₦airaland Forum

frosbel:
I weep for this young man and a needless death.

Two of the main problems in the Nigerian Police Force are Illiteracy and Poverty.

A sweeping educational initiative should commence immediately complete with exams. All those who cannot attain to the required standards should be retrained as a matter of priority on proper policing ethic.

But this is not enough , I also feel sad for the policemen who are expected to contribute so much including their very lives, and yet their income is so pitiable and shameful, they live in ghettos called barracks and they are a national object of scorn. They need good wages, good housing and proper respect in perspective.


Back to this crime, surely the policeman who did this MUST face the full wrath of the LAW.

True.

The Police is not well trained on proper code of conduct towards citizenry.

And to make matters worse, most of them are a buncha trigger happy sad men who are not properly motivated.

The force should be completely overhauled and drafted into the Nigerian Army while young bright freshly trained people are recruited into the police force.

I believe that the Nigerian Bar Association or even the office of the Attorney General can set up an independent body such as the likes of {EFCC} that will effectively handle cases involving extra judicail kilings.

The salaries, bonuses and promotion of members constituting such bodies should be tied to the number of cases they effectively investigate and try in each year.

The topic sounded like Poster quoted Jonathan saying "We wont, i repeat wont,. . .Jonathan Assures Obama"

i didn't read that in the article!

It gives the story a form of backing that the Acting President is being dictated to.

sjeezy8:
hahah lmfao- months ago they said Nigeria is losing its importance in the world.
Now jonathan is "Critical Leader In Africa"

"There are specific sections on energy and investment and the American government is encouraging the private sector there to and invest in Nigeria . We have existing bilateral relationships and agreements with them, which we are honouring.

lol thats yankee
Critical leader= Nigeria important to American economy.

Goodluck should represent well because[b] if he has the backing of US he can surely become presido in 2011[/b].

and how is that going to happen? Last time i checked, obama doesn't have a right to vote in Nigeria

lagerwhenindoubt:
How we love to wish the unjustly departed sorry and goodbye. we never ask what must be done, I doubt any policeman in Nigeria today who has committed murder of an innocent citizen has ever been brought to book and killed or locked up for life for his crime.

We all like to say sorry, May his soul rest in piece, one day it will be you and i doubt you will want people to just wish you sorry and rest in piece

And what would you have us {on Nairaland} do?

Yes, its that bad!

Did you read somewhere in an earlier post where supposed company's without a location or address, or even account statements engage successfully in IPO deals?.  Now, where in the world is such carried out except Nigeria?

It literary means, i can approach the Corporate Affairs Commission today, register a company name and after a week, approach the NSE for an IPO deal.  Now that's unimaginable! 

Frankly speaking, i don't see foreign investors coming in {you can say am being pessimistic}, rather, i see more of our own home grown investors seeking the greener pasture elsewhere.  The Political system is still very much unstable, credit intermediation is gradually coming to a halt, companies are facing hard times expanding their business, consumer confidence index and all other leading economic indicators are not very promising, and to make matters worse, why would you think someone will leave the comfort of his own economy and come down to a country which of recent has been riddled with religious riots and stories of kidnapping.  Wouldn't you agree that a smart and rational foreign investor will rather move to the Arab Emirtes where even tax rates is close to zero?

As for the issue of counterparty risk, Options don't operate like bonds or equities.  Equities signifies an ownership stake and the only sets of risk you have are market risk and company risk, while government  bonds on the other hand are usually not known to fail, all Jonathan has to do is to direct that tax rate be increased.

However, with options {calls as an example} , the person buying carries a significant risk that the writer might default on payment if the option ends up deeply in the money.

Now in as much as i agree hundred per cent with you on the fact that options if well structured can limit a holders downside losses and it is particularly useful for insurance and pension funds, my pessimistic imaginary friend tells me that given a history of defaults from our Insurance houses in time past, people might not just be willing to trade in it, and this of course will affect liquidity in such markets if and when established.

And why is Iwu reluctant to leave the position anyway? it aint his father's company!

Yes all these problems are not new . . . what we need is a new generation of finance professionals to move this industry forward. The old guard need to retire and live the field for us the youths

Derivatives is wonderful for risk management. This can be the first step. . . We can start an OTC market and write options for pension funds or institutional investors for a start. Simple marketing strategy will be that we are selling them this options e.g a put option so that they can buy downside protection. Who wouldn't fall for that ??

Black-scholes and the greeks are core to derivatives pricing. Classic black-scholes is nearly useless though because of all the laboratory assumptions. but the wonderful thing about it is that it can be adopted fairly easily . . so instead of having constant volatility assumed by BS you can have stochastic volatility . . . transaction costs etc . .

It is not only about what and what not nice things are embedded in derivative securities, the concern is much more about the Nigerian state.

Even with clearing houses and Margin requirement, how sure are we that we can mitigate against counter party risk without taking resort from legal process?

