Author Topic: HOW TO BENEFIT FROM STOCK MARKET  (Read 602 times)

Offline furtune

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« on: November 10, 2008, 12:22:13 PM »
How to benefit from stock market
By Sunday Ojeme

Until recently, when snippets of the global financial crisis entered into the Nigerian capital market, some investors and financial advisers were of the opinion that majority of Nigerians had come to understand fully how to play the stock market.

Through information from friends, offices, offer campaigns and other means, a number of Nigerians including those who never bothered about investing in shares suddenly became capital market players.

For the eight years the bull run lasted, some people withdrew their savings from the banks, sold properties, while some others borrowed money from friends and family members to buy shares. The experience became an opportunity for the new found investors to imagine themselves reasoning like billionaire Warren Buffet.

Moreover, it provided an opportunity for those who had time to devote it to writing journals on investment while others chose to turn out books for the same purpose.

However, the bearish experience in the last eight months has revealed that more than anything, some Nigerian investors still need to learn a lot before delving into the business of playing the stock market.

According to an investment expert, Mr. Martin Obiagu, the experience of some investors with what is happening now has again brought out the nature of human beings in their quest for taking profit without making sacrifice.

He says, ?Investing in the capital market is like investing in any other business. It even carries more risks than when you buy articles for sale and you watch how you market it. In the case of the stock market, a number of factors determine how your stocks grow. The fundamentals of the company is one, and even if the fundamentals are alright, other investors must be interested for the shares to appreciate.?

He adds that the boom experienced during the administration of President Olusegun Obasanjo at the capital market was as a result of the interest a lot of people, including foreigners, had in the economy.

According to him, ?I am not trying to discourage people from investing in shares. The economy is still good and there is a lot of money to be made from the stock market. But what has been revealed now with the way people are taking the bearish run, can be likened to pulling the cart before the horse. It shows that before now, people did not have a good knowledge of how the capital market works. Rather they understudy the stock business first, they pumped in money without knowing that prices of stocks fluctuate from time to time.?

He says the essence of investing in stock is not to tie money down for a long time because an individuals feels he is not getting much from the bank.

Obiagu discloses that ?like it or not, playing the stock market is like gambling. As soon as you invest, just watch it grow. The moment you have made profit, take your profit and use the money for something else. If you have to invest it in property, better. If you leave it there for too long, a time will definitely come when the prices will fall. That is exactly what we are experiencing now.

?Let me tell you, majority of those screaming now, it is not as if they lost their investments. They are shouting because they have lost a couple of millions but definitely not the few thousands they invested. The question is why didn?t they take the profit after the prices had risen by more than 50 per cent or more??

Speaking in the same vein, a market analyst, Mr. Kolawole Osai, says the bearish experience is good in the sense that it will impart more knowledge in Nigerian investors who have always believed that the capital market is where you reap all the time.

He says, ?I am really very surprised that despite all the seminars and lectures by the so called motivational speakers on investment, so many Nigerians are still shocked over a few months? losses in the market. It is called a market because the forces of demand and supply are there. And wherever you have these forces, then prices are bound to fluctuate.

?I believe the experience is good because as from this moment, those affected will now know how the market operates. When next they invest, as soon as there is profit, they take and use it while they watch the other either grow or decline in price.?

In his view, the Group Chief Executive, Intercontinental Bank Plc, Mr. Erastus Akingbola, believes, ?What is happening is very strange to Nigerians because we have always believed that once anything goes up it never comes down in Nigeria, especially prices. Nigerians never believed that the stock market prices will ever come down.

?The thing about stock market is that when prices go up, you sell and take your profit, because there will be a rush for a lot of people to take profit.?


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« on: November 10, 2008, 12:22:13 PM »

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