Is it time to enter the stock market ?

By Ephraim Njenga

The markets have provided very deep discounts. Jitters about the election and the weakening shilling have seen foreign investors flee the market.

Raising of interest rates in the US has not made things easier. When US Fed raises interest rates, capital flight from emerging markets happens.

This is because investing in the US becomes more attractive when compared wit the risks in emerging markets. The local market lacks the liquidity to outmatch the fleeing foreigners.

Many people have been asking whether it is time to get into the stock market.

The opportunity presented by the current bear is immense. Most stocks are trading at historical lows with dividend yields higher than 10%.

The last time we had such an opportunity was 20 years ago when KANU was about to leave power. Investment decisions should be driven by objectives.

It is not the time for everyone to join the stock market. However, if you have idle funds that you can invest for the long term it is good to check out the markets.

If you have illiquid assets such as land you could consider liquidating them in favour of stocks. Always remember to invest what you can afford to lose.

Stocks are one of the riskiest asset classes. You can potentially lose everything. This is the best time to take positions but the risks shouldn’t be ignored.

If you are unfamiliar with the stock market, take time to acquire the necessary knowledge. Also remember that in 2022 unlike in 2002, we have a serious debt problem.

This could hamper the efforts of the next government to revive the economy. If the next government doesn’t take the measures to immediately revive the economy, then the markets will remain depressed.

The election also needs to take place without much drama in order to restore investor confidence.