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Kenya: Choosing the Right Stockbroker And Avoiding Market Pitfalls
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Business Daily (Nairobi)
COLUMN
28 March 2008
Posted to the web 27 March 2008
Beatrice Gachenge
Bernard Thambu, a tea farmer in Meru, first bought shares on the Nairobi Stock Exchange in 1996 when Kenya Airways was first listed by the government.
Ten years later, he held the same stock, playing the long-term game.
Having been a teacher for 25 years, Thambu is a literate man. But he now admits how illiterate he was about the stock market.
"The reason I did not invest in any other counters was because I did not know which stocks to buy or even how to go about it. I resumed the market in 2006 because of KenGen and I was just part of the bandwagon," explained Thambu. He bought KenGen because everyone was doing it.
He barely understood the prospectus or hardly read the balance sheet. He did not know exactly why he was investing in KenGen. Later, he bought East African Cables shares on the basis of word of mouth.
Another investor who jumped into the bandwagon due to euphoria is Dr Pascal Kaumbotho, chief executive officer of Kenya Network for Dissemination of Agriculture Technologies, Kendat.
"My neighbour talked nonstop of how lucrative the stock market was and how he had made a kill from KenGen. He looked very happy. But I did not know where to start. Do I just walk to a broker? How will I know who is a good broker? What do I need to buy shares?" wondered Dr Kaumbotho.
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With some Sh200,000 he invested in KenGen, and later Mumias Sugar Company. But Dr Kaumbotho soon grew weary of the market.
"I would monitor the prices everyday from the newspapers and every time the share prices went down, I got depressed. It was very trying and very demotivating."
Read the rest of this special report in Business daily's 'Stockbrokers' pullout.
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