R0LL0N:

Not that theoretical. These findings are needed for chapter one and two. It needed to be able to understand NSE strength and weakness and to come up with a program that can predict future performances

Mr. Market is a prodigal child!
Google Isaac Newton and the stock market.
Since you are on research, it will do you good to dig a bit deeper...


http://www.financialexpress.com/market/when-isaac-newton-faced-an-opposite-reaction-in-the-stock-market/838406/

Job well done Oga Rabbi and other contributors as well. I think this book will help too...

Intelligent Investor-

http://www.fxf1.com/english-books/The%20Intelligent%20Investor%20-%20BENJAMIN%20GRAHAM.pdf

http://borrower.pricoacapital.com/special-issue-focus---four-reasons-for-optimism-in-2018-content-1414.php?lipi=urn%3Ali%3Apage%3Ad_flagship3_feed%3B%2FVt9ffaQSVKCqfhHkErk0w%3D%3D

TA Peeps
- Ichimoku Cloud Trading Strategy

Link:
http://ichimokustrategy.com/tag/kumo-breakout/

Some Notes:
Most stocks are trading above the kumo = bullish trend
Chk out Nbrew daily and see if u can spot the kumo breakout developing

#WeekendReading

Chibuking81:
With the NSE new rule that will start on Monday, am expecting most stocks within the ranges of #2 to #4.99 to move above #5 within a short period of time, and those already above #5 to maintain their above position.

You're right sir but not stock with Chellarams. Some stock don book parking space for now.
My personal view

The one Attribute Indicator.

P/E ratio.

this means Price divided by earnings ratio.

it tells you how long it will take to earn 100% profit or at least get your money back at the current price and earning rates.

it is used to determine "fair value" very easily.

How?

simple divide the price by the earnings. What you get is the Return of Investment time.

if you like it, then thats the stocks fair value to you.

(NOTE: what is fair to you may not be same for another.)

if you think its quite or too low;
then multiply the earnings by the timeframe (years) you think is fair.
The result is the fair value.

example: a stock's price is 10N; earnings is 1N. P/E ratio is 10. That means 10 yrs to full RoI.

that might be unfair. Perhaps you think 5 yrs is better RoI period.
Then you multiply earnings 1N by 5yrs..ans 5N. Thats the fair value.

this is easy P/E ratio fair value estimation.

DD advised.
P.S: the market does pricing due to demand & supply; fair value just helps u check your greed

DeRuggedProf:


Mr. Market is a prodigal child!
Google Isaac Newton and the stock market.
Since you are on research, it will do you good to dig a bit deeper...


http://www.financialexpress.com/market/when-isaac-newton-faced-an-opposite-reaction-in-the-stock-market/838406/

Thanks prof

R0LL0N:

Thanks olukoni. I give u 3 gbosa. Please can i have your contact. I need to acknowledge you when writing my thesis.

Instead of my contact, write special thanks to members of the investment section of Nairaland.

Agbalowomeri:


You teach them sef, dem no fit sabi. There is a wide gap between industry and academia especially in Nigeria

I strongly agree with you. Their theory has no match. They will prefer to dazzle the students with long formulas. And that is why these students come in with Mgbo or omokiriri because they can't cram these formula.

There is always a first principle solution to every question. Then from there you move on. And the whole thing gets easy.

sellydion:

Yes, thanks to CP. CP is not handing down the knowledge. I am a knowledge type.
Strongly believe I can do it by my self. There are various methods, that I am aware.
Practically some are good while some are theoretically okay. Especially in Nigeria context.
Hope you understand me.

I once saw a link that CP put here for calculating fair values of stocks. That link was self- explanatory.

Except you want him to break it down and explain everything line one by one to you.

Remember I don't think anyone is employed by NL to do this. No sitting allowances from NL

Onuokwu:


Nice one. @ Bolded i am sure you meant "value" and not price.

I agree with you. And it is debatable!

However, Value is a feeling you get when you pay a price. Price is the amount you pay.

Let me explain.
If you go to Banana Island and see a house being sold for N50m. You know that it is usually 10x more than that. Now you pay the price of N50m and you will say you are really getting value of the price you pay.

If you see all those calculations, they all give you the value for P ~ Price. It is left for you to use other gauges to check if the price is a value or it is overly expensive.

locodemy:
@ oracle.Do you see how you kept Ihedioramma your own brother?
@Ihedioramma.Have you seen what your mouth and vocabulary/writings brought you to?
Pls change your moniker and begin to use pidgin English or varnacular.

You are now not different from this man who collapsed on the pitch.Get up and pick courage again.such is life bro.

Didn't know he is 50 years old.

But he is supposed to arrange himself and not speak like that.

Anyway, Pa ihedi accept our apologies.

Ndo~ sorry.

