i like this. i have never thought of Unga in this way

BTW, when one talks/discusses 'speculation/trading' vs 'buy & hold' ... the latter is not forever but can change based on circumstances.

1) If the firm is under-performing and the (long-term) investor cannot see a future e.g. TESCO or even Berkshire Hathaway [the Mill] as WB reminds us.

2) There is a better opportunity and WB has done this many times. He will sell out a stake in a listed firm [less so unlisted firms] if the prospects of the 'replacement' are much better in the LONG-TERM. Think airlines & his investment in US Airways.

3) If he is not happy with the management or industry. Divesting from underperforming unlisted firms is something WB doesn't do often & that he agrees it is a weakness but even his under-performers are generally profitable!

Ultimately, WB wants to meet or beat the 15% annual return but this is not getting any easier as the total portfolio grows.

Equity

That depends if you have a float(continuous supply of cash to invest) like Buffet.

I think WB believes 10 are more than enough for retail investors.

@ Iris. Yes

@VVS, thanks. My wish list was almost going to 20, started feeling like im starting my own index

@fyatu. Am glad the Quincy case ignited something in you that leads you to think about stocks as companies and not just daily changing prices on a stock ticker. To me that is the road to successful investing.

Now I would not want to be so presumptous as to recommend companies in the NSE but I want to put some more wood in the fire to this line of thinking by adding some more Buffett. He says "I look for businesses in which I think I can predi
ct what they’re going to look like in ten to fifteen years time. Take Wrigley’s chewing gum. I don’t think the internet is going to change how people chew gum.” He adds "Predictable products equal predictable profits" which is key in arriving at durable competitive advantage. One easy way to determine this is by looking at how old the company is but with a caveat that this is not a fool proof method by any means. For example, some of Warren's key holdings have included the maker of Oreos (since 1912), American Express (since 1850), Wells Fargo (since 1852, Coca Cola (1886), Proctor & Gamble (1837)etc etc. Some of this companies, eg Coke have been selling the same product for over 100years and thus spend little on R&D or new machines for new product lines. On the other hand, a chip maker like Intel has to spend billions each year just to be in the game.

Now as a kenyan investor, it would help to look at the list of NSE listed companies (luckily they are quite few compared to thousands in the US), and ask yourself if your 4 year old will be using that companies products when they earn their first paycheck. Not many would bet against EABL's tusker being around in 20 years time. Or BAT's cigarettes. Nation newspapers have been around forever and I bet your child will be reading Nation, even if it will be digital on an app or whatever media will be there in 20 years. If the price of Tusker went up 30% would their customers switch to Keroche? Highly unlikely. What about a bank? If Equity decided to hike charges 30% would its customers shop for new banks? Maybe. This is the kind of thinking that helps one to buy and hold for a long time without developing ulcers every time they look at stock prices. But not to say that these companies should be purchased at ANY price. They must only be bought when the market has priced them below their real value or at least at their fair value. The strong products and predictable income will ensure that they provide a good return over the long term. As will no doubt be shortly pointed out, others have gotten outstanding returns from younger companies so good products and strong earnings can also be found in newcomers such as Safaricom just the same as old companies such as Mumias and Lehmann have been disappointments. What is important is that an investor thinks of products/earnings/competitive advantage/fair price. Remember, you dont have to be right 100% of the time to win at this game.

The story of Joshua Read, a man who earned low wages as a janitor his entire life yet died with over 8m US dollars to his name illustrates this point very well. The list of his holdings included Buffett type companies such as Wells Fargo, American Express, P&G, Colgate Palmolive and Johnson and Johnson. Even a kenyan would be able to tell anyone what these companies sell. So before you board the next Kurwitu bus you must remember that you shouldnt buy any stock if you cant explain in one line why you own a piece of that company.

You can read his story here. May just the next dose of your malaria jab

The Janitor Millionaire

That Janitor Millionaire story reminds me of the guy who said he will save so that he can eat chicken everyday. By the time he had saved to enjoy the chicken he had no teeth.

No NSE posting of closing prices.
Last prices were on Wednesday June 10 nkt

[quote=mkonomtupu]@ bengraham, this is a good the explanation on the bond yields and equities. I was expecting you to give the new investors this kind of knowledge instead of telling to stay in the casino when everyone is heading the exits. Given my pending retirement from wazua you will pick up the mantle and help newbies understand the market cycle better


http://www.businessdaily.../-/nvpqj3z/-/index.html[/quote]

Interestingly and hardly a week later, an article by the same writer concedes that although in theory bond yields and stock prices have an inverse relationship, at the end of the day its a futile exercise trying to predict market movements and easier to focus on what you as an investor can control i.e your ability to sit tight through market dips and not panic.

"Of importance, rather than worrying about how the Central Bank policy might affect the market--which you can’t control — it could be more profitable to focus on your own investing temperament, which you can. Realise that stocks are volatile, rate hikes happen abruptly, and the unexpected regularly happens. Doing well, as an investor relies more on your ability to accept market swings than your ability to forecast them."

http://www.businessdaily.../-/11rrymh/-/index.html