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Thursday, March 27, 2008

First Golden Rule Of Investment Being Ignored By Safaricom Buyers

So called financial experts always want to remain so complicated and they have been busy telling yours truly that he knows nothing about business and finance. Well, what do you expect from insecure folks?

That is okay and I have no problem with it. Although the truth is that I was once editor of a very successful financial and business monthly for over 2 years (but do I say?)

Let me indulge my "ignorance" on complex this-is-not-a-fish-market-stock-market-issues for a minute, if you will allow me.

If you want to be a successful investor the first golden rule is never invest money that you cannot afford to lose. NEVER. And that is precisely why it is not a good idea to take out a loan to buy shares.

Most of the people who are going to invest in Safaricom will completely ignore this golden rule for investors, that is if they have heard it.

Let us be blunt here folks this thing is being driven by greed, the same greed that has brought Kenya to its' knees. If I was president the first item in my agenda would have been how to resettle IDPs, not a huge IPO that puts money into the pockets of my backers. But then this is Kenya.

But my point here is quite simple. Shares prices can go up... and they can also go down. Everybody seems to have forgotten what happened to the Kenya Airways shares when they were first floated to the public some years back. The same greed that I see now was there then. It put people into a lot of trouble with loans that they couldn't pay and yet the share prices could not cover the loans because prices had gone down from Kshs 11 up to kshs 7 at one point.

Now I am aware that Safaricom is an extremely profitable company... for now. But there is nothing to stop those shares slipping in price, especially because everybody seems to want to do the same thing (except the fatcats who have some elaborate scheme that is heavily dependent on the public going crazy over the shares).

Now that many Kenyans have chosen to ignore the moral issues about this share issue and have instead chosen to quote "stock experts" some of whom were once called Nyaga Stock brokers, my advice to them is purely financial; don't spend money you don't have.

P.S. If only people knew who Mobitelea are and the characters who are really pushing the Safaricom IPO, they would throw up, I guarantee. Just to give you a hint some of the characters behind the scenes have been responsible for the collapse of once prosperous public companies, sending thousands of Kenyans to the streets while their own accounts have fattened by double digit million figures. Kweli Kenyans never learn. Keep it Kumekucha and you will gradually get to know a lot of fascinating stuff. Even Kumekucha is scared sometimes to reveal some things.

23 comments:

Anonymous said...

yes chris

just as there was ODM euphoria and railamania

we now have sharemania or some false investment euphoria being touted by kimunya and co.

it will take time for the truth (when all of it is told) to dawn, sink and finally bite the pockets. many will bear a brave face but it will be too late then and the faceless pkw will not be there to hold a hand and comfort a distraught investor, while other finance experts will ooze charm and talk about wisely choosing investment and diversifying etc, anything to dodge the real issues.

Anonymous said...

Huh, that is the golden rule i was given by my late mum (may her soul rest in peace) just when i got employed, Never spend money that you dont have!!!!! And i try leaving on that principle, but wait until i see that pair of shoes or that handbag!!!!
Enyewe Chris we are a generation that has lacked morals.....We dont have any at all!!!!!
Let the wicked gather wealth for the righteous to use!!!

Ivy

Anonymous said...

I like any body else would like to know who mobitelea owners are, though i gather this is a vodafone concoction - but wait, after we know what next?

Am sorry folks, but am getting lost somewhere. My people we are told are poor and kenya is unequal because of skewed govt since independence. Yet my leaders are telling people from one community not to buy shares for safcom, yet other communities are buying. Wont this further make the gap big? I ask is it a conspiracy that my MP Anyang Nyong has, to keep us poor and then he thrives as we struggle. Isnt this what has been going on for sometime in our part of the world. I have no time for PNU the thieves, but ODM may loose relevance if it doesnt check its fact rights. It should bring us to the mainstream rather than isolate us further from economic empowerment. My fear is my rural folks would go for this advise when we all have an equal opportunity. methinks our leaders should agents of development rather underdevelopment. These are the kind of things that Nyanza does not need. All the rift valley leaders are quite on this, they will all fall on this, yet our people who spend so much on tel will loose. My advise to ODM - the silence was a better option. Its too late on the day. The problem is, if this safcom goes through - and i see it will go through whether ODM wants it or not - will people believe ODM tommorrow. Politics is also about trust. I plan to defy my leaders on this.

Mzalendo

Anonymous said...

IPO Safaricom is a corrupt, anti-law and illegal setup, which will only profit Kenyan thugs.

Boycott this election cheating machinery.

antonio said...

Chris cut the crap.

Personal investment is a personal decision.And truth be told hata hao ODM bigwigs cheating the poor fools will be buying.

Yes Mobitelea is an issue.But let us not fuck around....this is what i understand to have cut.

In 1999 Safcom was geting into the market and during those days of Moi juu zaidi you could not get frquency just like that.So you had to bribe the corrupt govt so as to run your business in kenya.Bribe was in cash and in kind.

Mobitelea was in kind as in a companty with 10% shares in Safcom and it was formed and registered in the Cayman Islands by Biwot,his son-in-law and Gideon Moi(this is according to the Kroll Report).

