Up, down, sideways or in circles
As Matthew McConaughey says in The Wolf of Wall Street, no one really knows whether stocks are going to go up, down, sideways or in circles. True in markets, true in life. So the best we can do is to always stay ready.
In this edition:
Why stock prices react to company announcements
A sports psychologist takes us inside the mind of a winner
Introducing: The buff
Also, news about stuff going up and a quick question from a reader about something going down.
RUNDOWN
Shocking…but the good kind
The story
Kenya Power & KenGen Stocks Soar After Record Profits, Dividends [Read]
What happened?
Soon after releasing their full year results for the year ended June 30, 2024, the stock prices of the two electricity companies shot up. Provider KPLC gained 49.71% to KES 5.24 and KEGN gained 31.11% to KES 4.13 in a day as the market took in the results. Both companies announced bigger than expected dividends on the back of strong earnings.
Why?
Such big jumps in stock prices of listed companies don’t happen all the time. Public markets put in place measures to limit extreme volatility to protect investors. But when material information becomes public, investors tend to react to the new information. This translates to changes in the stock price.
Should you care?
When you hold stocks on your own account (and not through a fund), you take on the added responsibility of staying informed on your portfolio companies.
Here are some basics to need to keep in mind:
Know when they make major announcements (e.g. half- and end-year earnings) and what their recent history of earnings & dividends has been;
Understand that how the company performs has a direct impact on the value of your investment;
Learn to separate signal from noise — differentiate trends from once-off events in making your investment decisions.
As an investor, you take a long term view. You shouldn't react to everything, but you must stay informed on the performance of the companies you invest in.
ROUNDUP
High goes higher
Here are my news picks from the week in investing & investing in tech that are worth knowing:
Electricity companies full year earnings jumped with Kenya Power reporting a 10x increase while Kengen saw a 35% rise
The Bamburi buyout battle continues as shareholders have until December 5th to choose between two rival suitors
High yielding infrastructure bonds see high demand from investors
Kenya’s inflation drops to another record low of 2.7% in October
Nigerian fintech, Moneipoint, becomes Africa’s latest Unicorn after raising USD 110mn
QUICK ONE
Indicators not indicating as expected
Question:
Why is it that inflation has been dropping (and is at a record low) but I don’t feel it?
A short answer:
Declining inflation typically indicates a drop in general price levels. However, when such drops are necessitated by a lack of demand due to less buying power from consumers, then the declining inflation is not a good signal. Such declines persisting could indicate economic recession or stagnation.
NOTES TO SELF
Inside the mind of a winner
In the last edition, we learned from coach of legends, Tim Grover, about coolers, closers and cleaners.
In the time since, I came across Bill Beswick, an English sports psychologist and former basketball coach. He spent five years as head coach of the England basketball team, and won a gold medal in the Commonwealth championship in 1992. According to him, there are athletes who train to compete, athletes who train to win and athletes who train to dominate.
“In a sense, we’re all high performers…so the lessons of my high performance in sport carry across into life,” says Bill.
In this video, he discusses the attitude of winners — the fighter mentality — and how champions navigate the Challenge Zone through suffering.
THE BUFF
Running - a metaphor for life
We can learn a lot about high performance from athletes and physical fitness. In this section of the newsletter, I share such lessons & highlights from myself or others.
I enjoy strength training but I don’t like to run. Yet there’s a lot to be learned from marathon runners, like record-breaking Eliud Kipchoge. Here is content from him and two other runners whose paths crossed mine online.
A short watch: Eliud Kipchoge on mentality
A medium article: Peter Bromka on marathons
A good read: Mariska van Sprundel on the science of mental strength
“In anything you do, it takes no talent to work hard. You just have to want to do it.”
— Tim Grover
As Bromka says in his article above, “…we don’t play games for the final whistle. Don’t read books for the epilogue. The finish isn’t the affair.”
Life, as is often said, is a marathon. So keep running. The joy is in the journey, not the finish.
Have the best week possible.
Yours truly,
AG