Thursday, June 26, 2008

The High Cost Of Immigration

When I was in Kenya last year, I bumped into someone who used to work for at my folks farm in the 90's. I was at a cyber-cafe in shags where we met. After exchanging pleasantries, the Paul went on to tell me that he had just received a letter informing him that he had won the US green card lottery.

As much as he tried to show some excitement, Paul was very worried about his future prospects. A high school mate of his who now resides here in the US had applied for the lottery for him and his family. To his surprise, he was one of the lucky winners. In his wildest dreams, he had never thought he could win in the lottery.

And this is where his problems began. Paul is employed in a clerical job and therefore his earnings are meagre. With an unemployed wife and young kids, the amount of money required to process his green card application and buy air tickets was staggering.

By his own estimates, he needed well over half a million Kenya shillings to see him and his family through to the promised land. The thought of applying for passports for his family was enough to send him into depression. With each passport costing approximately 3,000 shillings and the trip to Nairobi, Paul would need close to 20,000 shillings which was a lot of money to him.

As much as I was happy for him, I couldn't help but feel sorry for Paul. Compared to him I was in a totally opposite scenario.

My story starts many years ago when we have having dinner with a family friend. During the course of the meal, I came to find out that the he had been denied a visa to visit the United States. As is the case with most people who are denied a visa, the consular staff did not believe that the guy would return despite the fact that the reason for travelling was genuine and he had no intention of over-staying.

This made me angry at the Americans and I went on to declare that Americans will one day come looking for me a give me a U.S passport despite what I perceived to be discrimination against Kenyans, and our family friend in particular. To which my mum warned me to be careful about what I ask for.

Little did I believe then that my rant was going to come true one day. Even though I do not hold an American passport (and I have no intention of doing so), my words turned out to be true. To cut the long story short, Americans have done everything that is humanly possible to guarantee my residence in this country.

My path towards obtaining residency has been a very interesting one. For one, it was completely driven by my employer. I remember days when I felt that the attorneys were becoming a nuisance because of their persistence in handling my immigration matters. I want to believe that there enthusiasm was driven by the fees that they earned for processing my papers because there was a time I couldn't tell what my status was. There was a time I didn't know what visa to apply for because I had several approved immigration applications. The number of documents in my immigration folder at the attorneys website can attest to their zeal.

I find it ironical that while I could have afforded to foot my immigration bill, the only money I ever paid out of my pocket was for the passport photos. And I could have expensed these minor costs to my employer.

On the other hand, Paul who can't afford to apply for a Kenyan passport, needs to pay for his way to America. And when he gets here later in the year, he will have to carry the burden of the people he leaves in Kenya. You can be sure that almost an entire village will be looking up to him. To them, he is their hope of a better tomorrow.

Wednesday, June 25, 2008

Out-Of-Blogging

I will be taking a break from active blogging in the coming weeks. The main reason is that I'm in the final leg of launching my own business and this is akin to taking a second full time position.

On rare occasion's, I might drop a post when time permits but I can't promise anything for now. I hope to resume active blogging by the end of summer.

Tuesday, June 24, 2008

Trading Like It's 1999

If you've been following the markets, then you are certainly aware that it's not that rosy out there. The DJIA breached the 12,000 level and the NASDAQ and S&P 500 are struggling to stay above their psychological levels.

I had planned to stay away from the markets until some time in September but I've decided not to wait until the coast is clear. The last one month has seen me cut some of my old positions and buy new stocks. In total, I bought five stocks and sold off one of my long term holdings.

With Oil at record levels, food prices over the roof, runaway inflation, economic slowdown and all the negative talk, I decided to go against conventional wisdom. Rather than wait for sentiment to change, I decided to take the risk. After all, investors are rewarded for taking risks and not for siting on the sidelines.

While I believe financials and housing are dead in the water for months to come, I believe that there are still some good sectors out there.

I have little exposure to oil but I believe this is one sector that will continue to dazzle analysts. The market has been calling for a top since oil was trading at $60 and now everyone seems to believe energy is a bubble. My take is that demand and geo-political risks will continue to drive the price of oil. Same applies to commodities and precious metals.

Technology is the other area that will continue to out-perform the broader market. The luxuries of yesteryear's are now the necessities of today. Internet is the new super highway leading to new frontiers and it will drive technology in the years to come.

While the broader market (including the emerging markets) will continue to struggle amidst a US led economic slow down, I have set my sights towards the next economic expansion. That said, I believe that we have not yet bottomed but Wednesday's FOMC outcome will determine how much lower the US economy will continue to sink.

