I'd Rather Have Apple Inc

There has been a lot hullabaloo about the iPhone and the media is full of news of people lining up for hours to get their hands on the must-have gizmo. Without doubt, the iPhone is a revolutionary product and it will surely earn it's place as one of the greatest milestone's in the technological revolution.

At a price tag of $599 for the 8GB version and an additional minimum $59 (+ tax) for the ATT voice and data plan, this has got to be one of the most priciest phones. As buyers hit to the shops o buy the phone, AAPL investors are smiling their way to the bank as the price of the stocks increases in the midst of all this fan-fare. Because it's not Microsoft exchange ready, I would imagine most of the buyers are consumers rather than business users ditching their blackberries in favor of the iPhone.

The $599 price tag plus the $60 monthly brings the total amount spent to over $2000 for a two year contract. While many people may consider this as a small price to pay for owning an iPhone, It would certainly have been wiser if the money was invested in buying AAPL shares. The $600 (+ tax) would buy at least 5 shares at today's price, while the wireless fees can buy half a share monthly if bought through an automatic investment plan. In 2 years, this would translate in at least 10 Apple Inc shares instead an iPhone.

For those who want the iPhone - buy the phone but also think about the investment opportunities that come with the product.

Post-Card From America

This was a first for me.

I've seen homes with magazine racks in the toilet.

I've also seen hotels with small screen televisions in the bathroom positioned next to the bath-tub.

But a telephone next to the toilet!

This one trumps the restroom attendant.

What next?

Got Money, Will Travel

Summer's here and the bags are all packed in readiness for the travelling mayhem and madness. Clutching lots of luggage and kids in tow, we'll be spending the better part of the break in Kenya. This time round we've settled for something different other than the usual game drives through the great plains of the Savannah. With everyone bored of seeing the big fives, we've decided a trip to the coast will be in order as it has been a while since we were last there. I can only hope that our stay at the coast will be far much better than the experience of buying the holiday tickets from a well known travel agency in Nairobi.

My online presence will depend on the internet connectivity speeds during the time I will be in Kenya. Since I'll have broadband connectivity in Nairobi only, I don't intend on surfing during the time that I'll be up and about visiting far flung places in Kenya. With work email taking higher priority, it is possible that I will not have the time to moonlight online if the downloading speeds are slow in Nairobi.

Happy blogging KBW'ers.

2007 Mid-Year Review

Like corporations, it is usually advisable to take stock of one's financial affairs after a definite period of time. Six months into the year, I can say the market has remained bullish. Almost every sector is still on fire thanks to a liquidity bubble. However, I'm a couple of thousand dollars short of my financial target owing to an upcoming summer vacation. Hopefully, after the holiday, I will cut back on the luxuries and live on Ramen Noodles until I am back on track.

This past week I sold everything that I had bought in May and June last year for a 35% profit. So I'm left only with stocks that I bought during the past twelve months because I want to avoid paying short term taxes at a higher rate. In the meantime, I have put in place limit stop orders to prevent any losses in the event of a major market correction while I am away. Should there be a correction, I have also placed limit buy orders for a few stocks that are on my wish list. For now, I'm still heavyweight on energy, gold and cash. I have taken a defensive by rotating out from Latin America and into to Japan because I am already overweight with Latin America in my workplace 401(k) plan.

My plan for the second half of the year is to retain my core holdings, buy more healthcare and at the same time build up my cash reserves. I'm also looking for a good opportunity to sell off an alternative energy stock on any upward volatility since I'm up >50% after four months.

Here's to the never ending Bull market. Enjoy it while it lasts.

Saving For A Sunny Day

In 2005 the US Department of Commerce reported that the savings rate in the US had turned negative for the first time since the Great Depression. Since then, the national savings rate has remained in the negative with Americans spending more than their disposable income despite rising wages and low unemployment rates. At the same time, the number of people filing for bankruptcy seems to be on the rise in addition to the number of homes being foreclosed as the price of debt continues to rise because of the increase in interest rates.

Unlike the Baby Boomers, today's generation seems to have thrown caution to the wind when it comes to saving money. Faced with ever improving technological advancements that keep churning out the latest consumer products, lower lending standards and the need to enjoy life as portrayed through the mass media, its no wonder that the savings rate is steadily declining. Gone are the days when people used to diligently save and instead it looks probable that future generations will inherit debt instead of wealth as it has been in the past.

