Buy Africa On The NYSE

There is now an African Exchange Traded Fund (AFK) on the NYSE. It launched in July last year but I only found about it after receiving a prospectus from my stock broker in the mail last week. According to the prospectus, the fund's objective is to replicate as closely as possible, the price and yield performance of the Dow Jones Africa Titans Index.

This index was also launched last year and covers 11 markets; Angola, Democratic Republic of the Congo (DR Congo), Egypt, Equatorial Guinea, Ghana, Kenya, Mali, Morocco, Nigeria, South Africa and Zambia. The index is weighted by float-adjusted market caps with each country’s weight is capped at 25% and individual components capped at 8% with a maximum of 15 companies per country.

Companies in the index must also have a minimum market cap of $200 million and a minimum three-month average daily trading volume of $1 million. The only information I could find about its composition was dated February 23rd, 2008 and South African companies dominate the Index with 15 companies.

The only Kenyan company then is Equity bank but there is a possibility that Safaricom has not yet included in the Index because Dow Jones has the habit of not updating its Indexes. A good case is GM which is still a component of the Dow Jones Industrial Average despite the fact that the stock has been trading at multi-year lows and is headed into oblivion.

The ETF is heavily weighted towards Industrial Materials (29%), Energy (10%), Telecommunications (14%) and financial services (32%). The funds holdings are a paltry $7.5 million compared to the average medium sized growth fund with $1.3 billion worth of stock.

On the brighter side, the advisers of the fund have waived 2.27% of the 3.15% expense fees till the 1st of May, 2010. And unlike mutual funds, there are no sales or redemption charges or minimum initial and subsequent investment.

As someone who is interested in diversifying my portfolio, I have added this ETF to my watch list and will be researching more into it with a view of buying into it.

Air-Conditioning Domestic Dramas

It is not the norm for me to get a letter from my electricity company. I've signed up for e-billing and therefore my bill is usually delivered to my online banking account where I arrange for it to be paid. Although the payment information is available in my online banking portal, I was pleasantly surprised to receive a detailed statement of my electricity consumption from January 2007.

As I suspected, I use around $40 per month for my non-air conditioning activities, which is usually between the months of November and March. When the summer kicks in, the electricity consumption shoots up mainly because of the air conditioning. It is also during the summer that I run my in-ground sprinklers every other day so that I can keep my lawns green but I doubt if the pumps consume a lot of electricity for the one hour that they are running.

The funny thing about air conditioning is that my wife thinks I set the thermostat too low because she is always complaining that the house is cold. On the other hand, I'm always complaining that its too hot in the house especially after she has reset the thermostat higher. So it is usually a tussle between both of us constantly playing with the thermostat.

She normally switches it off when she gets home and when I arrive with the kids after her, I turn it on. Then sometime in the evening, she will raise the temperature setting and when we retire, I set it back to it's programmed temperature. This means that she has to turn on the electric blanket when she starts to feel the chill. And because we have wooden flooring and leather seats, she is always wrapped in a blanket when we are in the family room even when the air-conditioning is not running.

And its not just our family that has this kind of drama, whereby the wife is complaining of the cold temperature and the man is complaining of the hot temperatures. These games are usually repeated in many households during the summer when its too hot and in the winter when it is too cold.

At work, it is also not unusual to see lady colleagues wrapped up in warm cardigans or with office heaters below their desks while the males are in short sleeve shirts even in the hot summer months because the temperature is set between 68 - 72F.

If I had it my way (and the money too), I would prefer the house temperature at 68F all year round. Instead, the lowest setting I can ever get the house ito s 72F and that is before my missus starts complaining.

WordPress Overkill

Is it just me or has WordPress taken over the web?

Almost every other Kenyan website is based on a WordPress template. I think WordPress is fine if you are a blogger but how do you explain when a website design company has its website built on the WordPress template.

The folly of this is that all the websites are starting to look the same. At this point, it becomes hard to distinguish professional websites from amateur websites because WordPress is now doing all the heavy lifting for everyone.

It pains me when I see ingenuity being chocked up by platform technology. Variety is the spice of life and uniqueness makes a website stand out from the crowd.

And while we are talking websites, I am quickly finding out that the average lifespan of a Kenyan website is 1 to 2 years. Most of the bookmark links on my browser are dead links.

The New York Times 'Shortage'

Every Sunday, I like to buy the Sunday edition of The New York Times. Rather than subscribe for their weekend package, I buy my copy from Borders, usually after the church service.

This past Sunday, I missed church as I was not feeling well. When I left home later in the afternoon, I completely forgot to buy a copy. And it was not until this morning when I remembered.

