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Strategy Quest
StatMeister
#1 Posted : Wednesday, June 16, 2010 4:24:19 PM
Rank: Veteran

Joined: 5/23/2010
Posts: 868
Location: La Islas Galápagos
If an investor buys 1 share for KES 100 on the NSE expecting to make a 20% gain in say 6 months, and factoring in 2% commissions, he would have to sell the share at KES 124.90.

This means that someone has to lose KES 24.90 for me to survive.

Is there any known strategy of making sure am not that person???

A bad day fishing is better than a good day at work
Much Know
#2 Posted : Wednesday, June 16, 2010 5:25:50 PM
Rank: Elder

Joined: 12/6/2008
Posts: 3,579
Quite wrong on so many levels. Suppose when the fellow bought the company last year, its value for example Total Assets-Total liabilities= 1,000,000/-. and it dished out 10000 shares at 100/- each, then made a kill on a music recording "manyake" CD pushin its profits to 1,000,000/-, of which it was reinvesting 700,000/- in equipment, and declares a dividend of 30per share for the year. Your investor sells his share for 124.9/-, who is loosing?
Ras Kienyeji Man
StatMeister
#3 Posted : Wednesday, June 16, 2010 7:01:00 PM
Rank: Veteran

Joined: 5/23/2010
Posts: 868
Location: La Islas Galápagos
i am looking at a scenario like KQ was 64 on March 16, but is now under 50.

This loss of equity must necessariry accrue to someone, unless no one divests (in which case the counter would have nil t/o).
A bad day fishing is better than a good day at work
Wa_ithaka
#4 Posted : Wednesday, June 16, 2010 8:02:12 PM
Rank: Veteran

Joined: 1/7/2010
Posts: 1,279
Location: nbi
Statmeister, your understanding of how the stock market works leaves a lot to be desired.
May i suggest that you first seek to understand how a share moves from one price to the other and then prease re-phrase the question.

Till then...
The Governor of Nyeri - 2017
sparkly
#5 Posted : Wednesday, June 16, 2010 8:36:55 PM
Rank: Elder

Joined: 9/23/2009
Posts: 8,083
Location: Enk are Nyirobi
StatMeister wrote:
If an investor buys 1 share for KES 100 on the NSE expecting to make a 20% gain in say 6 months, and factoring in 2% commissions, he would have to sell the share at KES 124.90.

This means that someone has to lose KES 24.90 for me to survive.

Is there any known strategy of making sure am not that person???


In short you are saying that stock market is a zero-sum game! Its not, but the number of people who suffer losses is more than you can imagine.
Life is short. Live passionately.
youcan'tstopusnow
#6 Posted : Wednesday, June 16, 2010 9:20:43 PM
Rank: Chief

Joined: 3/24/2010
Posts: 6,779
Location: Black Africa
sparkly, if only people followed Buffett:
Rule number 1 - Never Lose Money
Rule number 2 - Never forget rule number 1
GOD BLESS YOUR LIFE
sparkly
#7 Posted : Wednesday, June 16, 2010 10:04:20 PM
Rank: Elder

Joined: 9/23/2009
Posts: 8,083
Location: Enk are Nyirobi
youcan'tstopusnow wrote:
sparkly, if only people followed Buffett:
Rule number 1 - Never Lose Money
Rule number 2 - Never forget rule number 1

...amen to that
Life is short. Live passionately.
qw25041985
#8 Posted : Thursday, June 17, 2010 1:58:12 AM
Rank: User

Joined: 5/9/2010
Posts: 1,418
Location: Nai
@ stat. The nse isnt a gumbiin cassino as you are tryin to imply. But its a place where people get their fingers seriously burnt . Like those who bought KQ shares. Thank i was able to mitigate my KQ loss w/ some Co-op bank and some Rea vipingo. I hope they trade much higher.
Your future depends on your dreams so go to sleep !
StatMeister
#9 Posted : Thursday, June 17, 2010 11:59:17 AM
Rank: Veteran

Joined: 5/23/2010
Posts: 868
Location: La Islas Galápagos
@ sparkly, i agree for as long as a stock generates additional value in dividends & growth .

@ qw, diversification is one mitigation strategy, so is setting e loss benchmark (say 10%).

Still, is there such a powerful strategy to match growth strategies (short-selling, futures, forwards n options could help, but are not exactly available in kenya)
A bad day fishing is better than a good day at work
My 2 cents
#10 Posted : Thursday, June 17, 2010 1:33:32 PM
Rank: Veteran

Joined: 6/2/2010
Posts: 1,089
StatMeister wrote:
If an investor buys 1 share for KES 100 on the NSE expecting to make a 20% gain in say 6 months, and factoring in 2% commissions, he would have to sell the share at KES 124.90.

This means that someone has to lose KES 24.90 for me to survive.

Is there any known strategy of making sure am not that person???


To start with your time frame (6 months) is all wrongn for the stock market. People who try to make money too quickly get burnt.

Follow Buffet's formula, pick a solid company with good fundamentals, good management that has been undervalued by the market and hold for a very long time or until the fundamentals change
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