With financial advisers recommending that we put away not less than three to six months income for savings, there could never be a better time to save money than now. Not only are interest rates paid on deposits on the rise, but there is also greater access for higher paying money market accounts and certificates of deposits than their were a couple of years back.

On the other hand, the slowing economy provides a great opportunity in the near term for people with savings. The way the US economy works, is that it goes through a cycle as the economy continues to grow. Starting with a peak, the economy goes into a slowdown followed by an expansion leading to another peak. Because of this, it is possible to time the market when it comes to making investment decisions. However, in the case of making long term investment decisions like in real estate, it matters less at which point the investment is made except if it is during a real estate bubble.

With equities and an ever changing business environment, the greatest pay-offs are made in the case of people who invest in the stock markets prior to a business expansion cycle. Just ask anyone who invested after the tech bubble in 2001 and especially so if they invested in growing companies. Unfortunately, the same can not be said of people who entered the market at the height of the tech bubble. History has time and again shown us that the only thing that we learn from history is that we learn nothing from history. And now with forecasts of an economic slowdown and the booming stock market, you get a repeat of history.

For anyone not wanting to be left out in the current economic boom, this is a risky time to invest new money into financial markets. Instead, that money can be patiently saved for a later date and invested prior to another economic expansion after which it can grow. With up to 6% interest rates being offered, there is no reason for anyone intent on becoming rich not to increase their savings in preparation for the next investments boom.

A Father's Love, Hugs & Kisses

Children are a gift from the Lord; they are a reward from him.
Children born to a young man are like arrows in a warrior’s hands.
How joyful is the man whose quiver is full of them!

- Psalm 127:3-5

Like it were yesterday, I clearly remember the events leading to the birth of our first child. After spending the previous night and the whole day in hospital, I decided to go home and refresh myself in readiness for another long night at the hospital. As I drove home in the evening traffic, my mom-in-law, whom I had left at the hospital, called to tell me that the baby was on its way. I quickly rushed back to the hospital in time to welcome the flesh-of-my-flesh into the world.

Other than the fact that I was both excited and exhausted, I didn't feel anything unusual about my newly acquired status as a father on this day. Instead, over time I have come to learn that fatherhood is not an event but a journey taken together with my children. My biggest fear back then was whether I was going to afford the daily supply of diapers and other baby supplies considering we were just about to move into a bigger house to accommodate a new addition into the family. A couple of years later and the family has since grown and my worries about raising children have dissipated and now my kids represent my love, my joy and my hopes.

Although I was brought up in a macho-centric society, I have to admit that I love my kids more than I would have ever expected. The daily kisses and hugs have only served to make my heart more mellow. These daily doses of loving moments are what I have come to treasure most even though sometimes I am forced to limit on the hugs and kisses as they sometimes can degenerate into a viscous competition between my kids.

Even though my kids make me mad due to their naughtiness, I must say that nothing brings me more joy than spending time with them. Playing with them is like re-living my childhood, only that this time I have all the toys that I ever wanted when I was a kid. The long hours spent in the basement playing with toys and games, the park plays, and evening walks serve as a way to refresh me after the long day at work. Like other parents, I use the excuse of buying them toys that I want to play with too. I know I spoil them, but then I'd rather they have a memorable childhood.

Lastly, my kids represent my hopes for the future. As they grow up, it is my dream that they will become world-changers and make a difference in whatever they choose to do as adults. Above all, I want them to be successful and I will do everything that I can possibly do so that they may achieve their wildest aspirations.

In many ways my kids are my greatest blessing and I can't be thankful enough for the opportunity that I have to be a father. I consider fatherhood as a marvelous experience that brings out all the good in me and allows me to be a better person.

Happy Father's Day to all the dads out there.

Stock Market Soft Underbelly Exposed

The Securities and Exchange Commission (SEC), mandated to protect investors in the US, voted unanimously this week to eliminate Rule 10a-1 commonly referred to as the Uptick Rule. The uptick rule was introduced after the 1929's Wall Street crash to prevent declining stocks from being driven lower by downward momentum brought about by short sellers. Basically, it prevents traders from shorting stocks at prices lower than the last sale. The rule ensured that a short sale is bought at a 'higher' price thereby creating a 'floor' for a companies share price.

