Now Is A Great Time To Invest In Stocks

I used to think when people say "Knowledge is power only when applied" they were just trying to sound smart. But now I don't think so anymore. I have seen its truth play out repeatedly in my life recently.

The only reason I am making more money that I used to make just a year ago is not because I know a lot more now. I definitely do know a lot more now but the new knowledge I have acquired are not what is fetching me the bulk of my income. The bulk of my income come from knowledge I have had for a long time but just didn't apply/monetise well then.

All those things we read in books and know will only benefit us if we apply them in our day to day living. We all know exercising is good but only the people who put in the deliberate effort to exercise regularly will benefit from that knowledge; others will only be able to make nothing more than a good argument from their knowledge. We all that the best time to buy stocks is when they are down and selling at ridiculously low prices. Yet some people will never act on that knowledge either because they have genuine reasons or they are used to knowing without applying. Genuine reasons would be no spare money to invest, a deep hatred for stocks, inadequate knowledge on stock investing and better opportunities to put their money in. Reasons other than those are simply a reflection of an unwillingness to put to practical use the knowledge you have.

image: bornrich.com

Now is a great time to invest in stocks in Nigeria. And if you are not a great stock picker you will still do greatly well if you open a stock mutual fund (either with ARM or Stanbic). And that is what I am doing. I have resumed my monthly investment deposit to my ARM discovery fund. I no longer have the time to actively pick stocks. After looking at the performance history of my ARM discovery fund investment since I opened it in 2011, I have made more from it than from the money market. And even when I was running my own brokerage account, picking stocks myself, I didn't do better. So I will just have ARM manage the investment for me and do the stock picking.

Before I quit my job last year to start my own business, I used to make a monthly contribution of N60,000 to my investment accounts. Usually split as N10,000 direct debit to the ARM mutual fund, and N50,000 split between my ARM money market fund and ARM stock brokerage account. I stopped the N50,000 one immediately I quit my job in March. And I stopped the N10,000 direct debit in September last year when I had exhausted my savings. It was just two months ago I resumed the N10,000 direct debit to the ARM mutual fund account. And now I am restarting the N50,000 one too but will have it in the mutual fund rather than the brokerage and money market fund. It's now part of my monthly personal goals.

My reasons are very simple. Stocks are now ridiculously low maybe because the new investment hype is real estate and people are now more concerned about a predictable savings in the face of the current harsh economic environment. Banks are laying off staff in thousands, oil companies are letting go of contract staff and state governments are not able to make payroll. Very few people have cash and confidence to spare for the stock market.

Nevertheless, the principle is simple and always works. Those who make the most money in stocks buy when everyone is pessimistic about stocks. When you no longer see people reading the NSE price list section of newspapers and no investment firm is making buy/sell/hold analysis on newspapers. When the news is how the stock market is at a new low. These are the strongest buy signal you can ever get.