kalu61:
These are the inevitable variables coupled with market uncertainty that's makes us take a decision that at the end one seen as a fool and the other genius.

I still go with th Buffet philosophy, Good business, good stock and don't worry about the % return as long you are sure they will definitely be % returns no matter how small. Just be sure it will return.

Buying a bad stock hoping it will turn around, buying a good stock and things turn around. That's the nature of investment.

Good input boss. You wealth of experience in much appreciated in this thread.

emmanuelewumi:



That is where you will enjoy corporate raiders, they buy bad businesses that are selling below their liquidation price on the floor of the stock exchange.

AG Leventis sold for about 70k, but by the time the core investors decided to take the company private they we're ready to pay investors about N2.00

At 70k the market capitalisation of the business was less than N700 million, but I know if the assets of the business were liquidated at forced sale there is a high possibility of getting N5 billion.

Eg UPDC REIT has a market capitalisation of about N12 billion, but if the investment properties of the REITs are sold we can get over N20 billion the REIT still has over N4 billion in fixed income Investments oooo.


Dangote came to NASCON as a corporate raiders in 2007, the stock moved from N3 to over N20, he was also a corporate raider at Benue Cement Company in 2006 the stock moved from N6 to over N40 before he mrged it will Dangote Cement.

emmanuelewumi:



Market capitalisation is nothing, the bank with the highest market capitalisation might not be the highest in terms of profitability, best in terms of efficiency, the best in terms of return on equity, return on asset and growth rate. The most important things to look at at the intrinsic value of the business, the enterprise value of the business.

If anybody wants to get a 5% equity in any of the big banks in Nigeria there is no way their market capitalisation will not increase by a minimum of 80%.

Zenith Bank at N25, Jim Ovia will not sell his over 2.5 billion units for N70 billion Lai Lai doubt if he would sell for N100 billion which is about N40 per share. The annual dividend of over N7 billion is okay for him.

According to market capitalisation, Zenith Bank is about N800 billion. But the share holders fund alone is over N1 Trillion, deposits is over N4 Trillion and profit after tax is over N200 million.

When the market is low, you can value my property as N100 million. If the property owner is getting an annual rental income of N20 million from the property he is less concerned about whatever valuation ascribed to his Investment property.

When investors know the difference between price and value and understand the valuation of an asset, Investment, Busineses, venture they will be able to make profit through their understanding of the market Dynamics, behavioural finance and Investment psychology

jedisco:


You misunderstand me on certain things...

When looking at a markets, nothing gives a better picture of performance as the market cap over time (by time I mean years-decades)....This is because whatever fundamentals are at play in the individual participants of a market should ultimately affect price over time.
Now moving to individual participants of a market, a whole lot of indicators some of which you mentioned come into play of which the market cap is also among. I don't mean big market cap=huge product. But then, even in the NSE, there's a reason why the so called FUGAZ happen to have the highest market cap. 90% of growth over any timeframe in the US stock market are always accounted for by a handful of companies...... I can go on and on.... If I was to invest in the NSE today, except I have some good underlying info, I'd still be limited to a few big hitters.... Yes I want to be the one who bought Amazon, Apple or even our own Okumu when they were largely undervalued. But I wouldn't devote my whole portfolio to stuff I hope would be the next big thing that ends up being Myspace or Unity bank


If a sensible high net worth person wants to buy 5% in a listed coy, it'd surprise you to know that in that period the price of shares might remain stagnant or even fall not until the very end of their buying. When such folks buy, they do so slowly over a long period of time usually when the market is ranging. Sometimes, they'd even sell some of their buys to maintain price within a given range. I've seen this happen over and over again... The reason why you might see a huge uptick when there little buys on the NSE largely boils down to liquidity...

The example you gave with Zenith is a good one... If a coy has strong fundamentals for a long time that has not reflected in price, then it's either the market is trading at a mark down (which isn't bad) and prices would eventually catch-up or it's just an inefficient market where large coys can do as they please.... I wonder which one the NSE is.

Like I said, every market has period of markups, markdowns and periods where the market finds its true level.
Understanding how that market sentiment operates was the reason why for example I bought Bitc0in in May at 30k usd everyone was screaming how it's going to zero. Of course, I'd do the opposite when it gets to the other end.... Now my worry with the NSE is this: since 2008, it seems to have continually been in a downtrend... When will the markup come?

kalu61:
In as much as l agree with everything you wrote here, the nature of we humans are skewed and that's the reason l will not call anybody fool for an investment decision that went wrong.

It's human nature to justify someone who got it right and discredit one who got it wrong. Good examples of Corporate Raiders there because they came out successful.

emmanuelewumi:



At an All Time High All Share Index of over 66,000 in 2008 at a PE ratio of over 40 and dividend yield of less than 2%, it is obvious to the informed that the market was gross over valued.

