usernames to hide identity! looks like it was very easy to advice on what to buy and what will head north, or what will be split. but now with the bear market, advisors dont know what to do with all the shares being offloaded in the market. in fact more bad news are coming as far as company performance is concerned. after MSC announced less than expected results, portland has followed and i heard the sameer MD on radio already blaming cheap imports. that will prepare us for worse results. some time last year sameer was supposed to be the stock to watch given that some club was interested in it. in fact koboro was also linked to it.

but its all good as my friend likes to say, the activities of the NSE have provided quick learning to investors. pple now know that splits do not increase the share price. but rather increases the number of shares on offer hence diluting dividends. also the price gets supressed since supply is higher.

But other factors could also explain the subdued prices apart from what is generaly agreed to be correction. in 2002 jimnah mbaru vied for starehe constituency and lost. if he needs to vie again this year, wouldnt this be the best time for him to consolidate his gains in the NSE and liquidate his shares for campaign money or did he already do it last year. how about those other politicaly correct senior investors of the NSE? just wondering. politics is expensive, we saw Mr. Nguyai of mediplus closs shop after he was trounced by muite. the company jsut couldnt take it.

however if all else holds as we are proceeding right now, then about april wud be ideal time to buy more shares to bottom up the loses and average prices. eg if u bought ICDC for 100 /= and it goes down to 20/=, you will be better off buying some more at 20 /= so that the prices level off and you gain when it rises marginaly . you can also let go at 30/= and wait to catch it again at 19/=

but remember that even at 19, ICDC still is actually 190! so no panic.

in developed markets, you can hedge against this using options. other strategies is to be still and do nothing until the 'dhuruba' passes. or you can decide to go to other businesses like animal husbandry

and talking of animals, yesterday i saw a notice which i only associate with sugar. at nakumatt when they say two kilos per shoper please (why do we normally have shortages when we have that many industries ?)
so at nakumatt they have put a notice 'Two chickens only per shoper please'
which brings us to the first real oportunity of the year. chicken take very short time to mature enough to become dinner. you can therefore liquidate some of your assets, then go to chicken rearing for the short term. by the time the govt manages to control the cow disease (these men are old and wont be able to do it fast enough) you shall have made your millions. best business oportunities are when you have to respond to an urgent need.

odegle tip of the day ... bear runs are normally accompanied by general pessimism. in our case it could as well be just market correction as opposed to real bear run. as demostrated yesterday by kespa, the optimism of last year is very much alive.

6 comments:

  1. We tried to warn them that share prices do not always equate to performance...

    Now prices can get back to normal...

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  2. In this electoral year, Could a wealth-preservation strategy, as opposed to creation, being put in motion by some influential market players? I will be keen to watch the bond market in the coming days.

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  3. Od-article on pt. Its a good lesson for many to learn at an early pat of their stock investing lives. 2ndly, many can now spot pumpers and dumpers.
    I think the election will have an impact-don't forget our venerable wabunge are also holding shares and many will need to money to bribe voters.

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  4. Interesting all those 'Experts' on stockskenya who told us Mumias was a steal @sh.55 and Sameer @ sh.30 have all vanished.

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  5. research will always win at the end. technical analysis also helps but i guess if you keep your gaze fixed on the technical issues alone and ignore the fundamentals then you are sure to burn some fingers. pple have now noticed that after split, prices go down. when equity annouced the bonus pple suggested that the prices would jump to 700 and we were being urged to jump on. in reality even sasini lost a massive 42% on one day after the split. what one hopes is that the nse is not all hype like our local hip hop music. where all celebs are one hit wonders!

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  6. I think the word is euphoria. I will comment on stockskenya. I like stockskenya, but it has a lot of 'followers' and recently con artists.

    In the case of Mumias, the 'crowd' had a misplaced notion that it will head north by February/March, and didn't care to think about excess liquidity after the extra shares hit NSE.

    As for the poor results, I am guilty of being too optimistic,the results were a shocker.

    I've always loved my sugar, but Mumias should have issued a profit warning,but treasury needed to raise money, and relevant/negative information had to be suppressed.

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