The stock market price decline of 2008 was a wake up call for many investors at the Nairobi Stock Exchange. The unprecedented sudden and steep decline in prices shocked many investors as they watched the value of their portfolios drop significantly in just a few weeks.
However not all is lost here are some of the New Years tips for Investing in Stocks.
Shareholders of Unilever Tea Kenya Limited (UTKL) have passed a special resolution to de-list the company from the Nairobi Stock Exchange (NSE). The move follows success of an offer by Unilever Plc through its subsidiary Brooke Bond Group Ltd (Brooke Bond), to acquire the 11.8 percent shares held by minority shareholders in the tea company.
The offer was conditional on Brooke Bond receiving acceptances which, when combined with the existing Unilever Tea shares held by Brooke Bond (88.2 percent), resulted in Brooke Bond holding not less that 90 percent of the issued share capital of Unilever Tea.
UTKL Managing Director Mr Richard Fairburn said in a statement that the shareholders’ decision of delisting had been communicated to the Capital Markets Authority (CMA). ‘’We are waiting for instructions from CMA to NSE to de-list the company from the bourse,” he said.
Minority shareholders holding 4,602,329 shares representing 80 percent of the 5.75 million shares in their hands accepted the offer and Brooke Bond now holds 97.65 percent or 47,727,329 shares in Unilever Tea. Shareholders who accepted the offer have received payment at the offer price of Kshs62 per share, according to the instructions provided in the acceptance forms.
The move by Brooke Bond to acquire the third party shareholding in Unilever Tea is consistent with Unilever’s strategy to achieve a preferred wholly owned structure within East and Southern Africa, he manager said. The significant inward investment to purchase the third party shareholding in Unilever Tea is further evidence of Unilever’s commitment to Kenya.
Here are some guidelines to follow:
- But with this pain comes the opportunity to become a more astute investor in the future. Here’s a summary of important lessons to be learned from the recent market meltdown.
- Stocks do not go up for ever. Stock prices fluctuate minute-by-minute as well as decade to decade. Losing money with stocks is a fact of life.
- Stock market is like any other investment. You might open a duka today and get many customers, and tomorrow no one wants to shop from you. The key thing is to be vigilant and identify opportunities.
- Learn how to invest. The era of buying a stock and disappearing is long gone. Today you must know the why and how of investing.
- Price bubbles always burst, no matter what kind of asset (i.e., stocks, bonds, real estate, oil, copper, gold, silver, coins, stamps, artwork, grains).
- If you own a stock and its price chart confirms that it’s at or near bubble prices, sell it. On a simpler matter, if you feel a stock has reached its peak…sell…sell. Ask those who had Equity when it was costing Kshs320 and did not sell.
- Wait until a stock stabilizes and then buy it on the price upside. You might miss buying at the lowest price, but you’ll increase you chance of making money if you buy when prices are on an uptrend.
- Don’t base any investment decision on hearsay.
- Eliminate emotion, particularly anger and fear, from your investment decision making. You can’t control the movement of stock prices, but you can control your reaction to extreme volatility that causes the value of your portfolio to fluctuate.
- Be diversified. Don’t load up on one of two stocks or similar stocks from one sector. If you’re wrong, you can get killed, particularly if you own volatile stocks.
- Keep an ample supply of cash on hand. Cash doesn’t offer great returns, but it won’t disappear overnight like some stocks. And you’ll have cash available to buy stocks at bargain prices when they head to the upside.
Happy investing and remember the lessons come next year.
Contributed by Perminus Wainaina who is the CEO of Concept Advisory Services Limited and SmartBizAfrica Financial Analysts.