Market capitalisation moved from N600 billion in 2002 to almost N10 Trillion in 2008, how is that possible...

All Share Index moved from 8111 in 2000 to 66,000 in 2008, how possible.

The faster the rise, the deadly the fall and the longer it takes to recover.

Instead of looking at 2008.

Can we look at the growth from 2000 to 2021, where the All Share Index moved from 8111 to 41,000 and market capitalisation moved from less than N600 billion to over N20 Trillion.

Or look at the All Share Index from when it was introduced on January 1st 1984 at 100 to the present 41,000

jedisco:


Of course the market is higher valued today than it was in 1984 or 2000. If it wasn't, we wouldn't be having this discussion.

Truly, the 2008 peak was a classic bubble. The first so far in the NSE.. I wouldn't really blame retail money caught at the top that's just normal human nature... Folks would always be bullish at the top... The concern is that the market has continued to punish them for over 10 years... The market has failed to beat inflation (and devaluation in our case) which are critical indices
For comparison, the US stock market has historically beat inflation and so it always made more sense for their citizens to invest in it than keep money in the bank.

Around 2008, there was a worldwide market crash... But then, most other markets put in new highs in less than a decade... Same also with the covid crash. The difference was that even at the lows the covid crash, while certain markets traded far higher than their 2009 lows, the NSE was pushed back to its 2009 lows... Not good..

Everyone invests to make money and enjoy it in their lifetime. The life expectancy in Nigeria is less than 70... 14 years is alot of time to wait...

All said, 2 places I'd spare the NSE are these;

1. The NSE is largely linked to the Nigerian economy which has been largely stagnant over the last decade..


2. Looking at the historic ASI attached, it does seem set to break past this 42000-44000 region which it has struggled with over the past decade. This should see it set on another rally... I'd keep this in mind and revisit in the coming months.... If the last 10 years was a bear market, then hopefully, the bull market should be good... Afterall, some of the money the CBN is printing ought to find its way there

jedisco:


For comparison, the US stock market has historically beat inflation and so it always made more sense for their citizens to invest in it than keep money in the bank.

ositadima1:


People talking about the USA stock market don't know that it is not a place where you easily make money. NSE has its problems but it isn't that bad, they key is in d stock selection process as well as timing.

Only a few seasoned analysts or edge funds managers make returns that beat the S&P 500, the yardstick usually used to measure performance. Only a few have alpha.

Note that the S&P 500 has a CAR, compounded annual return, of less than 9% over the last 40 years plus.

It is not all that rosy in the Big USA either, as some people make it out to be. I often read about how it's better to invest in an Index than buying individual stocks. Why?

ositadima1:


The statement above is not completely correct.

The USA stock market unlike NSE has over 20000 stocks. In there u can find all types, from badly performing to well performing stocks.

The common advice is to invest in stock indexes, like d ones that mirror S&P 500, NASDAC, dow jones etc. Trading or investing in individual stocks is risky same as in NSE, and u are most likely to loose ur money, except you have skills and knowledge.

jedisco:


You misunderstand me on certain things...

When looking at a markets, nothing gives a better picture of performance as the market cap over time (by time I mean years-decades)....This is because whatever fundamentals are at play in the individual participants of a market should ultimately affect price over time.
Now moving to individual participants of a market, a whole lot of indicators some of which you mentioned come into play of which the market cap is also among. I don't mean big market cap=huge product. But then, even in the NSE, there's a reason why the so called FUGAZ happen to have the highest market cap. 90% of growth over any timeframe in the US stock market are always accounted for by a handful of companies...... I can go on and on.... If I was to invest in the NSE today, except I have some good underlying info, I'd still be limited to a few big hitters.... Yes I want to be the one who bought Amazon, Apple or even our own Okumu when they were largely undervalued. But I wouldn't devote my whole portfolio to stuff I hope would be the next big thing that ends up being Myspace or Unity bank


If a sensible high net worth person wants to buy 5% in a listed coy, it'd surprise you to know that in that period the price of shares might remain stagnant or even fall not until the very end of their buying. When such folks buy, they do so slowly over a long period of time usually when the market is ranging. Sometimes, they'd even sell some of their buys to maintain price within a given range. I've seen this happen over and over again... The reason why you might see a huge uptick when there little buys on the NSE largely boils down to liquidity...

The example you gave with Zenith is a good one... If a coy has strong fundamentals for a long time that has not reflected in price, then it's either the market is trading at a mark down (which isn't bad) and prices would eventually catch-up or it's just an inefficient market where large coys can do as they please.... I wonder which one the NSE is.