With the rule eliminated, it will now be possible for short sellers to drive down the price of a stock as long as there are buyers in the marketw. In seesence, the SEC has come to the aid of the Bears in the battle of the rising short sale levels pitted against a liquidity driven raging Bull market. This ruling couldn't have come at a better time with the Bears baying for a market correction. If and when the liquidity dries up (when the Fed finally decides its done with printing more money), investors can expect the short sellers to brutally drive down the market.

Investors looking for buying opportunities during dips will have to be extra cautious as they are now likely to drive down the price of stocks by buying from short sellers. The stock market is now a two way highway for traders to make money even in the event of a burst. So much for the SEC facillitating capital formation in the equity markets.

Dealing With Racism

Forty three years after the Civil Rights Acts was passed, one would be forgiven for thinking that racism would a thing of the past that is only taught in History classes to remind people of the struggles that America has gone through. A poll conducted last year by Opinion Research Corp. for CNN showed that most Americans, black and white, continue to view racism as a problem and they know people who are racist. The odd thing about racism, is that we only see it in other people but we fail to recognise it in ourselves and thus people are always quick to point an accusing finger at others.

When it comes to racism, Kenyans in the US fall into two broad categories. Those who have overcome the bondage/demons of racism and those who have succumbed to racism. The first group of people who have overcome racism are usually successful people, and if they are not they are on their way to being successful. As for the second group, I will not say anything about them.

To understand the people who have overcome racism, you have to understand racism. By and large, the US is still a white man's country. People can say anything they wish to say about the history of this country but if you go back to the roots of this nation you will see that it was founded for the white male to make a buck. Anyone else, including white women, were considered as personal property back then and it was only through the various constitutional amendments that this has changed. It is this culture that institutionalised segregation in the US and made it part of the fabric of the society for a long time.

Luckily for us living in the US today, a lot has changed and we are not subjected to the gross injustices that African-Americans had to endure then through no fault of their own. Instead, we are faced with mostly social discrimination and subtle racism. Even though most immigrants are aware that they will encounter discrimination at some point of their lives, how they react to it when it happens it makes all the difference as to what type of life they will lead abroad.

In my discussions with several successful Kenyans, the subject of racism came up and without doubt all of them had experienced it but what set them apart is that they were not bitter or vengeful about it. Sad they were, disappointed and disgusted, but none of them had allowed the burden of racism into their lives. Not that they had chosen to ignore racism and neither are they Uncle Tom's or Aunt Jemima's, instead they have made a conscious decision not to let the incidents affect their future.

In my opinion, there is no magic way of dealing with racism. How you deal with racist neighbours in the sub-division should be different to how you deal with racism when trying to flag down a taxi or discrimination in school. In general, the younger the person, the harder it is for them when it comes to dealing with discrimination. The older a person is when they immigrate to the US, the easier it is for them to deal with racism than it is for kids of immigrants who are growing up in the US.

As a parent, my greatest fear is not that my kids will be discriminated against but how they will deal with racism when they encounter it. For Kenyans parents in the US, it is important to make sure that they discuss it with their kids. Should they be discriminated against in school by their peers and they keep quiet about it, then they will internalize it to their detriment. I know of Kenyans, who moved their kids to a different school because of an incident in school. I don't intend on moving to a black neighbourhood because that is not a solution to the problem. I will just have to wait for that time when it happens and make sure that I guide them as best as I can through that trying moment.

No Hope For Ethanoil

With US voters farmers across the Midwest betting their farms on the ethanol boom, it remains to be seen how the whole ethanol hype will unravel. Ethanol stocks might be a good indicator of what the future holds and it is probable that farmers will be left with worthless bushels of corns due to declining ethanol prices.

The stock market exuberance seems to have caught on with the farmers and now commodity analysts are projecting a decline in ethanol prices from the current price of $2.20/gallon. Anyone hoarding corn in their barns with the hope of fetching a higher price in the future is definitely taking a big gamble.

Late Fees Reversal

Early this year, I realised I was experiencing cash flow problems because over the years I was operating three savings and three checking accounts in different banks. Closing the bank accounts was a bit complicated because I had set up various direct payments for my bills using the three checking accounts. Over the course of a few weeks I was able to consolidate most of my billings to one checking account and thereafter I cancelled my accounts in two of the banks. In the process of setting up new automatic bill payments, I ended up delaying payments to my Circuit City and Kohl's store credit cards in addition to a returned payment from my cable provider. The delayed and returned payments resulted in me being billed $5 finance charges, $50 late fees and $25 returned payment fee. In total, I was being charged $80 for not settling my bills on time.