PS: At the beginning of the year, I put together a post recession stock list. Unfortunately, the events have turned out to be different than I expected but I am still closely following the names on the list. I am yet to buy any of the stocks on my watch list but they are all beginning to look very attractive.

Monday, June 23, 2008

Paying For A Warranty

My car stereo has been acting up and so I decided to replace it. My first port of call is the car dealership. I call them up give them my VIN number and the guy at the end of the line tells me that it will cost me $962 total to have the job done.

"962 dollars!", I yell at him. "What does the stereo include?", I ask him.

Apparently, I'll be getting exactly the same stereo as I have. No bells, no whistles. Just a CD player and radio. In addition, the stereo comes with a warranty.

For someone who has never paid for a warranty, I was not about to enter the live by fear band wagon. When I buy something, I don't expect it to last forever. Whats more, my car is 6 years old and it's useless to buy a stereo that will outlast it.

Instead, I've settled for a much cheaper car stereo from Circuit City. With them offering free car stereo installation, I'm saving myself $50 which I would have paid at Best Buy had I bought the same stereo.

For the $962 I could have gotten my car pimped up with a DVD player, screens and some serious woofers. But I guess I'm well past that stage in life.

First thing I'll do when I pick up the car tomorrow is to hook up my wife's mp3 player onto it. I just loaded it with over 100 albums from my Kenyan music collection. Sweet:)

Thursday, June 12, 2008

I'd Rather Have Apple Inc

Around this time last year, Apple Inc launched it's much talked about smart-phone. At $599 (+ tax), Mac lovers were treated to one of the most revolutionary piece of technology. At that time, Apple shares were trading at slightly over $122 and I said they were better priced than the iPhone.

Since then, AAPL has appreciated by more than 50% and the price of the 8G version has fallen from from $599 to $199. For the same amount of money, those who stayed away from the 1st generation iphone now have a chance of owning a much better smart-phone. With 3G capabilities, the new iPhone is bound to be better device than the first one.

At $69 (+ tax) a month for a two year contract, the cost of owning the new iPhone adds up $1855 compared to $2039 (+ tax) for the 1st generation iPhone.

Like last year, I'd rather buy Apple shares than buy the iPhone. At today's price of $176, you'd be getting 10 shares unlike last year when you'd have bought close to 17 shares.

However, I'd be slow to buying Apple shares. Even though the iPhone is going for a song, the weakening U.S economy and rising unemployment doesn't bode well for Apple's range of computer products. And with oil prices rising owing to the threat of Israel attacking Iran, consumers will be looking to cut back on discretionary spending.

In the coming weeks, it would not surprise me if we retest the 1 year low price. After which you can expect AAPL to rise as we re-enter the expansion phase of the business cycle.

Recommendation: Like all other Apple products, the iPhone sucks. It may impress your friends but it is not a practical phone. If you want a smart-phone, get a BlackBerry. If you want to listen to music, get a mp3 player. And if you want to surf, get a laptop.

Previous post; I'd Rather Have Apple Inc (29-June-2007)

Wednesday, June 4, 2008

Dinner For One - One Trillion Dollars


2 Castle Lagers, Z$191,270,000
1 bottle of mineral water, Z$95,635,000
Dinner for one, Z$956,350,000

Inflation in Zimbabwe, 1,700,000%

There are some things money cannot buy in Zimbabwe.

For everything else, there's Mastercard*.

*With effect from 1 January 2007 MasterCard transactions are no longer accepted in Zimbabwe. Only VISA, DINERS and AMEX cards are accepted. Clients are advised settle accounts in foreign currency i.e. SA Rands or U.S. Dollars. Clients to carry small denominations of bank notes as change will be given in Zim Dollars.

Source; Investment Postcards from Cape Town

Tuesday, June 3, 2008

The Revolution Will Be Televised

Tonight is the night. Oh Yeeeeeeeeeeeeeeeeaaaah.

We have a winner.

5 months of grueling Democratic presidential battles are coming to a close. For some, this will be a time of celebration. For others, the mourning started on Saturday soon after the the RBC settled the Michigan and Florida nomination debacle.

Many doubted that Barack Obama would get the nomination. But his base never let him down. They fought tooth and nail to ensure that their man carried the day.

Tonight marks an important milestone in the 2008 US presidential elections. We now know who the main contestants will be.

I plan to be counted among millions of Americans who will be glued to their TVs tonight. And I will be recording every bit of it. Thanks to my cable provider, I can record 4 shows simultaneously. And I will record the revolution.

The revolution will be televised, tonight. Grab some popcorn, sit back and relax.

Stay tuned.