Happy Friday, first I must yet again apologize for my long absence. A lot of things have happened over the past 2 months and I got distracted pursuing other stuffs. This post is long over due, It has been in my draft folder for over 45days.
A lot has been happening in Nigeria, exchange rate is very high, inflation has hit double digit, there is a decline in purchasing power of individuals, GDP has declined over the past quarter, Government spending is severely constrained, PHCN is holding on to power and fuel has become a scare commodity.
These are hard turbulent times for Nigeria, there is so much uncertainty in our dear country and most industries and businesses are affected by these challenges. Uncertainties heightens arbitrage and speculation, both new and old businesses are not willing to take risks, and many are reluctant to establish new businesses.
As a Christian, one word that keeps me going in these turbulent times is in Job 22:29, “When men are cast down, then thou shalt say, There is lifting up;”. The good news is that there is always opportunity in chaos. What Nigeria is currently going through is nothing new, it has happened in the past and its just a cycle. New billionaires will emerge from this low decline period.
Now is the time to consider various strategic options and one of such options is applying the principle of value investing. Value investing generally involves buying securities that appear underpriced and less than their intrinsic value. Warren Buffet is a proponent of this form of investment and he once quoted, ” Be fearful when others are greedy and greedy when others are fearful”.
This is the time to stop spending on frivolous things and invest your money. Smart money buys in decline. Nigeria will get through this period and now is the time to position yourself. The capital market is experiencing a price reduction and stocks are crashing. If you have money that you can afford to tie down for the next 2/3 years, buy shares in value company’s now. Buy low and sell high later.
Invest in counter physical stocks, stocks that even if the economy goes down, people will still use their products. Telecoms, Food & Beverage,Pharmaceutical, even banks. One of the biggest bank in Nigeria, I was shocked to see that share price has crashed to less than N4, I foresee that bank’s share going back up to over N25 in a few years time. So imagine buying 200,000 units @ N4 and in another 2/3 years selling it for over 5 times the amount you bought it. I will not mention the bank, rather I will leave you to figure it out. (Do some research and contact a stock broker).
This is the time to apply the principle of delayed gratification, hold on to that car you want to purchase / dream holiday / luxury watch etc. and invest smart.