By Emin Pasha
Money, money, money is on everyone�s minds this time of year. Maybe it�s because the festive season depleted everyone�s pockets. I know that mine could use a boost. Members of my family will soon be reminded that, "skuma wiki" has an actual meaning as well as being a leafy green vegetable.
Perhaps people are thinking about money because a new year (better yet a new decade!) symbolizes a fresh start.
The print media have also picked up on this sentiment. I�ve observed a virtual landslide of articles in the papers with advice about personal finances, the benefits of savings, and ideas about how to invest your money. Many of the writers provided a list of things to do to start off the year right financially. This sounds good.
But some journalists were merely rehashing from pop-culture management books and self-help guides to make you rich. Their articles lacked sincerity and depth. One gets a sense that the writers themselves may not be following their own advice.
Also missing was that none of the writers told their readers what to avoid. Sometimes knowing what not to do is as important as following someone�s so-called "7 steps to financial security".
So, when it comes to real financial security, here is a no-nonsense list of what you must avoid in 2010:
l avoid Believing That the World Economic Crisis is Over!
It�s not over, but could be soon. Watch for signs of improvement in the U.S. employment sector after April. Remember, this is an election year in the United States and the impact of the stimulus package is expected to be felt long before November�s polling. If the American economy starts showing signs of life - and their stock markets appear to be doing so already - then markets in other parts of the world will follow. Including our East African exchanges.
l Don�t Fail to Read, Read, and Read More About Investments!
For professional fund managers and investment advisors, our business is all about information. Personal networks are one good source, but we also must read financial industry magazines, journals and of course the local daily newspapers. Specialized international publications such as the Financial Times and Economist magazine can also help one to learn more. Even a casual investor will benefit from regularly following media reports in the daily and weekly newspapers.
l Don�t Miss Out on IPOs and Bond Listings
The largest listing in East African history, Safaricom, spoiled investors� appetite for IPOs as well as the pocketbooks of many in our region. But Safaricom�s IPO listed way back in July 2007. We�re now in 2010. And as of this week, Safaricom�s price had reached 5.9 Kenya shillings (listing price was 5 bob).
As for bonds, the KenGen issue showed us that many retail clients will participate in the market when the issue�s minimum purchase is reasonable. Bonds should not be the merely for banks and insurance companies. If my fellow brokers get the idea and jump on the bandwagon, more "democratized" bond issues should appear in 2010.
lAvoid Bad or Lazy Stock Brokers
If your broker has not contacted you in the past 6 months, find another broker. If you want to invest in the capital markets but don�t have a broker, visit several of them before making your selection. There are plenty of excellent firms who place clients foremost, provide valuable services, and clear, pertinent investment advice.
lDon�t Believe that the Markets in 2010 Will be as Bad as 2009!
All our region�s markets had difficulties in 2009 even though listed company performance and financial results were for the most part, outstanding. There is a misalignment between the market�s perception of equity investment value (low) and the reality of profit-making companies (high).
Somehow this message is not filtering down to the investing public. After company results for 2009 are announced, and I expect them to be good, that is when the alignment of share value and perceived value should merge. And as a result, last year�s market doldrums will be a distant memory.
Emin Pasha is a stockbroker in East Africa. [email protected] |