My first instinct was to call Borders and hope that they still had some of yesterday's copies. The associate told me that unsold copies are usually sent back to the publisher at the end of the day. And then I made a call to Starbucks. Here it was a different story. They normally trash any unsold papers at the end of the day.

You would think that with The NY Times hemorrhaging, they would at least have their Sunday paper in the stands for a bit longer. Personally, I view the Sunday paper as a magazine and I usually read it during the week rather than on Sunday.

Sometimes I think businesses should put themselves in the shoes of their customers. Instead they prefer to force customers to conform to their practices.

And this is not the first time I have witnessed such folly from newspapers. The day after Obama was elected president, I could not find a single copy of The New York Times. I drove all over town in search of the day's daily and every single book stand had run out most of the newspapers. I mean, who didn't know that there would be a huge demand for newspapers. And you can be sure, the shortage occurred the day after Obama's inauguration.

With such incidences, it doesn't surprise me that the newspaper industry is begging the government for a bailout.

Rebalancing My 401(k)

Seeing what has happened in the last few months, whereby companies that have been in existence for decades have gone bust, I sold off the last remaining company match shares in my 401(k). As of September last year, my company match shares stood at 33% of my total 401(k) holdings.

I sold almost two-thirds of it, to bring my matching shares down to 10% of my holdings. As of two weeks ago, the company match had risen to 12% and that is when I decided to sell the remainder.

I took advantage of the current bull market to sell the appreciated shares. With the proceeds, I invested the money in emerging market funds as I still have my doubts regarding the American economy vis-a-vis the world economy.

Unfortunately, I still have some exposure to my company stocks. I have another retirement account with them, outside the U.S. that is 100% company stocks. Owing to the complexities, I have still not figured what to do with the stocks I am not allowed to sell all of it and I may incur some taxes and/or penalty.

Hurry, Hurry, Has No Blessings

The US stocks are way too expensive. I know the stock market is forward looking but there is no way to explain the current lofty valuations. If you take out the 'profits' from financials, you are faced with grim reality of how bad the situation is.

The chart below does a good job at pointing out the folly of the current sentiments.

Right now I'm trying to exercise patience as I think there will be opportunities to re-enter the market in the near future. I'd rather preserve my capital than take the risk of another pullback. After all, I've already minted some dough this year and my 42% equity holdings allow me to run up with the market if I have missed the opportunity.

Revisiting The Dark Days

It so turns out that every stock purchase that I made during the stock market lows over the past few months has appreciated considerably higher. A quick glimpse at the stocks I follow shows that the stocks have appreciated between 48% and 837% from their 52 week lows but most are still a far cry away from their 52 week high.

Basically, I could have bought anything back then and made lots of money.

During the dark days most investors were keen on selling or staying out of the messy market. Those who took risks have made a lot of money. Others stopped contributing to their 401(k)'s and now that the market has turned up they will resume. It seems that buy high and sell low is a natural instinct.

As usual I am kicking myself for not going 100% into the stock market. Even though I've made money from the bounce, I left 40% of my cash on the table.

I doubt if we will see such a buying opportunity soon, but who knows what the future holds. I think the biggest threat to the stock market is the US dollar and any ensuing inflation.

For these reasons, I am overweight on emerging markets and I'm still holding on to my Oil and Gold. What's interesting is that Oil was the last sector to turn green in my portfolio though I've been getting 12% monthly dividends which I have not been counting as part of my gains.

That said, I think this is a good year for anyone wanting to buy real estate. Prices have never been this low, sellers are desperate and interest rates have fallen to attractive levels.

The down side is that the job market has not stabilized but in the long run, real estate buyers will be thankful that they took the risk.

Good Times

I'm not sure if I can explain what is happening in the stock market. Against the back-drop of one of the worst economic slowdown, the market has rallied very strongly from the March lows. Considering the over-bought conditions, today's volume in the NYSE was huge. The 12 billion shares traded certainly caught my attention.

I thought we were due for a pull-back and then we explode upwards.

I knew my buys in the winter will be rewarded, and I have profited from my sells, but I didn't expect the kind of rally we are seeing. As it is, 201(k)'s have grown to 301(k)'s and consumer sentiment is rising.

My main worry is what is going to happen to all the liquidity that the government has created. And what about the failing banks. Very little has been done to rectify the excesses of yesteryear's. We may have created another bubble. Who knows.

Friday, we get unemployment data. It should be interesting to see how the week ends.

But at this rate, I am tempted to dump another chunk of my holdings. Which I may do so if this madness continues.