In 2003 after kibaki won Mobitelea got scared of the change of guard and sold 5% to vodafone.Some say the resultant cash was used to buy protection from kibaki's govt and thus they cannot be touched now.

Some perspective,ODM which is shouting so hard is made up of former KANU and NDP people who in 1999 were cooperating and since this was a cabinet decision all no who mobitelea is!

If we were to boycott all businesses who paid to get into kenya lets not pick on Safcom...

Celtel also did the same.Remember Merali(who along with Kulei was a front man for Moi's corrupt deals) selling his big batch of Kencell shares?How had he got them???

Kiss 100 also had to agree to Ziporah Kittony's son being a director so as to be sold the frquency!

Am not propagating corruption but i just think it is wrong for Chris,Phil,et al to cheat the ignorant by not availing all the facts on the table and hiding behind sensationalism.As i asked Phil yesterday if ODM had gotten the cabinet posts they would not be raising this issues?how irresopnsible..

So those who wish to buy buy,those who opt to pass do but make that personal decision with factual info not because Raila said Kibaki said or that you read in Kumekucha it is wrong.

God Bless Kenya!

PS:Let me digress....If we have to keep caling Anan to mediate why the hell are we paying kibaki n raila to be president and PM???si we just outsource leadership coz in kenya its clearly lacking!

34 and 44 ministries are excessive and irrelevant..surely kibaki na raila can see that ama its the nyongos and karua who are hardlining???

Anonymous said...

Chris as you keep on screaming about safcom IPO's personally I've known many people who were excellent reservoirs of learning yet never had an idea. "Eyes that look are common. Eyes that see are rare," . The problem is we're flooded with information and starving for revelation, and that is why some of us end up topping up marks for people thinking that if i give u A plain rather than D+ or whatever you will make an excellent daktari, hapana haiwezekani.....Ever wondered that some guys excell in seco, then they go to campo but end up not nyitaring anything and they endup being pathetic docs that is if they make it for the 6 years without them running insane.....Watch the space 10 years fron now kenya will be bila well qualified professionals coz the real ones were denied the golden opportunity even after the morning dawn and night preps hustle......But just coz some were able to "REALLY WORK HARD & INVEST IN SHARES then abakadabra they have it all......Mrembo mimi na wewe tufe maskini lakini heri tuwe na utu.....But again who is a judge of poverty and richness

Ivy

Anonymous said...

Chris
You article raises an important matter about spending or investing within one means. I fully agree with you on this one. However, any good investor is one that identifies an opportunity and takes the risk. The is no investment without risk, even money in a bank or hidden under mattress is subject to risk.

I think we need to differentiate risk taking and greed. An investor who takes the risk and probably makes kill in future is not greedy. He/she is reaping from his/her good investment decision, whereas a greedy investors will not necessarily take the risk but makes a kill through scam or unethical means.

If you look at the world richest people, they happen to be big risk takers, they venture where others cannot dare. Incidentally they are not highly educated nor do they have academic degrees in financial investment, they simply identify opportunities and go for it. Any high return investment is also a susceptible to high risk.

Prior to introduction of mobile telephony in Kenya, studies conducted indicated very low potential and most investors were discouraged. They considered demographic, economic and political factors before making the decision. Kenya being a developing country has low disposable income and high unemployment rate. They had projected half a million subscribers in 5 years. We are now talking of over 10million. No one could imagine mama mboga owning a mobile phone. The risk takers are now reaping great profits.

No one would say with certainty that safaricom will continue making the current high profits. The possibility of continuity and potential for growth is there, the market saturation point is expected to be around 20 million subscribers. If the company continues diversifying its product portfolio and retain its solid customer base as there is no serious competitor at this stage, I think it has a good future.

Anonymous said...

chris and the like go hang and i won't feel sorry..this blog makes me puke and has no respect for any form of intelligence and least does not promote patriotism. Now i do understand why the German slaughtered the jews..and i can draw a paralell here as a student of NLP and manipulating human behaviour by Speech...Why do you think ( if at all you do that the ODM pigheads Pentagon for that matter are not going to dig in to the IPO. I don't care who mobitelea is and you bet i will get a loan and buy Safcom then i can die rich than die trying.At least with the ODM follower of 4 millin plus boycotting( God i hope they Do!!!!) this thing will make some us rich.....good bye chris and nothing personal its just business

Anonymous said...

Once again, thanks Chris for the information. Just to add something small to your, "dont spend money you dont have", please also remember to not spend any money you cannot afford to loose. It seems things are complex with this IPO but what if somebody timed it so that it looked like this? In Kenya, you can never rule anything out. What if someone wanted to float those shares in such a state of confusion so that one side of the political (seems to me that the divisions are still pretty much intact) divide remain jittery and avoid those shares? Am just wondering aloud.

Gentleman

Anonymous said...

chris if you know something we don't then spit it out. this is not the place for "some tribe" "some fatcats" "some people in high places" blah blah blah we read in the newspapers. if you know them name them or are you afraid "they" might shut down the blog?