Like I said, every market has period of markups, markdowns and periods where the market finds its true level.
Understanding how that market sentiment operates was the reason why for example I bought Bitc0in in May at 30k usd everyone was screaming how it's going to zero. Of course, I'd do the opposite when it gets to the other end.... Now my worry with the NSE is this: since 2008, it seems to have continually been in a downtrend... When will the markup come?

kalu61:
In as much as l agree with everything you wrote here, the nature of we humans are skewed and that's the reason l will not call anybody fool for an investment decision that went wrong.

It's human nature to justify someone who got it right and discredit one who got it wrong. Good examples of Corporate Raiders there because they came out successful.

Lazyyouth4u:


Xiaoli please sell your Uber Pencil light Camry and buy this man 10 bottles of Cristal. Very valid points!

emmanuelewumi:


Buhari came on board a former minister of Petroleum in the late 70s, former Chief of Army staff, retired General and former President. All things being equal with the right entrepreneurial mindset such a person ought to be a billionaire without stealing public funds, but he was just there.

einsteine:




Good companies on the NSE have been having depressed valuations. It is a long term inefficiency.

emmasoft:
Take care of your January 2022 now.

Today is 31st of October 2021. It's exactly 61 days and we shall be in January 2022 by God's grace

Don't be caught in the usual long January thing as a result of end of year spendings.

You can start from tomorrow to keep money for your January financial support into the Abacus money market fund managed by investment one.

By January 1st 2022 you will be paid interest prorated for the two months at 7.56% or more with that your January well be well taken care of and you will be liquid as per cash.

To start, Click the link on my signature to open account for free. You need a minimum of N1,000 to start investing after your account is opened.

You can also reach me on phone if you need more clarifications.

emmanuelewumi:



Yes if you are a trader, but those whose dividends increased by 100% and more in the last 10 years will disagree with you

courage89:


UCAP, Afriprud comes to mind

Lazyyouth4u:


Of all the asset management firms in Naija, why are you the only one that is here marketing shamelessly every blessed day? Doesn’t that say something?

emmanuelewumi:
Do you agree with this guy?

Donbrig:
This is not necessarily true. If you are determined in life, with a strong will and passion towards your goals and mission, it does not really matter who you hang out with...

In fact, you could sometimes learn a lot by hanging out with fools or debtors.

ositadima1:


The statement above is not completely correct.

The USA stock market unlike NSE has over 20,000 stocks (NSE has less than 200 listed stocks ). In there u can find all sorts, from badly performing to well performing stocks.

The common advice is to invest in stock indexes, like d ones that mirror S&P 500, NASDAC, dow jones etc. Trading or investing in individual stocks is risky same as in NSE, and u are most likely to loose ur money, except you have skills and knowledge.

emmanuelewumi:



Investors should invest in their financial education. I thank God for some of the older people I met between 2004 and 2009, who advised me to diversify my loot from the stock market.

I was a margin trader with FBN Quest Securities and UBA Stockbroker between 2002 and 2009, the market was good to me. I was using leverage of between 150% to 200% of my capital. I thought I was a genius, until an elderly man explained the importance of diversification and using yield from the assets for the basis of my investments.

This made me to sell 60% of my stocks and invested in real estate and money market instruments.

It is always better to remove the performance of the market between 2006 to 2008 in any serious analysis, there were no fundamentals to explain the sporadic rise.

Government policies also affects Investments, the policy of Obasanjo had a multiplier effects on our economy. Debts were liquidated and foreign direct and portfolio investors came into the country.

Yar Adua, reversed some of the policies and it affected the economy. The sale of 51% of the refineries to Dangote and Otedola consortium for $1 billion was courtesy of Oshiomhole led NLC pressure on government. In the recent financial of the Port Harcourt and Kaduna refineries both did not generate a Kobo but workers earned billions of Naira as salaries and loss after tax of about N500 billion was declared.

Crude oil sold at an All Time price of about $100 during the tenure of GEJ but was our reserves was depleted and the country went back into debt.

Buhari came on board a former minister of Petroleum in the late 70s, former Chief of Army staff, retired General and former President. All things being equal with the right entrepreneurial mindset such a person ought to be a billionaire without stealing public funds, but he was just there.

Without having politicians and leaders that are problem solvers and wealth creators, nothing good can happen in the country, except for those who have decided to take their destinies in their own hands through making the right Investments and financial plans

emmanuelewumi:


Where you will be in 10 years are determined by the types of books you read and the types of friends you keep.

Maybe I should include by the types of threads you visit on Nairaland

einsteine:




Good companies on the NSE have been having depressed valuations. It is a long term inefficiency.