R0LL0N:

Not that theoretical. These findings are needed for chapter one and two. It needed to be able to understand NSE strength and weakness and to come up with a program that can predict future performances

There is no computer program that can predict future performance.

Use FBN as example. If your program was to predict the price of this stock, it would have placed the stock on permanent 50kobo based on NPL ratio, profitability ratio, asset quality ratio, comparison of past performances. But human behaviour is far the best. This is because human will hear the latest gossips(inside info, AGM) adjust prices accordingly. Even sentiments will move the prices.

Godisfaithful:
Job well done Oga Rabbi and other contributors as well. I think this book will help too...

Intelligent Investor-

http://www.fxf1.com/english-books/The%20Intelligent%20Investor%20-%20BENJAMIN%20GRAHAM.pdf

Thanks....I have the hardcopy. Good to keep soft copy.

RealityShot:
The one Attribute Indicator.

P/E ratio.

this means Price divided by earnings ratio.

it tells you how long it will take to earn 100% profit or at least get your money back at the current price and earning rates.

it is used to determine "fair value" very easily.

How?

simple divide the price by the earnings. What you get is the Return of Investment time.

if you like it, then thats the stocks fair value to you.

(NOTE: what is fair to you may not be same for another.)

if you think its quite or too low;
then multiply the earnings by the timeframe (years) you think is fair.
The result is the fair value.

example: a stock's price is 10N; earnings is 1N. P/E ratio is 10. That means 10 yrs to full RoI.

that might be unfair. Perhaps you think 5 yrs is better RoI period.
Then you multiply earnings 1N by 5yrs..ans 5N. Thats the fair value.

this is easy P/E ratio fair value estimation.

DD advised.
P.S: the market does pricing due to demand & supply; fair value just helps u check your greed

Thanks for this explanation.

You are right in the PE explanation. However for the determination of the timeframe for recovery of investment, I will advise you use Inverse of Dividend Yield. This gives you the accurate time you get your full money back discounting the witholding tax.

The PE doesn't in anyway tell you the time frame for getting your investment back except if the dividend is equal to the EPS.

I shall explain.

Stock A:

Price= N10
EPS= N4
Dividend = N1

Stock B:

Price= N10
EPS= N4
Dividend = N3

Stock C:

Price= N10
EPS= N4
Dividend = N4

.......,................,......................,............

For stock A
PE= N10/N4 = 2.5
DY= (N1/N10) * 100%= 10%
Time frame for recovery of investment should not be 10 years. Rather it should be inverse of the DY or Price/ dividend.
So time frame= N10/N1 = 10 years

For stock B
PE= N10/N4 = 2.5
DY= (N3/N10) * 100%= 30%
Time frame = 3.3 years

For stock C
PE= N10/N4 = 2.5
DY= (N4/N10) * 100%= 40%
Time frame = 2.5 years

Why is this so?
Dividend is the one you get as return on your investment but You don't get the declared earnings as your return of investment. Except where dividend = EPS or where dividend tends towards EPS, that is when there is convergence between PE and timeframe.

I

RabbiDoracle:


Thanks for this explanation.

You are right in the PE explanation. However for the determination of the timeframe for recovery of investment, I will advise you use Inverse of Dividend Yield. This gives you the accurate time you get your full money back discounting the witholding tax.

The PE doesn't in anyway tell you the time frame for getting your investment back except if the dividend is equal to the EPS.

I shall explain.

Stock A:

Price= N10
EPS= N4
Dividend = N1

Stock B:

Price= N10
EPS= N4
Dividend = N3

Stock C:

Price= N10
EPS= N4
Dividend = N4

.......,................,......................,............

For stock A
PE= N10/N4 = 2.5
DY= (N1/N10) * 100%= 10%
Time frame for recovery of investment should not be 10 years. Rather it should be inverse of the DY or Price/ dividend.
So time frame= N10/N1 = 10 years

For stock B
PE= N10/N4 = 2.5
DY= (N3/N10) * 100%= 30%
Time frame = 3.3 years

For stock C
PE= N10/N4 = 2.5
DY= (N4/N10) * 100%= 40%
Time frame = 2.5 years

Why is this so?
Dividend is the one you get as return on your investment but You don't get the declared earnings as your return of investment. Except where dividend = EPS or where dividend tends towards EPS, that is when there is convergence between PE and timeframe.

All these na academic exercise and you know say I no Sabi book. How can a business pay out 100% earning as dividends? What will the company plough back for the continuous ability of the business to thrive.

You can recover your money in company with a PE of 10, before 10 years. The retained earnings should aid the ability of the business to grow her earnings.

Nigeria Brewery gave investors the option of getting their dividends or to be issued more shares in the company. As a matter of fact, I always used my dividends to buy more shares in the companies that paid the dividends.