How sure are we that the signals and the trends given off by the market is real and not "manipulated" as done in time past?

With a capitalization of 4 trillion Naira (correct me if am wrong) , it means any investor with as much as 10 billion Naira can drive the Nigerian all shares index in any direction he or she wants without prices reverting to the fundamental values for a long time.

Amidst these levels of deceit and fraudulent activities incorporating exotic instruments such as derivatives and structured products might only spell more harm than good for parties involved.

Is this for real

Votukpa:
Salutations all,

Love the thread,  really interesting, especially coming from peeps with exposure to core finance fundamentals. Love it.

An observation though -
Talking about CAPM in Nigeria is kinda annoying, primarily because financial markets in Nigeria are far from perfect - not even to the extent that the model implicitly attempts to reflect developed markets. (an assumption which the CAPM is solidly grounded on). With the volume of insider trading going on in the NSE along with the preponderance of asymmetric information delivery, I am fully convinced that financial market equilibrium will remain elusive in these parts.

All the excel models can be run, all the Sharpe ratios calculated, all the optimal portfolios got, all the alphas observed and the the risk contributions defined. All can be done but will amount to nothing because the system we have will hardly give them any meaning.
Therefore, I think its even dumb to teach CAPM and several other financial models  (plus traditional portfolio theory) in Nigerian business schools. Moreover adjusting the model to fit the Nigerian model would be useless. All we need it time. Time with institutional development. These models have been developed with underpinnings that strictly apply to developed markets.


But of course you all knew these already.



Me

P.S WE don't need Black-Scholes either. Greeks are useless. All of them. No core derivatives markets in Nigeria.

Well said!

NSE is a joke!

***ahem***

i have your YIM

when ure about jump starting your projects, involve me o

Yes Boss!

candylips:
yes this is a very good idea. i guess u can even just trade the options or futures on the exchange

Oil trading might also be attractive from a nigerian perspective i think ( . . . looking at all these guys that ship oil out of nigeria . . )

There is a commodities exchange in Nigeria http://www.abujacomex.com/ but i think they only deal in food



tbaba yes o i dey hole up somewhere around SE .

I tried the link and my laptop screams "Malware detected"

freshera:
Nothing new. I have heard of 1billion naira fraud in Access Bank before from a very good source, a friend to one of the bankers. Nobody was caught and no one was worried since everything is insured.

You kidding right?

^^ nope!

Buh if i can get sufficient experience in the commodities and Asset Management industry, and sufficient funds, i can have commodity trading prop desk in Nigeria with deal executed on the Brazilian Mercantile and Futures Exchange, trading Biofuels, and Precious Metals, i really don't have to take physical delivery, and if i have to do, i might just manage that using forward freight contracts


Who knows what might happen in the nearest future, there might just be a good and well developed exchange for such stuffs in Nigeria.

I guess the country needs our prayers!. . . . a lot of it

@Poster:

Simply get one of this

Put her head first in the toaster

candylips:
yea right. not good for retail investors

but can be quite attractive for institutional investors invovled in heavy daily trading


However, when we start dealing with options that noise is very fundamental (i.e volatility in the black-scholes model)

Yep!

If am going to pursue a passive management strategy like a buy and hold as well as frequent re-balancing, then i'd exclude noise and other disturbances from my portfolio composition, however, if am an active daily trader like Sir tkb417 , who depend on trading volatilities or perhaps institutional investors who need to constantly manage the delta and gamma of their holdings, then noise as you put it is very fundamental.

I'm actually looking to go into full time commodities trading, and perhaps own a big and well capitalized prop desk someday.

Yes he's rich. How much do you guyz think he makes per hour? Most of you ppl complainin abt a grave yard security bin rich dont even make more than 8naira/hr . What i see as rich might not be rich to you bt all i know is ,he is rich

Yeah you are right, i hear most people on Forbes are grave yard security guards who make more than 8naira/hr

candylips:
violent

you are right. You can also use daily data or even tick data to get more data points

when you simulate more datasets i presume u do it via bootstrapping right

Yessssssssiiirr!



Personally, i wouldn't recommend daily or tick data though, there is a lot of noise in such data

Most banks engage in fraudulent activities. . . it was evident when Sanusi began the banking reform

i thought the returns used for the optimization problem is the expected return got from CAPM

No not really

All we are trying to achieve is the best portfolio weights based on historical returns and risk!

Besides, the process of simulation brings flavor to the whole context.

Look at it this way, even if you are working with 50 years monthly returns, that will only mean 600 data sets which will never be enough.

But once you simulate another 4000 data sets, with you current one, you will be able to achieve almost any form of return and risk.

With 4000 data set at your disposal, all you need is to instruct the Execel solver to give you portfolio weights that will provide the maximum returns and minimum risk.

candylips:
@violent

Ok i get it now. basically you are just going to plug in returns and risk for different stocks and then optimize to see the most efficient. But you will still have to worry about covariances.

nice one 

Yes boss!,

the returns are adjusted returns and the risk is from the average standard deviation of the historical data!. . . . i will be happy if i can lay my hands on the quaterly figures for a 10 year data.

