Why investing in the NSE is a waste of your intellect and money and is the Kenyan reincarnation of "fool's gold"

definition:
fool's gold is also known as pyrite iron, fool's gold is a gold-colored mineral that is often mistaken for real gold but has no value

1. Your investment is subject to the whims of the market and a lot of factors outside your control. If it was your small business facing these challenges at least you have the opportunity to deal with the problems yourself or talk to that resourceful friend that could sort you out. At the NSE you have to stand on the sidelines and wring your hands as management fumbles with simple things that you would know how to deal with.

2. You will get a false sense of achievement. Naturally when the market goes up you will be on a false high. You won't understand why you were successful, preparing you to make large mistakes in the future. Your high will be more similar to that of a gambler than that of a business owner who has acquired real knowledge and experience.

3. You are entrusting your money with management in an environment of low trust and poor law enforcement. How many NSE companies have had corrupt management? It doesn't even matter if the company is doing well or not. Your company could be in a great industry where it should be making a lot of profits but management finds a way to steal the value from you in the form of bonuses, side deals and tenders to related parties etc. There are many companies in the NSE where management has done very well for themselves in the last 5 years while shareholders have lost value.

4. We as a continent are not there yet. We have very few companies listed in African stock markets precisely because we have too few companies in Africa. We are in an time period where we are called to be pioneers and build companies, yet unfortunately most of us have been educated using a syllabus suited for the developed world Wall Street BS. Your situation as an African if you look towards the West or specifically the US for inspiration should be more similar to the pioneers who first immigrated to the United States of America and had to build everything from scratch. That is where most African countries are. Not Wall Street level! The smart person is the one that can tell the difference.

5. It's a poor investment. You are much better off putting your hard earned money in CBK treasury bills and bonds and getting 9%-10% a year than losing 40%-60% of it in the NSE. If you want unlimited upside possibility take a small percentage of your assets say 10% and either start a small company or fund one where you have the ability to use your intellect, connections and money to grow the value of your investment. Worst case if you lose the 10% you still have the 90% of your assets intact.

6. You will waste your time and intellect analyzing the NSE than using it to solve society's problems and generate wealth for yourself. There are brilliant people on Wazua with great intellect and insights but unfortunately that is wasted because they are not able to implement their ideas. That intellect would generate a lot more return solving problems in a small company.

That is why a few years ago, I sold all my NSE equity, started a company in stead and made a lot lot more return for myself while creating much needed jobs in the economy.

Long post but you are 100% wrong here...


Alot of people on wazua or at the NSE are business people or politicians... Your MPs... Almost all CEOs of listed companies come here...


Some people prefer to invest in mature businesses instead of start ups

Start ups are more risky compared to the NSE...


Conclusion :" you are wrong please deleted this post...


NSE is not for everyone...

I know what I'm talking about because I've been there, done that.

I used to be one of those suckers who would read company Annual Reports from cover to cover, scrutinize financial statements, attend AGMs and the like, watch the NSE Trades like a hawk, spend time crawling Wazua posts, all in an effort to improve my stock picking.

Now as a small business owner, I might have a meeting to think about how to provide better services to our customers and by the end I will improve aspects of product which usually leads to an increase in revenues.

The same amount of effort I was using on the NSE, put into my business gives me a lot more return and I'm getting better and better at running my business which will lead to more value in the future.

I'm gaining real knowledge and skills while creating jobs, paying taxes, solving important needs in the society while making much more than I would have made at the NSE.

The NSE is a lot more risky than a start up in my honest opinion. The hidden risk is that your NSE company is being run by other people who could steal your value and you have nothing really to do about it, you are also missing out on the opportunity to deploy your intellect and hard work to improve your outcome and learn about the real world by creating a new company or funding a new company with a team that you believe in and have real influence over.

Very strong point tom_boy.
Nse is not for everyone same as running a business isn't for everyone

1. @mv-fanisi your observations help to debunk stock investment myths. It is surprising that you had to go through all that experience to learn your lessons which you could have picked from basic business education text book.

2. There are three basic ways to make money: sell your labour (employment); run a business; or economic rents.

3. Employment is straight forward. You sell your services to one customer (your employer) who takes care for other factors of production ie land, labour, capital goods and entrepreneurship.

4. As a businessman, whether selling goods or services, you organize the factors of production to make money. A stocks dealer or broker is a businessman. He makes money in all market conditions but the quantum is determined by his skills as an entreprenuer.

5. Economic rents arise from passive investment of property, liquid and illiquid. You can rent out your house for a monthly income. You can license out a patented idea to manufacturers. Bank savings are money rented out to businesses and consumers through the bank as an intermediary. T-Bills are money rented out to government to provide public services. Stock investment is money rented out to businesses with a right to residual income of the business.

6. All the three sources of income have levels of risk and reward. e.g your can get fired from employment, your business can fail, the banks/goverment can go bust and the stock investment company may not have residual income to distribute.

7. Back to your experience. If you wanted to make sure money from stocks trading, you should have obtained a dealer's/ brokerage/ Financial Manager/Agency license and put in the time and resources.

8. T-Bills and stocks are in the same category of passive rental investments. You need a substantial outlay to make meaningful income from both. If you don't have the means, you make the money from employment and business to invest in T-Bills and stocks.