I think more companies will soon embrace DRIP ( dividends reinvestment program)

R0LL0N:
Hello. Am currently doing my MSc project on stock price prediction. Is there any stock broker on this platform? please i greatly need your help i have some series of questions to ask in order to aid my discovery. Thanks.

If you have the stamina and patience, you can start reading from page 0 of this thread to this current page 3057 and you will get answers to at least 90℅ of your questions.

RabbiDoracle:


There is no computer program that can predict future performance.

Use FBN as example. If your program was to predict the price of this stock, it would have placed the stock on permanent 50kobo based on NPL ratio, profitability ratio, asset quality ratio, comparison of past performances. But human behaviour is far the best. This is because human will hear the latest gossips(inside info, AGM) adjust prices accordingly. Even sentiments will move the prices.

From my world I think this is possible but needs extensive statistical research. A predictive model can be developed but this may be beyond his level, probably a PhD project.

Agbalowomeri:


From my world I think this is possible but needs extensive statistical research. A predictive model can be developed but this may be beyond his level, probably a PhD project.

The end result will be the same, the model will take many to their early grave.....

DeRuggedProf:


The end result will be the same, the model will take many to their early grave.....

For academic purpose of course

RabbiDoracle:


Thanks for this explanation.

You are right in the PE explanation. However for the determination of the timeframe for recovery of investment, I will advise you use Inverse of Dividend Yield. This gives you the accurate time you get your full money back discounting the witholding tax.

The PE doesn't in anyway tell you the time frame for getting your investment back except if the dividend is equal to the EPS.

I shall explain.

Stock A:

Price= N10
EPS= N4
Dividend = N1

Stock B:

Price= N10
EPS= N4
Dividend = N3

Stock C:

Price= N10
EPS= N4
Dividend = N4

.......,................,......................,............

For stock A
PE= N10/N4 = 2.5
DY= (N1/N10) * 100%= 10%
Time frame for recovery of investment should not be 10 years. Rather it should be inverse of the DY or Price/ dividend.
So time frame= N10/N1 = 10 years

For stock B
PE= N10/N4 = 2.5
DY= (N3/N10) * 100%= 30%
Time frame = 3.3 years

For stock C
PE= N10/N4 = 2.5
DY= (N4/N10) * 100%= 40%
Time frame = 2.5 years

Why is this so?
Dividend is the one you get as return on your investment but You don't get the declared earnings as your return of investment. Except where dividend = EPS or where dividend tends towards EPS, that is when there is convergence between PE and timeframe.

For a coy that has not been consistent in payment of dividend, what other method(s) are available to determine the recovery timeframe of investment?

RabbiDoracle:


Instead of my contact, write special thanks to members of the investment section of Nairaland.

All right thanks

emmanuelewumi:
I


All these na academic exercise and you know say I no Sabi book. How can a business pay out 100% earning as dividends? What will the company plough back for the continuous ability of the business to thrive.

You can recover your money in company with a PE of 10, before 10 years. The retained earnings should aid the ability of the business to grow her earnings.

Nigeria Brewery gave investors the option of getting their dividends or to be issued more shares in the company. As a matter of fact, I always used my dividends to buy more shares in the companies that paid the dividends.

I think more companies will soon embrace DRIP ( dividends reinvestment program)

My Oga why na.

Aside capital appreciation, dividend is the only thing shareholders get. Don't even talk about bonus. This will be for another day.

If you invest N10 in 1 unit and get N1 return as dividend, it will take you 10 years to get back your N1 presuming that the company pays N1 for 10 years. This is the gauge for return for shareholders.

Looking at it your own way from PE angle, if you pay N10 for 1 unit and the EPS is 1, it is only when the company pays N1 as dividend (equals to the EPS) that you will wait 10 years to recoup.

Newton sabi book , but the market no sabi Newton
#DontBeLikeNewTon

9free:

For a coy that has not been consistent in payment of dividend, what other method(s) are available to determine the recovery timeframe of investment?

Depending on how much you bought. If you bought 10 unit of a stock at N50 ( total amount invested will be N500), and they don't pay dividends, all you need to do is just to attend their AGM. At the AGM, they will give you food worth more than N500 and some corporate gifts. That is how you will recoup your investment faster.

For those that have heavy units, they will just sit it out and wait for capital appreciation.

RabbiDoracle:


Depending on how much you bought. If you bought 10 unit of a stock at N50 ( total amount invested will be N500), and they don't pay dividends, all you need to do is just to attend their AGM. At the AGM, they will give you food worth more than N500 and some corporate gifts. That is how you will recoup your investment faster.

For those that have heavy units, they will just sit it out and wait for capital appreciation.

lollll omg

#CutLossesAndMoveOn

RabbiDoracle:


My Oga why na.

Aside capital appreciation, dividend is the only thing shareholders get. Don't even talk about bonus. This will be for another day.

