Investing with 2012 general election in mind

Einstein defined insanity as doing the same over and over again and expecting a different results.

Prior to the 2007 general election, I argued here and elsewhere that Kenyans must ignore politics and effectively decouple it from business for our economy to flourish. I still urge us to do and the need to do so is even more urgent today. It saddens me when you see a whole mashinani town come to a standstill for a whole day when well-fed politicians land in their helicopters.

In part, my drive was because I used to think Kenyan siasa and had small if any effect and in any case this would be temporary. PEV and its after effects disabused me of this notion.

Politics does have a serious impact on the way your investments will turnout and you have to bear this in mind when investing. And the risk is higher the more liquid your investment is.

So real estate will be risky to extent there is a repeat of PEV because certain areas will become no go zones. Cosmopolitan towns like Nai, Mombasa and Nak will benefit on the other hand. Any slight hint of discord will send NSE investors scurrying into bonds, saving accounts and other frontier markets if they are foreign investors. IN which case, an investor will want to stay in stocks that show low volatility but give fair income (say 4%+ dividend yield). Alternatively, one can focus on being liquid to take advantage of volatile shares. As of now, I am looking at shares with that are either illiquid or have small floats in the NSE and either give good income or are more affected by other factors other than politics. Examples being Carbacid; EABL; Eagaads.

So what is the likelihood of discord or even PEV in 2012? The signs are not promising. The Ocampo announcement gave Kenyans hope that VIPs who had been able to escape the law would finbally be getting some law on their heads. It was to be a huge step forward in quashing impunity. Somebody would finally be held accountable for PEV. The new Katiba gave Kenyans hope that we'd henceforth start doing things legally, but also with goodwill.

Alas, Mwai Kibaki has other ideas. The first appointments under the new katiba for AG, DPP and CJ have be done with the utado attitude thaat we expect from Kibaki and since he has the numbers in bunge, the 3 will go thru. The appointments are not dissimilar to those of the ECK commissioners in early and late 2007 that effectively created the environment for the rejection of the 2007 ge results. The political elite don't suffer from the consequences of their actions and hence will never learn. There is no excuse for us investors.