As a battle hardened investor who has survived two major recessions and several minor ones,I can assure you that stocks still outpoerform real estate in the long term. So dont give up on stocks,just get smarter about how you go about investing in stocks. And here are a few lessons about how to go about doing that.

Do not diversify: I have always said that diversification is for lazy people and it will not reward you,nor will it protect you from the slide. You are better off keeping a few stocks(for me max 5) that you know like the back of your hand,stocks which you can monitor like a hawk around the clock. and when I say monitor I mean reading news related to it,listening to earnings conference calls,monitoring stocks bulletin boards. what you will realise after doing this is that you will always be a step ahead of the market,coz the market is not that efficient.

Do not be afraid to bet against the market: Everyone knows Warren Buffett's 'be fearful when others are greedy and be greedy when others are fealful',but how many people acctually put it to practice? When you see mama mboga day trading,know that's its time to get out,on the other hand when you see the media beating the recession story to death,then its time to jump back into the market.

Prioritize wealth preservation: Most people are very good at wealth creation,but they are very poor at wealth preservation thus rendering their effort useless. Please use stop loss wwherever you can. Absent stop loss,then know when to take profits. Blindly buying and holding onto a stock when there are other better opportunities is simply irrational,which brings me to my last point.

Buy the best priced stock,not the best company: A lot of us focus on the company more than the fair value of the company's stock. For example,Exxon Mobil may be the best oil and gas company but Petrobras stocks may be better valued in comparison to Exxon. and since our priority is to increase the value of our equity,we need to focus on stock valuation rather than company valuation.

Agree with you Ug and Ghana. One thing to watch out for in Ug,is at this rate,I'm pretty sure it'll have political complications within the next 3 yrs.

www.mjengakenya.blogspot.com

Mzee TB / Mainat,

I rarely respond to any contribution in my post but since I respect both of you on this forum,let me clarify some things. Also all my articles are my true life experiences

I am a core stock investor in 5 African countries (Nigeria,Kenya,South Africa,Ghana and botswana) and also five off shore countries (Hongkong,US,Australia,Thailand,Singapore) and I do this to build by next egg to retire from rat race (paid employment) in few years to come.

Stock investment is my No1 but it is extremely perfect to back up with Real Estate. The most difficult thing with real estate especially in Africa is the fear of being conned especially if you are overseas,also the huge amount of Capital involved. But I have discovered that for a salary earner like me I can still decipher a reliable way to start small without being conned even without having huge capital.

To avoid being conned you have to see what you want to buy (by travelling there) and you must conduct due diligence to establish the authenticity of the land or house to buy. More importantly buy a house or serviced plot from a planned estate and don't cut corners (pay the right legal fees / commission) and follow due process. EXAMPLES
CASE 1 GHANA
I came across this planned estate the first of its kind in West Africa called Sun City marketted by Falconcrest Investment Lts,Accra Ghana. A planned city of 4000 Plots (80ft X 100ft) going for US$6,000 then (2007) and you only need to make 20% installment and spread the balance over 36 Months.

I travelled there conducted my search,subscribed to it by paying the deposit. I was able to pay the balance installmentally 10 Months after in August 2008.

The going price of the land is US$15,000 now and you must make 30% down payment and pay the balance over 12 Months rather than 36 Months.

So if I want to sell my land now,you know how much I can realise.

Suncity Website : - www.falconcrestghana.com

STOP PRESS
Latest feed back is that the going price of Suncity managed by Falcon Crest Ghana
is a whooping USD$35,000, 50% down payment and balance can be spread over 12 months.


CASE 2 UGANDA

After due deligence I got to know Jomaiyi properties :-

www. jomayi.co.ug



Again their have serviced plots available and negotiable installmental payment.
See below their reply to my phone call and E-mail correspondence.
info@jomayi.co.ug 11/4/2009 wrote

foreigners are allowed to buy land/property in kampala but on leasebasis(e.g alease of 99 yrs)and when it expires you have to reknew itwe prefer cash. And if possible u deposit 70% of the initial price and wegive u only 3 months to pay the balance in 3 installmentsyes we shall assist you with the documentation,we can assist with theconstruction though here in Uganda we have aprogramme to follow beforebuilding a house/bangalow.you have to firstdesign aplan that is approvedby the district authorities.you can pay in 2 halves if you want shouse tobe constructed for you.we have very good property through out the year and even in 2009 we shallenlish some wonderful properties for all our customers both local &foreign.so they will be available.


Again I have to see and verify what I plan to buy so I have to pay the price,how ?
I have scheduled a trip to Kampala Uganda by early December 2009 to see things for myself and if convinced possibly deposit the first installment.
Also land prices for now in Kampala is very reasonable compared to other African countries might be due to their weak currency. But one has to be careful not to be conned.

Even in Kenya ask anybody that bought a genuine land,has the price dropped because of global economic melt down???. The main problem is being conned.

Mainat,the risk problem is that no African country (Except S/A) is politically stable so the fear of war always there the fact remains my next neighbour in Accra land,is a Chinese . He deposited for ten plots and hope to sale 9 and retain one. He does not reside in Accra.
I personally see Africa as one country so my destiny is not tied to Nigeria,Kenya or anyway else.

