Rank: Veteran Joined: 2/10/2010 Posts: 1,001 Location: River Road
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ecstacy wrote:XSK wrote:mkonomtupu wrote:ecstacy wrote:mchambuzi wrote:mkonomtupu wrote:ecstacy wrote:If you are not in a hurry, you are better off buying NSE blue chips to the end of time.. why buy shares with dividend yields of 1-5% when you can get 8-10% on the money market without risking your capital 8-10%? Thats low, inflation is at 7.15% although in actual sense its usually much higher. That means you are making 2-3% gain. In shares you can make more from capital gains not just the dividends. I would opt for a portfolio of blue chip companies if I was risk averse To make it easier, assume you had been buying SCOM, BAT and KCB shares over the past three years. Look at the share price appreciation and dividend yield and that money market fund is exposed as a joke. At that point the dividend yield was good 7-10% but right now the same stocks are over-valued e.g SCOM has p/e of 36(overvalued highest should be 18). That means you to wait 36 years. It's unlikely that company earnings will match up with those prices any time soon. For the record i bought my shares at rock bottom prices KCB 21, NIC 24, kengen 8.3 but I have taken capital gains and re-invested in money market. It depends on timing
@Mkonomtupu Thanks for that education on the money market fund. Its basically a place to keep/park your money as you wait for an opportunity to strike! Meanwhile the money will not be losing value. I assume I am talking to Wazua veterans here. And where do we imagine these fund managers take your money? HAHA Let us put this in perspective. After waiting 12 solid months, the fund promises me 8-10% in a country with 7% inflation at best and we are happy? To put this to rest. Buy KQ today 13.50, sell on 2015 FY announcement. Buy NBK today 31.75, sell by March 2015. Buy HFCK today 33.75, sell March 2015. NB: Any negative NSE reaction on sign of fed tapering and sell the above before Sept 2014 for a lower re-entry. We shall compare notes at this time next year OR before Sept 2014. And just to hammer the point closer home, buy SCOM TODAY at 11.70/= and sell by this 2014 full year results in June therabouts. Between now and then, price appreciation estimate is 13.50, that is 15% up from TODAYs 'over valued' price for this GROWTH stock!! HAHA I decided to check out your calculations over this lazy period Assuming I had put in a million equally into your four stocks i.e. 250,000 KQ=250,000/13.5=18518*8.5=157,407 NBK=250,000/31.75=7874*24.5=190944 HF=250,000/33.75=7407*45=333333 Safcom=250,000/11.7=21367*14.05=300,213 Total =981,899 Money market=1,000,000*0.093(effective annual yield)=93000 Total=1,093,000
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