@nan - I prefer solutions not lamentations hence my rhetorical questions to your earlier post..

@all
...Just to illustrate this (bottom phobia)..as the market continuously slid,some waited patiently for Equity at Ksh. 40(?),I patiently bought 'a little' at under Ksh. 95/=..as others patiently wait for KCB at Ksh. 9/=,I've 'patiently' waited and bought 'a little' at Ksh. 15.10/=/. As we all patiently wait (for the opposite directions) in the examples given,remember double digit inflation is also ravaging your local resources wherever they sit. No one is advocating for indiscriminate buying,just prudent investment.

Investing is not a popularity contest,never has been for contrarians.

Tusker B’ridi.

I believe we can end this debate at this point. Anything further will be repeating stuff that has already been said. I notice that others want to get in their nine licks too. Here is my closing summary:

You predicted that the global economic crisis will come to Kenya,causing all manner of problems including a collapse of the NSE and the Kenya shilling.

I disagreed. Kenya may be facing a crisis but it is one of government and institutional incompetence,not a global economic collapse. In fact things should start looking up with recovery of the agricultural sector,the bedrock of our economy. In short our economic crisis is ending,not starting,unless we screw things up politically.

On this I am willing to bet you a crate of cold tusker,to be delivered at a place of your choosing in December of 2009 by which time it will be clear who was right or wrong.

We also digressed into all manner of interesting by ways but we can agree to shelve these for another day.

The important point is this: on your prediction,you are wrong and if you use it to act on your short term investment decisions you are likely to lose money. Of course if you are a speculator that is another story.

Wakanyugi,lets agree to dissagree. About your bet,I'll be home in dec so please dont conveniently dissapear coz I'll hold you up to your bet.

Ecstacy,what I see happening will not be political unrest,it will be more like class warfare. The vicious warlords may have united but its all for nothing if their troops know that the union serves the warlords self interest rather than the foot soldiers interests.

What I see happenning is that the poor will revolt against the rich,and this transcends any political affiliations. The RV warriors,Kibera thugs and the Mungikis will see through the hypocricy of their so-called leaders.

The biggest timebomb in Kenya right now is the high number of idle and unemployed youths,mix that with further economic hardship and we got ourselves a classic class warfare. Damn politics,these youths want unga first.

Excellent discussion people!!!

@Wakanyugi

They said we would have rain this week. Today Nairobi feels like Lokichogio. Taking the worst case scenario where the rains fail or are inadequate this year,what should we brace ourselves for??

@Tusker Baridi

Where do you see the Kenya Shilling versus the dollar in June 2009 and in December 2009?

Weusi wa nywele za mshtakiwa zaonyesha ujinga alio nao

The NSE maybe correlated with Western markets; that is it tends to rise and fall as they do. After all the small crowd that play on this arena get the information on which they base their buy and sell decisions from the same sources - Internet,CNN,Bloomberg,CNBC,BBC etc - that Western investors do.

But the Kenyan economy is not. Why? First because it is not reliant on the same kind of information. Mama mboga does not need the media or SK for tips on where/when to buy sukuma wiki. Secondly the fundamentals of the Kenyan and developed world economies are too different. For instance:

- Reliance on agriculture – Kenya 80%,US 1%
- Dependence on exports – Kenya under 20%,China over70%
- Size of informal economy as a percentage of the whole – Kenya 80%,US 5%
- Proportion of Kenyan households that own shares,less than 1%,US more than 60% etc

When we argue that the NSE will fall because the NYSE has,we may be right. But if we extend that argument to say that the Kenyan economy will fall for the same reasons we are comparing two incompatible variables (my oranges and bananas metaphor).

My final proof is Equity Bank. Why is the price of this share so poorly correlated with general Market movements on the NSE? The fact that they have been on a surprisingly good run the past few years does not explain this low beta value,as many have pointed out. Neither can we point to the brilliance of Dr Mwangi and co. He may be smart but success in one industry,one bank,does not make a trend. So what is the answer? Luck?

Here is my theory:

The Equity model of banking the poor,makes it the only company that is truly plugged into the real Kenyan economy. Its performance reflects that of the majority in the country – whose impact is not captured by the other companies on the NSE that cater to an elite,mostly urban clientele. In other words if Peasantkenya is doing well,Equity is likely to do well.

I expect Safaricom to show a similar pattern in a few years time.

This is my last on this Subject.

Tusker B,start saving now for my crate of cold tusker.