Kemmy Creations said...

Chris,

Thanks for the advise. Apprently I think am among the few who are not interested in buying these safcom shares. From day one i became suspicious and lost interest and opted for; "lemmi sit and see people cry real tears...hehehehe"

Proud Kikuyu Woman said...
This comment has been removed by the author.
Proud Kikuyu Woman said...

I have no quarrels with your credentials. How well is your business AND financial paper doing now?
Wish you could loan me some to own Safaricom, though. There is nothing special about people buying out of greed. Or fear. In this case, you want fear to rule the day. I'd rather greed. Please release the names on Mobitelea owners.

Seasons & Reasons said...

Am one of those who queried your ignorance.

You are spot on about borrowing to buy shares but that was not your point on the earlier post..your post was telling Kenyans not to buy shares but for other reasons like collapse of Nyaga,mobitelea etc

Taabu said...

I have learnt quite a great deal from our very own River Road Wall Street experts. Leaves you wondering schooled bravado is genderless. Chris stop topping-up important posts with tasteless shockers please.

Anonymous said...

Why can't you release the names of the owners of Mobitelea??

chris said...

Proud Kikuyu woman,

I was not the owner of that business and financial monthly, so I left for greener pastures and it collapsed in the hands of those who took over from me. Facts not bragging or insinuating anything. If you email me I can send you to people who will verify these facts.

Secondly a more accurate headline for your post would have been the following;

Buy Safaricom Build TransCentury

Those guys are your friends, arent't they PKW?

Anonymous said...

Some guys like Antonio sufffer from ODMphobia, pls you can make sense without mentioning ODM yawa it was safcom IPO, and i dont remember reading any comments from this anti- Safcom shares saying they are not buying coz ODM said so....Yawa can someone help me here saidia oh saidia (SOS)

Ivy

antonio said...

Ivy,

Go to comments for jana and read the comments and read what an annoymous guy said about the fact that Raila that raila amesema so he will not buy and Phil congratulating him.Utter foolishness!

On ODMphobia there is no point answering you.

I also raised the issue of the owners..Did you see ama you were just blinded na ODM?Even Chris has not addressed it!

Just listened to Raila on Capital FM saying ODM was not opposed to kenyans buyin shares per se but they had issues with Mobitelea which can be addressed as IPO continues.

So all you who were waiting for Raila asema...Amesema!!!!

PS:And ati Raila and Kibaki met for an hour...good for them..how i wish they can go for a retreat just by themselves minus the hawks.am sure we would have a cabinet by monday!

Taabu said...

Masikini Ivy you LAZY TWIT, you will die there with a bowl in your hands while other have their drums overflowing. Please my dear I beseech you and Mrembo to climb down from your INEDITBLE MOREL PEDESTAL and share in hadwork, please?

You see you are either genetically progemmed to be rich of thrown to the mercies of want. I fear the two of you are symptonatic of the many Kenyans will REMAIN poor becasue of slavery to morals. My poor Ivy!!!!!!!!!!!

Anonymous said...

anon 2:29

the profitability of safaricom and celtel is due to strangulation and smothering of healthy competitition. the third mobile operator was licenced or maybe not more than 2 years back and still cannot hit the ground. other worthy competitors have also been blocked. stocks give best returns long term and not so much short term (unless of course you have some insider trading). secondly as somebody alluded to, safaricom has about 9.5m subscribers ( i bet thats the number who have purchased service and not active subscribers which would be about 2/3 or 3/4 of that) and celtel about 2-6m dont have those statistics. our pop is 35m projected to grow to 50m. the net subscriber base will be about 25m. with more penetration of ICT technologies, mobile phones will not be a necessity, remember the current mobile penetration is due to gross inefficiency by telkom (growth in landlines from 10,000 to 250,000 from 1963 - 2000 as opposed to cellular 10,000 - 10m 1995 - 2007)

two things will hit mobile phone profitability simultaneously, internet broadband services and more licensed operators or level playing field. i mean with email, chat, video phone etc, providing guaranteed clarity (no more dropped calls and poor signals) the majority of users will have ready access to fixed telephony services which are more reliable.

so those planning to invest, try to understand the entire risk / cost benefit model both short and long term before you make your "wise" decision.

Abass said...

Chris, I believe you have being sincere and giving invaluable advice. Even if I were a billionaire, I would never buy it. I just don't trust these guys really and I know they are lurking somewhere in firm control of the whole of this company. No matter what you do, you can never rid the world of greed. And that means, there will be some folks who will fall for this. Sad but I feel like they will regret when it is too late.

Anonymous said...

Chris, that golden rule of yours is fake! Which is this money that someone can afford to loose? Kindly show me. Is it your savings? The answer is none. If people followed your advice there would be no investing! What you should be saying is people need to assess the risk of loosing the money.

For a person who was an "editor" of a "financial monthly", it was a bit disappointing to see a whole piece based just on one financial principle!

Chris, you seem indefatigable in your quest to misinform people.

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