Investment Clubs.

Investment Clubs, better know as “Chama” are a good way to venture into the market.
Most investment clubs are formed by a group of friends, co-workers, neighbors etc. The basic idea is to get people who have similar goals and objective to avoid a lot of conflict later on.

What are the advantages of being in an investment club?

You don’t need a lot of money to start. The little money each member contributes quickly adds up to a lot. Every shilling counts!

You get to pool your funds and reduce the individual risk associated with investing.

The combined knowledge of group members can prove to be vital. Imagine having members from banking industry, advertising, manufacturing, transport, finance etc. The wealth of information can be priceless.

You get to set your own rules and are compelled to follow them. How many times have you promised yourself to do something and up to now haven’t done it? Many I guess. How many times have you promised a friend to do something and failed to do it? Few I bet.

Decisions about investments are deliberated and agreed upon by people with different investment perspectives and may result in profitable investments.


With the unlimited gain potential and limited losses (until you money gets to 0 bob) of the markets, you can easily grow this money into a substantial amount.

Set realistic long term goals. Investment clubs take time and effort before you can reap their benefits. But when you do, it will be worth it. Ever heard of the Tran-century Group?

Have regular meetings to discuss your investment objectives and the direction the club is taking. And don’t meet in pubs. Trust me.

As the age old adage goes: There is strength in numbers.

Go on, call your buddies, start a club.


ps. You can download this ebook. It will guide you in starting your own investment club.


Its the same book two different links. Just in case one doesnt work. Enjoy.

http://s21.quicksharing.com/v/3832056/InvestmentClubProfits.pdf.html

http://www.mediafire.com/?0wlzjklkngx

The Animal Farm

The Bulls
A bull market is when prices are moving up in the market. There is a lot of optimism in the market which drives the prices up.

The short term bulls are driven by good earnings of companies and announcements of positive future prospects of the company. Announcements such as mergers (CFC-Stanbic), Acquisitions ( Olympia, Scangroup, KPLC, EA Cables), Expansions ( KQ ) etc.

Long term bulls are driven by good economic sentiments. Lower inflation rates ( from double digits in 2006 to 5.9% in March 2007), growing GDP( 6% 2006), Increased investments both local and foreign which we are seeing currently in this country-Kenya.

When the bulls come home, it’s nothing but a party!!

However, one should watch for extended bull runs that result in overpriced stocks and corrections are inevitable.

Remember the 1st quarter of the NSE 2007?


The Bears
A bear market is when stock prices are moving down. There is a lot of pessimism in the market. Short term bulls are caused by poor earnings from companies ( Sameer Africa), negative publicity such as scandals and internal fraud ( Portland Cement), poor future earnings projections ( Eveready) etc.

Long term bears are driven negative economic sentiments. The converse of the Long term bulls.

When the bears come home, its trouble. But the party continues.

One can change positions from a long position to a short position. Short selling is not yet possible on the NSE but we are getting there.

Short selling is a technique used to sell high and buy low. On more sophisticated markets this can be done. Such as the NYSE now NYSE-EURONEXT.

Bears also present an opportunity to buy stocks that were previously overpriced from the bull runs.

After the correction at the NSE in the first quarter, opportunities to buy were present in abundance.

Remember, You haven't lost until you've sold.

Chickens

Chickens are just that. Chicken. They are afraid to lose anything so they opt to make investments in the money market.
They invest in bonds and T-Bills.

Pigs

Pigs are high-risk investors looking for the one big score in a short period of time. The speculators.
They are characterized by greedy and emotional decisions about their investments.

They are very impatient.
Informed traders love the pigs, as it's often from their losses that the bulls and bears reap their profits.

The bear run in the 1st quarter was absolute massacre of the pigs.

"Bulls make money, bears make money, but pigs just get slaughtered!" –investopedia.

Where do you stand?

Choose your investment strategy wisely.