We worry about covariances when we are worried about the problem of auto covariance and auto correlation, which if present will defeat the purpose of diversification in the first place.

So we check for autocorrelation by regressing the stock returns against its lag values, if autocorrelation is present and the p value from your regression is less than 5 percent, we either drop the variable or de-autocorrelate {using some sílly and disturbing mathematics of course}.

Simulation of another 2000 dataset is done using VBA or @Risk, and if you are the psycho type that love to incorporate personal opinions, you can make use of the black littermann model.

nice one boss

candylips:
@violent

hmm . . . idealy you need to be regressing against the market index.

You really don't need to regress on the market index, because that will only mean that you are only looking to explain the effect of the market variability on the stock prices, which is applicable in CAPM models which defines relationship between risk and expected returns that is used for security pricing.

In the case of optimization, the market index is only used as a benchmark index along with a tracking error

However, in the case of optimization, what you are concerned about is calculating and maximizing your sharpe ratio given the risk free rate of return.  The efficient portfolio will be the best portfolio for any rational investor under any given circumstance.

The regression part of it helps define the diversification which is the root of the MPT, and to achieve that, you must be sure that your portfolio asset holdings are not positively autocorrelated.

Autocorrelation is achieved by regressing the stock return data against its own lags

candylips:
you can only do this with options. unfortunately options is non existent in the stock market.

i think the time is ripe for an OTC options market.

Yessssir!

you a damn right!

The NSE gives little or no chance for efficient portfolio management

I honestly doubt if we are ripe enough for them though.  

My fear is rooted in the possibility of a liquid market for certain exotic instruments, i doubt if we have the infrastructure and technical know how as well as enough knowledgeable finance professionals in place to ensure liquidity in such markets.

I might be wrong though, i certainly hope to be.

candylips:
ok thats cool.

but how will you get the expected return of the stock ( i.e beta) you will still need to regress the historical data of the stock with the historical data of the market index for you to get this isn't it.

I will perform regression of the stock returns against its lag values to check for autocorrelation.

The stock beta isn't really necessary in this case.

With my adjusted return, i can calculate my sharpe ratio, and all i need do is some Monte Carlo simulations and the leave the rest of the optimization for Excel Solver.

I'm just a lil bored at the moment, needed to find something to do for kicks.

Moreover, it will really be useful for folks {like my dad} who are into stock investment for long term purpose.

and how did you find out?

candylips:
@tbk when you subscribed was it possible to get historical data going back to say the 60's or 70's .

@violent are u trying to do some kind of regression analysis on the data.

I'm not doing regression analysis.

I want to construct an excel template on certain sectors in NSE to determine optimal portfolio weights of each stock that will give me the maximum portfolio returns with minimum risk.

I am hoping to drop the attachment here once completed.

[quote author=rita@NL link=topic=427429.msg5856682#msg5856682 date=1270762893]He's rich,loving,caring,handsome,aritculate and fashionable.You saw him and you liked him.After talking to him you fell inlove with him even though you didnt know much about him.Two weeks later you got talking about his Job and he told you he works in the grave yard as a security. Would you still wanna go ahead with the relationship ? What will run thru your mind everytime he  comes home midnite and lay beside you ?  [/quote]A rich graveyard security?

Maybe I'm going overboard, care to explain what you call "rich"?

tkb417:
done level 2

was part of the guys who took the CFA chaps round the country sometimes last year.
The guys were looking at incorporating CFA curriculum into our finance programs in our universities. Met with LBS and some others. They also met with some captains of the industry especially the finance houses, investment banks, kpmg, and others on the need to support willing staff in increasing the charter holders in the country. we had a nite at lagoon restaurant with the guys answering a whole load of questions from candidates and charter holders on how to move the practice forward in Nigeria.

The CFA are looking at bringing back a center to Lagos or Abuja but the issue of security and other issues remain paramount in their minds. We now have a local society in Lagos and we shd have a full fledged one as soon as we have 35 charter holders and about 15 members. The practice is moving and i expect 9ja to be better for it in little time. I shd be a charter holder by his grace next year cos this year, i no dey read book o. i wan rest

as per making a diff, when ure knowledgeable, then the desired changes will just come handy. as it is now, we dont have up to 30 charter holders in the country compared to over 50,000 we have in the UK

You are a don with the level 2!
I doff my hat o!


Does anyone know where i can obtain historical data on the NSE?

I tried the Reuters, couldn't find any

I will like to use it for a portfolio optimization process.

Joey is truly a smart boy!

He keeps quiet and gathers fact. . . and when its time to act, he moves in a swift, ruthless manner!

If my boy Jonathan can achieve this, nothing will stop is future politcal ambition.

Yes, you heard me right-----NOTHING

nope!

WTF

Don't worry fellas, everything is under control