If you invest N10 in 1 unit and get N1 return as dividend, it will take you 10 years to get back your N1 presuming that the company pays N1 for 10 years. This is the gauge for return for shareholders.

Looking at it your own way from PE angle, if you pay N10 for 1 unit and the EPS is 1, it is only when the company pays N1 as dividend (equals to the EPS) that you will wait 10 years to recoup.

Your N100 million property generates N10 million rental income, ie PE of 10. But the Real estate investor ploughs back 50% of his rental earnings into the expansion of his real estate investment, meaning the investor spends just N5 million from the N100 million property earnings of N10 million.

Companies have dividend policy, real estate investors also have dividend policy.

The earnings not paid out but ploughed back into the business is still part of the return on investment, which over time will increase the equity of shareholders funds of the investment, if properly managed an investment with a growing equity ought to increase earnings on the long run.

Anyway sha, wetin I Sabi def?

There are somethings, that can't be explained on how small businesses or investments turn into big businesses or investments.

Real life story a group of 10 beggars at Oshodi bought a property on Oshodi road, just demolished to build a 3 storey shopping complex. These currently have 4 of such investments at Oshodi, Agege and Ogba.

Accountants in the house, please explain Internal Rate of Returns to a lay man like me.

emmanuelewumi:



Your N100 million property generates N10 million rental income, ie PE of 10. But the Real estate investor ploughs back 50% of his rental earnings into the expansion of his real estate investment, meaning the investor spends just N5 million from the N100 million property earnings of N10 million.

Companies have dividend policy, real estate investors also have dividend policy.

The earnings not paid out but ploughed back into the business is still part of the return on investment, which over time will increase the equity of shareholders funds of the investment, if properly managed an investment with a growing equity ought to increase earnings on the long run.

Anyway sha, wetin I Sabi def?

There are somethings, that can't be explained on how small businesses or investments turn into big businesses or investments.

Real life story a group of 10 beggars at Oshodi bought a property on Oshodi road, just demolished to build a 3 storey shopping complex. These currently have 4 of such investments at Oshodi, Agege and Ogba.

Accountants in the house, please explain Internal Rate of Returns to a lay man like me.

You are mixing things up.

The earnings that comes to the company as EPS belongs to the shareholders. We know. But what do you actually get. The main thing that reaches you is the dividend. That is the koko. That is the passive income you get from investing. Why don't you say that your passive income from investing in company A is your EPS times the number of units.

A sensible company can give part of the EPS as dividends while retaining the others for strategic investment. This investment can go good or bad. Presume that they don't invest the money, what is your own return? It is just the dividend yield and any price appreciation.

Lots of companies have been paying like 35 -45 kobo for years without much increase. Will you say that since the EPS is 60kobo, that it is the return on your investment?

The company can use that to compute it's ROI but you(the shareholder) must use the Dividend yield only.

emmanuelewumi:



Your N100 million property generates N10 million rental income, ie PE of 10. But the Real estate investor ploughs back 50% of his rental earnings into the expansion of his real estate investment, meaning the investor spends just N5 million from the N100 million property earnings of N10 million.

Companies have dividend policy, real estate investors also have dividend policy.

The earnings not paid out but ploughed back into the business is still part of the return on investment, which over time will increase the equity of shareholders funds of the investment, if properly managed an investment with a growing equity ought to increase earnings on the long run.

Anyway sha, wetin I Sabi def?

There are somethings, that can't be explained on how small businesses or investments turn into big businesses or investments.

Real life story a group of 10 beggars at Oshodi bought a property on Oshodi road, just demolished to build a 3 storey shopping complex. These currently have 4 of such investments at Oshodi, Agege and Ogba.

Accountants in the house, please explain Internal Rate of Returns to a lay man like me.

chai , pls kontinu

'' . . earnings not paid out but ploughed back into the business is still part of the return on investment ''

this part is what is why some companies will be here longer than others but our people too like big dividend lollx #smh

RabbiDoracle:


You are mixing things up.

The earnings that comes to the company as EPS belongs to the shareholders. We know. But what do you actually get. The main thing that reaches you is the dividend. That is the koko. That is the passive income you get from investing. Why don't you say that your passive income from investing in company A is your EPS times the number of units.

A sensible company can give part of the EPS as dividends while retaining the others for strategic investment. This investment can go good or bad. Presume that they don't invest the money, what is your own return? It is just the dividend yield and any price appreciation.

Lots of companies have been paying like 35 -45 kobo for years without much increase. Will you say that since the EPS is 60kobo, that it is the return on your investment?

The company can use that to compute it's ROI but you(the shareholder) must use the Dividend yield only.

Make we no argue further , my earnings are part of the returns on my investment your own dividend is the return on your investment.

I think that is okay.