Buy Stocks Like Tomatoes: When In Season!
Any investment adviser worth his salt will tell you to include stocks in your investment strategy, but few tell you how to do it. I strongly believe that stocks are great, and should be part of everyone’s long term investment strategy, but I haven’t focused much on them in the past. However, after observing the trends in the Nairobi Stock Exchange (NSE), then reading this article, I am convinced it’s tomato season in the NSE, and we need to harvest. The article says:
There’s no foolproof approach, of course (when picking which stocks to buy). But for all the analysis and angst, the odds are stacked against most investors from the start simply because they insist on buying stocks out of season – namely, when they’re breaking down to multi-week or multi-month lows.
Like the weather, the moon or other natural cycle, markets aren’t chaotic, but move in trends that tend to persist over time. Just as a garden’s growth depends on planting seeds at the right time, investors must insure potential stock purchases are in season before they buy. The Wallstreet Journal (April 23, 2012)
The NSE 20 Index (an index that tracks the performance of shares in the stock market), is currently at 3,546 points, a slight recovery from an all time low of 3,000, but much lower than the 2007 /2008 high of 6,000. Most of the shares in the market are very undervalued as we will see on this blog, and I strongly believe this period till the General Elections are concluded is tomato season.
In an effort to be accountable and in the process have all of us learn something new, I will be tracking my NSE investments on this blog, by posting what and why I buy on a monthly basis, and every 6 months, an analysis of the performance of the entire portfolio. This is a learning process for me too, because in the past, I’ve bought stocks haphazardly, with little technical analysis and without an overall strategy. As we have seen on this blog severally, strategy is everything when it comes to personal finance.
My strategy is to invest consistently over the next 12 months (or more depending on the results of our general elections), and hold those stocks for at least 5 years, unless there is a compelling reason to dispose.
Today we look at my current holdings and the price as of yesterday:
Kshs 20.75
Kshs 4.65
Kshs 14.85
Kshs 22.50
Kshs 9.75
In April, I decided to invest 50/50 in both KCB and Equity Bank, again, not educated by any financial analysis, just pure gut feel, and the fact that I felt I needed more shares in these counters.The number of shares I hold in each counter isn’t significant, and neither is it important for this series, but as you can see above, my portfolio is quite heavy on finance and insurance stocks (Equity Bank, KCB and Kenya Re). Kenya Airways is my biggest fail, but thankfully I hold very few shares here.
On the next post, we will look at the basics of buying shares.
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