Rank: Veteran Joined: 6/2/2010 Posts: 1,089
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VituVingiSana wrote:My 2 cents wrote:Xymalos wrote:My 2 cents wrote:Question is what do you do with this knowledge. Does one buy more at current lows or bail out? The stock exchange is the only market where buyers flee from low prices. Under normal circumstances, low prices of great companies (e.g., Apple, Google, Amazon, Microsoft, Meta etc.) would be great opportunity to buy. For NSE, you have to determine which are the great companies that are low priced to buy. Sample these price changes: KCB in Jan 2015 was 58; now 16.35 NCBA in Jan 2015 was 64; now 37.15 StanChart in Jan 2015 was 339; now 155.75 Britam in Jan 2015 was 29; now 4.97 Centum in Jan 2015 was 65; now 8.35 I&M in Jan 2015 was 125; now 17.35 EQTY in Jan 2015 was 51; now 37 Absa in Jan 2015 was 16.25; now 11.45 EABL in Jan 2015 was 304; now 126 SCOM in Jan 2015 was 14; now 11.65 Presumably investors bought shares not only at 2015 market tops but rather across a range of dates. For instance, I have safaricom shares I bought at 5, 2.5, 27,33, etc. NSE will come back, we just dont know when. Even the NYSE and the stocks you quote were cut in half at some point. Microsoft was cut by more than 70% during the dot com crash and only recovered after 16 years!!!!!!!!!!!!!!!!!! Let's say we have to wait for 16 years. That at 14% on IFBs would mean the bondholder is far, far better off. Let's take the 16 years from 1 Jan 2015 then we will have done 9 years (31 Dec 2023) and have 7 more to go. The 6.5 year IFB is expected to yield a minimum of 16% which is about a 200% gain in interest income. Take it all the way back to 2009, NSE never fully recovered from GFC. We have done 14 years already. Maybe we do another 5 bear years. If most stocks double in 5 years that is 14% per year; and then add on another 10% dividends. 24% sure beats IFB. The caveat is that stocks have to double in 5 years.
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