Pesa Portfolio – 15 May 2012

When it comes to investing, the rule of thumb is buy bear and sell bull. Invest in an asset while its price is cheap then sell it later when its price has appreciated. If things go well, you will make your money. Depending on how things go, it may take you as short as a few months as with land prices in some areas (Nairobi has the fastest growing luxury real estate market in the world!) or as long as decades but if the basic rules of economics hold, that is how things go. In this information age, it may even be a matter of minutes before your asset appreciates in value and you sell it. In fact, thanks to a curious invention called a derivative, you may not even have to buy an asset to sell it. All you need to do is to promise to buy it at a certain date, then sniff out a deal paying you as much as possible for the asset you (that you don’t even own).

But Kenya’s markets have not developed that much. Aside from building up a business from scratch, dealing in real estate, buying bonds and stocks, Kenyans don’t have too much variety in their investment options. And in that regard, here is PesaPortfolio. We start with a notional KES 100,000, investing in several equities and bonds (maybe in future) and trying to simulate what we think are good investment decisions to grow our little portfolio into something sizeable.

The rules of engagement are outlines in a previous article (read that here) and below is our inaugural portfolio based on the NSE prices as of Monday 14^th May 2012. We believe that the stocks are undervalued and possess enormous potential for growth: