Do you know any better way to describe the current events on the Nigerian Stock Exchange? I don’t. I don’t know of any more graphical way to paint the picture of what is going on in the Nigerian Stock Market right now! I think Michael Jackson got the phrase right, “there is blood on the dance floor”. Reading the lyrics of that song in detail, it even amazes me that the girl that spilled the blood was a one night stand 🙂 Now parallel that with being a speculator rather than a long term investor in today’s market. If you look at it that critically, you might see Michael as a prophet :). You come to the dance floor to enjoy, to let you hairs down, to celebrate… and you are about getting into the groove, and you see a splash of blood, you are shocked and everybody panics, is this a drink, ketchup or someone’s blood? You look around to see the source, and then the whole club spots it all at once, there is blood on the dance floor, and the blood, is yours!
It wouldn’t amaze any avid stock market investor now, that people have started committing suicide. People have lost millions, some billions in this “market correction”, and if it was only money that was lost, one might not be so bothered. The average person has already lost about 50% of his capital in this craziness, and the end is yet to come. Many who have a normal penchant for taking higher risks, by using the bank’s margin facilities in this market, are crying – sorry, weeping! Week after week, I have studied different opinions on what was causing the land slide of share prices and where hope lies, and honestly it got to the point where I figured it all out. I not only figured it out I figured out what to do. I’m sure you are wondering what exactly that is?…Read on.
1. All, I want to say is that,they don’t really care about us!: It didn’t take me long to discover that all the dailies, all the expert perspectives were very wrong. No one can put their fingers on what exactly is the 20% that is responsible for 80% of the downturn. I have watched the experts change from it’s foreign investors, to it’s lack of margin facilities, to it’s the change in share price movement indices, to it’s the banks even end of year, to it’s Yaradua and his influence or lack of it on the economy. Please let’s relieve pap of it’s tribal marks – pap doesn’t have tribal marks ( e ko ila kuro leko, eko kan o kola) or as my Warri brothers will say, “let’s leave story for tortoise”. All we have been fed is one story gradually migrating to the other. But of course what can you expect? There is no information source to the market that is currently not also in the market. Everybody is offering wishful, hopeful and anticipatory information, no clear direction! Fundamental or not, everything is going down right now :). And how I love the analysts, I have even seen some of their well thought out bar charts, but ask yourself when listening to them – “Isn’t it easy to study a trend in it’s history and come up with postulations based on it? Here are the facts the way I see it. a. This market is not coming back up in less than 6 months, except of course the government goes to hire people to consistently pump money into the market like Abacha did to keep the value of the dollar constant. b. Investor confidence has been shattered by too many inconsistencies in policies – me too 🙂 c. Some of fundamentals that support local businesses are being eroded, power is still unfixed (don’t be deceived by what is happening currently, it’s the rain :)) it’s not 2yrs, and Obasanjo is already looking like a Messiah. d. The down slide, is not over yet.
2. She says I am the one, but the kid is not my son! That seems difficult to judge doesn’t it? If she says you are the one, she probably has a reason, if you say the kid is not your son, you are saying it didn’t happen in your watch, how do we really know until we can do a blood test. That’s also true of the market, everybody has been dodging – what do we do? But we don’t have to wait until the house falls on us before we run. We don’t have to sleep with Billy Jean and wonder whose kid she’s having. Here is my own 2 cents on how to handle the present predicaments. a. If the money you are playing with belongs to the bank. RUN! Sell it off and return the banks money now! You have lost, live with it, and move on. If you don’t the loses are not likely to reduce for the next 6 months, and the bank may pressure you to sell later. If you wait, it’s a gamble. b. If it’s all your money and you are bereft of ideas on what else to invest in or do with money, stay and lick your wounds, it’s not forever. Like they say, you don’t lose until you sell. c. if you know other things you can invest in, that can make you as much as 40% in the next one year – move and come back later, when the dance floor is not so red. Don’t move into one thing as well, move into 2-3 things. Not diversifying is why you are where you are now 🙂
3.Beat it! Well, that’s not advice for everybody, that’s my own personal direction at the moment. It means to scram to run away. We need to run away from everything that has falsified what real investment is to us. 100% gain per annum is not normal, the reason why we waited in the market this long, most of us, is because we are used to seeing it double and triple. Wonderbank syndrome, is what I call it. In this day and age, people still frown at proper small time returns. The 3million plus I made in 3 weeks in this same stock market, I lost in 3 months, doing what? Waiting… waiting for it to pick up, waiting for the banks to have different end of year, waiting for margin trading, waiting. Why? It can turn around. Don’t get me wrong, I am diversified, in fact, what I have in the Stock Market is small compared to what I have else where, but even that can be better spent. I have a friend offering me a 45% guaranteed on a real estate project he’s doing, I’m taking it. I have another friend offering me 60% or more on a PPP with the Lagos state government, I took it. I also have a novel concept guaranteeing me of a minimum of 30% with potentials of up to 80%, I’m doing it. All in all, I’m beating it, now, before my nett loss surpasses my nett profit. And if for you it has, learn the lessons and forget the details. If you can’t stay without the funds for the next 6 months to 1year, then beat it!
What I have written is not the encyclopedia or dictionary of how it must be done, they are my opinions based on my play in the NSE and what I have observed. The market is in perilous times, and we should not all be caught in it. I was tempted to start this off in the old style of Nospetco, how much longer… and say NSE, how much longer? But we all know the answer to that now, don’t we?