Knowing very well that it was my mistake, I promptly made the payments including the fees that I was charged. I waited for a few weeks after which I called the three companies and explained to them what had happened. My cable provider and the Kohl's customer service agents reversed the charges but the Circuit City agent refused to credit back the late fee and finance charges. Since I don't easily give up, I asked to speak to the supervisor or manager so that I could plead my case further. The supervisor checked my account and saw that I had over the years paid my bills on time through direct payments. Sure enough, she agreed to refund the charges as I had cleared the bill as soon as they had sent me a letter to notify of the late fee charges.

True to Louis' post, most financial services companies make substantial amounts of money by charging exorbitant fees for late and returned payments. Unfortunately, this practice is legal because the charges are outlined in the account application agreement which the customers sign. In the eyes of the law when you sign-up for their services, you are agreeing to their policy and are bound by law to pay up these charges in the event that you do not pay the minimum ammount required on time.

However, these charges can be reversed and in some companies they have it in their policy to waive off the first late fee charge if the customer makes the request. Most companies will only allow one reversal per calender year so if you get another charge before twelve months have passed they will not reverse the subsequent charges.

These companies know that customers with a good credit history will move on to their competitors when they get hit with the late fees and therefore they allow for a one time reversal so as not to lose customers. In the case of people with bad credit history, it's hard for them to move to the competition because they are likely to be turned down. It is these people with bad payment records that companies like because they will get more money from them as they have no other option. Unfortunately for these people, they will be hit, left, right and center, with all manner of charges until they straighten up their accounts.

Co-signing Away Your Future

A good name is more desirable than great riches; to be esteemed is better than silver or gold. - Prov 22:1

For people immigrating to the US, having a good credit history is the second most important issue, the first being having a green card. For a country that has been built by borrowing money, having a good credit history in the US is almost as good as having $64,000 in a savings account. One's credit history, determines what kind of services you can receive and how much you are going to be charged. It is therefore common for people to pay different prices for the same service or product especially if they are buying on credit.

The credit systems therefore makes life in the US harder for those who have just landed than if they had grown up here as they are denied products or charged more because of having a low credit score. It is therefore the norm for friends or relatives to help new immigrants by acting as co-signers for them. Co-signing usually requires an individual with a good credit history to serve as a guarantor for an individual with a low credit score. Among the most frequent requests for co-signing are for apartment rentals, car loans and even student loans. In the event that the primary borrower defaults on the debt, the co-signer is held responsible for the debt. Because most co-signers have a good credit score, they usually pay-off the debt as they do not want to mar their credit history.

While co-signing has helped a lot of immigrants, it has also destroyed a lot of friendships and damaged the credit scores of a lot of co-signers in the case where the co-borrower defaults on the debt. Because of this, anyone intent on acting as a co-signer has to think twice before they agree to act as a guarantor. From my experiences and what I've heard from other people it is always better to err on the side of caution. As they say, better safe than sorry.

For people who have just arrived in the US, I don't mind co-signing for them an apartment. Even then, I make sure that the rent is affordable and the housing is decent and not luxurious to the point where they are paying more than they would have for a decent apartment. I never agree to co-sign for more than 6 months because should the person default you'll be left to pay for the remaining months or the task of finding another tenant to take over the remainder of the lease.

When it comes to co-signing for a car, furniture or cash advances for people who have lived in the US a period of time, it is important to request for their credit history and score from at least two credit agencies. If they have any defaults or late payments, I turn them down as they are likely to miss payments again because they know that I will pay it off for them. For student loans, unless it is for my spouse, brother, sister, son, daughter, nephew or niece, I can never agree to be tied up to those long term debts. Only if I am morally obligated to paying their tuition will I agree to co-sign a student loan for them. The same applies for co-signing for a mortgage. These long term loans are too much of a burden to bear.

Co-signing has has definitely helped a lot of people, myself included, but it has also been abused by serial defaulters who take advantage of other people's kindness. As a rule, if you can't afford to pay for the loan if the main borrower defaults, then do not agree to act as a co-signer.

Africa: The Next Chapter?

Hot on the heels of the World Social Forum that was held in Nairobi early in the year is the 2007 TEDGlobal conference that is being hosted by our Tanzanian brothers in Arusha. Billed to be the conference of the year in Africa, the line-up of presenters consisted of heavy hitters from all over the world with a fair share of our brothers and sisters from the continent. Minimal coverage from the traditional mass media outlets did little in the way of bloggers who provided detailed coverage of the event.

