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• Influence Of The Mass Media On How We Invest

  Posted: May 21, 2008, 7:11 pm by admin

  A couple of years ago, real estate was the hottest thing in terms of investing. For anyone who had some good spare cash- because the venture is capital intensive- then real estate was the way to go. That is why grabbing of public land by the so-called private developers was rife in Nairobi, and other major Kenyan towns. For those who had made it, owning huge tracts of land was the ultimate status symbol. It still is the same though at a relatively low level.  

  The rich have discovered the potential of the Nairobi Stock Exchange and the capital markets for that matter.

   As years go by there is a recognized change in the choice of investments. Even though the monied are still crazy on the real estate, there is a shift to ‘paperless’ investing. By paperless investing I mean shares, unit trusts, bonds, and treasury bills. Apart from unit trusts, all the other forms of investing have been with us. Even the unit trusts existed though in a different name. Some call it portfolio management others discreet portfolio etc, if you ask me the concept is the same. You give someone money and the power to make investing decisions on your behalf. 

   So, what has caused this major shift in investment choices? As per my observation, the media has played a great role. As I pointed out, apart from unit trusts all other forms of investment existed. Nairobi stock exchange has been with us since independence.  The media has played a critical role of informing the public at large. Before KenGen I can confidently say stock investing was alien to many. The publicity generated from the IPO saw the number of CDS accounts jump from a mere 60,000 to over 250,000 in a span of 3 months. Subsequent offers have also attracted a sizeable number of new investors.

   When I talk of the mass media majority of you think of only the daily newspapers and the TV stations. Mass media include the blogs. Blogs in Kenya fall into two main category. Those geared towards politics and those that address business related issues. The best thing with a blog is its uncensored nature. During the political chaos in early January, the only timely and uncensored breaking news was from the blogs. Whether the reporting was factual or even objective is a discussion for another day. At least the bloggers were there when needed most. I can say this is the same with the financial bloggers. Even before the mainstream media has released info to the public, the bloggers are usually two steps ahead. Log in to stocks Kenya, ka-investor, bankelele, mjengakenya and a host of other blogs and you will get timely and accurate info on the happenings of the stock market and in extension the Kenyan economy.

  A financial blogger was complaining on how stale the financial pages of the newspapers have become because what they consider to be breaking news is already in the hands of consumers of blogs. Moreover, at times, the analysis from the bloggers is deeper than that of the papers. Maybe it’s because of the space limitation but the journalists are best suited to comment on this.

  My only worry is the impact the written word has on many. Try putting an advert and at the same time a feature is done on your competitor. The response from the feature will be three times more than the advert. This is called PR for the uninitiated. The public takes into heart whatever is written and more so if they consider you as an authority in a subject. It even gets interesting for an industry where you cannot define what will happen in a week leave alone the future as is the case with the stock market.

  Ultimately, the media shapes our opinion and that of investing. However, as an investor you should develop the skills to analyze what is worth following and what should be dismissed at the first instance. And this will entail doing the homework for your self. It’s interesting when you scour for the info on your own and make a decision there on. Chances are you won’t feel bad even when it turns out to be a bad move as it’s a decision of your own making.

   In any case you know best what your investing goals are.  Any information that you receive should be analyzed along these lines. Don’t follow anyone’s advice blindly.

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