Two weeks ago,Mr Samuel Gichohi of NIC Capital predicted that interest rates would begin to decline since the shilling had stabilized and this would trigger a surge on the NSE listed equities.
T-Bills have since gone down to 13.7% and the NSE has rallied for the last one week.
As usual, THE OTHER FOOL THEORY (Google for definition) is in the process of repeating itself for many retail investors who rush to buy equities because prices have gone up rather than shut out the noise and act on sound fundamental principles that are the basis for making prudent and profitable investment decisions.
NOW is the time to buy into fundamentally sound stocks. Particularly those that lost value as a direct result of the rise in interest rates. KCB, CENTUM, COOP, EQUITY, CIC, BRITAM, KPLC, KENYA RE and BAMBURI are great buys and if one had them before the correction, averaging down should be a priority move while it would be prudent for any investor holding ‘CRAP STOCKS’ like MUMIAS, KENYA AIRWAYS, EXPRESS KENYA, SAMEER and EVEREADY to sell them off and shift the funds to the former as these are unlikely to recover and so the opportunity cost is too high as you lose on the opportunity to buy strong stocks at bargains in exchange for the long and uncertain wait for the latter to recover.
Most investors tend to focus on losses instead of opportunity which is a grave error of judgement in investment. It is not the loss, but rather what you do about it that make the difference between sound investment decision making and wealth creation in the long term.
Most billionaires Like DONALD TRUMP and WARREN BUFFET have made massive losses and some have even been declared bankrupt only to become bilinear all over again. That’s because they learn from losses/mistakes and leverage on these lessons to create new opportunities.
Article By Samuel Gichohi of NIC Capital