This is my candid opinion. I want to create a balance as a leverage.

Why do Africans have this Phobia to invest in their country or other African countries wheras Chinese,Japanese,European business man troupe in for business in most african countries ?

Thanks & Best Regards
Miefu are you there ?

Best Regards

Young,
Lagos,Nigeria


AFRICAN INVESTOR

@young - The 'phobia' is for the reason you mentioned. There is little 'safety' of property rights. Ask the kikuyus in Rift Valley.

Greedy when others are fearful,Very fearful when others are greedy - to paraphrase WB

@Much know

The figures shown are percentage of portfolio and not losses.

Young

It seems like you have done your due dilligence on the real estate,especially the Suncity in Ghana. By all means go for it if you have time and money. My only objections to real estate has been that it ties too much capital,is not liquid,transaction costs are too high,and it still does not appreciate fast enough relative to equities..

Dont forget that real estate prices do fall,just ask those who bought at the peak of the housing bubble in US,UK,Dubai etc. And when they burst,they can take years to recover,Japan real estate is still below its peak more than a decade later. So be very careful my brother. As for me,I will stick with equities since I am such a control freak with my investments.

On the oil discoveries in both countries,one thing you have to keep in mind is that at a given price,one can discover oil anywhere in the world. Be very wary of oil discoveries when a barrel of oil was going for $160. Methinks that the $160 per barrel justified these explorations and that they are not sustainable at $50 per barrel. So it may be some time before we see oil flowing from these new discoveries.Also analyse the quality of the oil,is it light sweet or some very poor quality that will cost so much to refine,I understand that the Ugandan discoveries may only be good enough for kerosene. Again,I may be wrong. Finally,dont forget the curse of oil. Just take a look at the conflicts in Sudan,Chad,etc.

I look at the situation strictly from a cost-benefit analysis,and to me,relative to equities,real estate does not even come close. The only real estate I am buying is a place for me to live,not as an investment,if it appreciates,then that's just fringe benefits.

@MainaT

Thanks for the advise. However,where do I invest the proceeds from the sales (EAPC,Bamburi,MSC,Kenre,NMG & BBK) which in total is Kshs 4.0m?. I take one is Athi River to replace EAPC and Bamburi. What of the others?

Evolve- I'd put it in AK and Equity. But this is just me. I'm an extreme risk taker once I believe in a particular share. You must do your research and concentrate your firepower/cash rather than disperse it.
Mozenrat-I usually avoid shares that don't really have much control over their environment. Kenol buys oil whose price fluctuates wildly,gets taxed at source or wherever KRA deems fit and will get held up by KPL whenever a crafty sod comes along and runs away with its money.



www.mjengakenya.blogspot.com

@Evolve

Lets assume I were you( my risk appetite is extremely high,and I eat,sleep,dream stocks),then I would select a couple of stocks(Athi River and KCB),go all in and focus on those stocks like a laser beam. I would become an authority on these stocks such that I would anticipate things even before they reach the CEO. Equally essential is to make sure that you mitigate potential losses by using stop loss.

@MoKenya

Actually,I just began investing at an early age.The two major recessions I'm talking about are the dotcom burst of 2000,which hammered me senseless,and the current recession,which I escaped. I started investing right before the dotcom crash. I went gaga on Nasdaq and lost over 80% of my portfolio,talk about being taken to the cleaners. But that did not deter me,I just took it as a very expensive lesson in investments 101.

Now regarding diversification,if your goal is to attain the historical annual returns of 10%,then its definitely for you. Focusing on a few stocks enables me to reap huge returns and get out when the stock peaks,then I wait for the next stock to ride to the top. These rides could last weeks or months. By focusing on just a few stocks,I'm able to know them just as good as the analysts who follow them,if not better. This enable me to know when to get off,whcih is much more difficult call than knowing when to get in.

I'm glad you brought up WFC vis a vis good vs value stocks debate. I love Wells Fargo as a bank,I bank with them,very good CEO,very good company. In March,I was ready to get back into the market and I figured out that financials had been oversold and were overdue for a bull run. I picked better valued BAC over WFC,and if you look at the charts since March,BAC went up 450% while WFC went up only 250%,I expect this trend to continue in the forseable future. And just to show you how dedicated I am at following BAC,today I listened to the entire 4 hrs AGM on webcast while simultaneously monitoring the stock on yahoo finance forum to get immediate reactions and analysis from fellow traders,investors,longs,shorts,bashers and pumpers. I love this game man!!

This is very difficult time for investors and everybody else,as the world economies contract,there is risk of losing one's investments as evidenced already. Nobody is spared by the this financial crunch,even world wealthiest guys like Warren Buffet have not been spared.
So,my advice is completely different from all. Buy gold and/or precious jewels. When the dollar soon loses value due to what Obama is doing with the economy(printing money) it will lead to inflation and woe unto those who hold their investments in dollars because they will be affected the most.
Buy buy buy gold.

Our tomorrow depends on life's present efforts {input}.