CONTRARY to a widely-held belief among a number of Zimbabweans I have interacted with, stock market investments is not really rocket science, neither is it just reserved for the rich, the financial specialists and upper classes.

Working class people can also invest consistently and create wealth for themselves. It does not matter whether you are upper, middle, or just working class. You should have an investment plan that is suitable for your circumstances. There is nothing to motivate you and sustain an investment regime than to do it towards a specific target.

Let’s suppose you are a working class professional in the Diaspora seeking to raise $18,000 in three years time to start your own small business back home which you have always dreamt of. You can put aside $500 every two months and buy into selected stocks. By the end of the year $6,000 would have accrued to the investment account. If you are persistent, by year three you would have put aside the whole $18,000 without even taking into account dividends, and value appreciation.

While the world over including South Africa you can now buy and sell stocks directly without the intervention of a stock broker, the Zimbabwe Stock Exchange (ZSE) is still a manual stock market where stock brokers still interface physically.

First, one has to open a trading account with a registered stockbroker. You can transfer money to the account using electronic banking. Once you have a relationship with a stockbroker, you can give your broker email instruction on which stocks to buy or even sell on your behalf. Ideally, you should not buy less than $500 of each stock at a time to have sufficient economies of scale. Once your purchase is registered, the broker can hold the share certificate for you and you can eventually collect it at your own convenience.

Considering the horror stories I have heard of how some people who have worked hard in the Diaspora only to arrive back home to discover that their sweat had been blown by someone else who did not understand what it took to get it, then the stock market should be considered an optional store of value. You can, therefore, be physically out of Zimbabwe while you accumulating value in a relatively secure environment of the ZSE.

If you are a novice, then it is better to stick to companies with proven business ways. Do not buy a stock because it is cheap. It is probably cheap for a reason. Neither should you buy into a company because it has fallen to the bottom of the barrel, it has probably fallen there for a good reason. Just because a stock has fallen 60% in 2011 does not mean it can only go up. It may even fall further.

Another common mistake for novices is to buy the stock which was up by 60% last year, trusting that it would do the same next year without taking into account the full circumstances.

There are very good stock brokers on the ZSE who give excellent advice on the ZSE. You can even compare the advice of three or four stock broking firms. However, you should never forget that brokers are in the trading business. So they make their money when people buy or sell stock. So at any particular time they would like to have a delicate balance between buyers and sellers.

It is like what typically occurs at Mbare Musika, Renkini, Mahombekombe or Musika wehuku.  If there are more sellers of tomatoes than buyers, the price of tomatoes collapses and conversely if there are more buyers than sellers, it rises dramatically. The decision to buy a stock should entirely be your own. That way, if the company bombs, you will accept responsibility for your investment and not look for scapegoats.

Once you start to participate in the stock market, you can ask your stock broker to email you a daily report. So from your geographic location, you can read what is happening to the market. It is also important to read company annual reports, business news and economist reports that are released periodically. That way you will get a better understanding of what is happening to the market.

While it is important to look at the profits earned by a company, it should not be the only thing you look at. Clever accountants can make profits look better than they are through revaluing assets and other creative accounting methods. A good pulse of any business is the cash it generates. It is a lot more difficult to fiddle with cash flow. Invest in companies that generate good cash flows.

While some debt is bad, some debt is accumulated to fund a company’s operations which will result in future improved cash flow. This information can be read in the annual reports. This historic information can assist in attempting to predict what may happen in the future.

It is also important to look at the leadership and management of a company. It is usually preferable to invest in a company where the top management and leaders also put their own money to buy the company’s shares. That way, you know their interest and yours are indeed aligned. I am particularly suspicious of management who sees the company as their ATM to buy them three or four company cars, pay for their medical aid and kids’ school fees while funding their overseas holiday escapades.

I would like to end with the following extract from Calvin Coolidge:  "Nothing in the world can take the place of PERSISTENCE. Talent will not; nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not; the world is full of educated derelicts. Persistence and determination are omnipotent. The slogan ‘press on’ has solved and always solves the problems of the human race."

It is important not to waste time trying to time the market. Consistent investment will create long term value even for working class members.