The invitation-only conference, titled Africa: The Next Chapter, was aimed at providing ideas and direction in the areas of Technology, Entertainment and Design with the hope of fostering positive change in Africa. While there were divergent views regarding the way forward in bringing meaningful change in Africa, all the prominent presenters were in agreement that there is hope in Africa and that inevitable changes are taking root in the communities.

During this conference, successful African innovators were given a chance to showcase their products and technologies. Unfortunately, missing from the line-up were researchers from African universities who are meant to be change agents and provide leadership in various areas of research. Instead, their place was taken over by individuals who have taken up to the challenge of being innovators.

As an innovator, I couldn't emphasise more the role of research in developing America into a super-power. With it's vast resources, the US has been able to take a lead as the most advanced nation in the world owing to the advancements they have made through innovations. The high number of American Nobel Prize winners is a testament of the superiority of this nation when it comes to research. It is with this in mind that I have every reason to believe that one of the most important way in bringing change in Africa is through institutions of higher learning. Instead of carrying out research, the lecturers are only too happy to settle for teaching and even then we produce graduates who only have a theoretical grasp in their fields of study.

With most of African universities relying on government allocations and tuition fees to run their institutions, most of these monies are only sufficient to cater for the payrolls leaving no funds to be ploughed into research. Because of limitations in funding, it is important that the universities seek funding from the private sector which is awash with cash and always seeking for partnerships and collaborations with academia.

To this end, the TEDGlobal conference in Tanzania would have been a perfect opportunity for academicians from the major African universities to showcase their talent and capabilities with the view of attracting funding to carry out research. By presenting/participating in the conference, they would have gotten visibility, which in turn would have led to newer funding opportunities for research in their universities.

Aid, debt cancellation and trade are all important in helping bring meaningful change but to sustain development, Africa needs to join the rest of the world in embracing the role of research which in turn produces innovation leading to an in-flow of dollars into their economies.

Kenya Airways On a Wing and a Prayer

Sometime last year, Safaricom, Kenya's largest wireless phone operator sought to recruit Kenyans in living in the UK and US to work for the company in Kenya. This move was widely welcomed and a lot of Kenyans showed interest in the jobs. As it turned out to be, the exercise was a holiday trip abroad for the Safaricon recruiters and not a recruitment exercise as it was meant to be. Even for a successful company like Safaricom which won the 2004 and 2005 'Company of the Year Award', recruitment is not such a straight forward exercise.

Anyone who has ever sought a job in Kenya can attest to the fact that nepotism, sexual favours and to a large extent tribalism, determine one's chances of getting a job. While recruitment discrimination was started in the civil service and parastatals (quasi-government agencies) as a political tool by the KANU government, it has now spread into various sectors of the Kenyan economy. Not even Kenya's largest and most successful companies, including Kenya Airways, have been spared of these woes and cannot claim that they carry out recruitment on merit.

Despite advertising for jobs in the media, one's success in being recruited by KQ depends on who forwards your job application to the airline. As it is with recruitment in government offices, high government officials, well connected politicians and senior Kenya Airways managers are known to forward their lists of preferred applicants who end up getting the advertised jobs. While many of the successful applicants may be qualified for these positions, the fact remains that there is no integrity when it comes to recruitment in Kenya Airways. The same can be said of staff training opportunities carried out abroad. The more connected the employee, the higher their chances of being selected to attend training overseas.

With reports indicating that the 2 major plane crashes to have hit KQ were a result of pilot error, one is left wondering whether these crashes have anything to do with the way the airline recruits and trains its employees. If anything, the loud silence by the airline and it's accomplices, the Kenya Civil Aviation Authority and the Ministry of Transport, goes to shows that they are all in bed together. The fact that KQ has not been held accountable by the government or the aviation regulators is worrisome considering that travellers are beginning to question the safety record of the airline in light of these fatal crashes.

Though Shareholders may be satisfied with the performance of the airline, the company needs to address the root cause of these plane crashes because at this rate air travellers will shun the airline especially now that their are a number of airlines flying to and through Nairobi. Shareholders can only hope that the CEO, Titus Naikuni, and the airline's board of directors are doing something behind the scenes to straighten up the corporate culture of the airline.