Monday, April 5, 2010


Over the last one month I've been made to feel like a celebrity sort of, simply because I told television viewers in early January what I thought was very obvious - that the Nigerian Stock Market will rebound during the quarter.By end of March the NSE Index had notched up 25 % and didn't seem to be relaxing at all,and everybody suddenly thinks I'm the nostrademus. Am I flatterd ? Big time ! Am I impressed ? No !

Well,it's possible that I'm crying over spilt milk.In early march,when the gain hit 14%, I took the decision to sell down all my short-term portfolios irrespective of the fact that things were still looking up.That decision of course means I have missed out of the extra 10% that followed,but I have no regrets whatsoever.Any human being that makes the same mistake twice must have to search his soul thoroughly.

In 2008 the stock market crashed flat on our faces, and is only just reviving after two very painful years. What caused it ? Did we learn anything from that experience ? Well I'm afraid many of us do not seem to have learnt any lessons at all.In 2006/2007/early 2008 the market was awash with liquidity - ie hot cash - from the banks,institutionals and foreign speculators.That is precisely the same situation we have found ourselves in today.Interest rates have crashed miserably in the money market and in reaction,depositors are moving their funds massively from the banks to the stock market.

In early 2008 the market was so enveloped with the 'greed' factor that we simply did not know when to apply the breaks - until of course the vehicle crashed ! Regretably that is the same situation that we are pushing ourselves into today."The money is there, just buy for me - at any price !". In December most stocks were technically underpriced;today many are already over the roof,and still no signs of restraint ! It is so sweet to watch your investments grow,but always remember the pains that come when you lose - and always remember that in the stock market,what goes up will always come down (and vice versa).

Now to all my friends who have been asking me for another 'big prediction': The market is still good for investments,but at this point resist the urge to buy at significantly higher prices.The market urgently needs to cool off,even if for a few days or weeks - it's in our own interest.Let's keep things stable.

1 comment:

  1. Nice advice there, lucky for me most of my investment in the NSE are long term.

    Thanks for your comments on my blog.


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