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I have seen over N1,000,000 of my stocks investment money wiped off this year. And we are just 8 months into the year.
How did this happen? What did I do wrong? Am I able to sleep well at night? Shouldn't I move my money to Treasury Bills or other capital guaranteed investment scheme?
I will tell you how it happened but first let's get it over with the other questions.
I didn't do anything wrong. I sleep very well at night and even on some afternoons. No, I am not moving my money to Treasury Bills.
Back to how it all happened.
My stocks investment are split into 15 Nigerian Companies (Dangote Cement, Dangote Sugar, Ecobank, First Bank, GSK, Mansard Insurance, Nigerian Breweries, Nestle, NewGold ETF, Okomu Oil, PZ, Total, UBA, Unilever and Zenith Bank) and 2 USA dollar denominated ETFs (DB Commodity Tracking PowerShares and iShares Gold Trust).
Most of the losses came from my Nigerian stocks. And this is due to the capital flight from our stocks by the foreign investors in order to gain from the increased risk free return (US bonds) in USA and in trend with the general new distaste for emerging (and frontier) markets. Some say the election/political risk is also contributing to it.
My US holdings are also not fairing well. I have seen significant losses in my Gold ETF holding and as for the reason, the experts are divided and bewildered. It runs against conventional investment wisdom that Gold will go down in a time of increased global markets trouble and economic wars (courtesy Donald Trump). Also, my Commodity ETF holding has slightly dipped (the rise in Oil has been what is preventing a deep slid in that one).
Why then am I not worried?
It is because that is the nature of stocks investment. It goes up and down. Volatile. In fact, I have been buying steadily up till early this month when it dawned on me to start saving towards my wedding. If not for that near term need, I would just keep buying stocks without bothering about the decline.
What then is the source of my confidence?
It is God. Pastor Poju Oyemade explained in today's sermon that we must always see God's hand in all we have and do. And if I will try to explain how God did it, it would be that He made me to have a well thought out investment strategy. I bought into companies and securities that I was sure were selling at a discount (below their true value). I don't care about how much further below their true value they go because I know they will rise back to what is sensible. Also, I don't care about the election effect (as I believe it will be short-lived) and I am not worried by the fleeing foreign investors (we all know they always come back).
That's interesting, not everyone will come out and reveal the position of their account. Kudos Sir.
ReplyDeleteFor me, I am currently outperforming the index, only Dangote and Seplat stocks, which are my long term holdings are down. I own AIICO, NEM, Caverton, every year, I do a sentiment analysis of Nigerian stocks, and position my portfolio for maximum benefits. Sentiment lets me see what people are buying, then use Fundamental to value the stock and Technical to time my entry.