Vincent Adubor is an Assistant Director with the Chartered Institute of Stockbrokers. In this interview with Okechukwu Nnodim, he says Nigeria is one of the most fertile places for short-term investment
What are your three key investment principles?
You must invest in what you can control, where you think you will be in charge. You don’t go and invest where you don’t have an idea of what is happening. So you must be knowledgeable about what you are investing in. If you are to invest in land, you must know that location is one of the most important things to consider and you must know other things that surround the security of the land you are investing in.
So before going into any type of investment, you must be familiar with it; you don’t just invest because other people are investing.
Secondly, you must be able to know point of entry and point of exit. For example, now that we are talking about property issues in Europe and in America, there was a time it was at its peak. And at that peak period, I don’t think an average investor can just enter.
You have to know what is the average price like, how does it start, what is the bottomline, what is the support and what is the resistance so that you will be able to say if I enter at this point, what is my gain going to be like and how long it is going to be.
Therefore what I am trying to say is that you should know your point of entry and exit. If you are a speculator, you must know when to exit. If you are a long term investor, you must be able to give duration in terms of projection of when you might have made your maximum return or at least 50 per cent and above. And at the point of exit, even if you’ve not made what you want to make on the investment, have you taken advantage of breaking even at exit instead of total loss? So this is what I mean by point of entry and point of exit.
Thirdly, what are your expectations in terms of return on investment? In every business the bottom line is profit. So what are you looking at? Is it short, medium or long term? All these will help you to know when and where to invest in, whether it is stock, land or any business.
Are there short-term investments in Nigeria that can generate good returns?
I think Nigeria is one of the most fertile places to invest for short term. Let’s take the capital market for example and let’s forget about what happened even after the meltdown, you and I know that there was a time when (the share price of ) Guarantee Trust Bank Plc, not quite one year now, was N9. Today you and I know the price and when you take the average percentage in terms of income, you will know what I am talking about. So if you have cash and you are not in a hurry, Nigeria is a fertile place to invest.
So in that aspect, you could have made your 100 per cent returns under one year and one year is a short term from all angles. In terms of investment analysis in Nigeria, when you talk of money placement, one year, 180-days or 190-days period is short-term and it is like the money market.
But even in the capital market, if you want to invest and pull out all your money you can make it. Even in the past two months, if you analyse the stocks movement, forget about the market makers they have now, you would have noticed that some stocks have gained up to 25 to 30 per cent.
It’s been argued that only about 10 per cent of the listed equities have gained this much, so how would an investor interested in the stock market know which stocks to invest in?
Well like I said, many of our practitioners, are not well exposed to market analysis, but what is important is that over the years even if you are not a broker, you would have known that even though there is capital market meltdown, there are some stocks that are known to be steady. So historically you will know that, you will be able to look at one or two stocks.
Apart from that, in terms of property, aside the cost of building, location is another point. If you are able to get a good location in Nigeria and build a good property and you are able to handle it properly, I mean under two years you will make your money. I am talking of real estates now and you can get good returns there. I know that even in Ikorodu, Ketu and some other non-luxury areas, people bought land and even when they couldn’t build on them, the land continued to appreciate.
For an average individual who wants to invest in the stock market, what are the basic things to look out for?
If you don’t know anything about the market you must meet a practitioner, which is why we are brokers. And the broker must look at the fundamentals, forget about whether a company is paying dividend now or they are paying next year or what they have paid. Look at the current fundamentals and see the projections and see whether the ones that they have already sold out agree with their projections or surpassed it.
You may not reap immediately but in the long term you are going to reap.
So the fundamentals of companies, not bandwagon effect of companies, like ABC companies are mopping up and you don’t know their objectives and you join them without finding out. No! Do your analysis through your stock, let him advise you and go to all the sectors to pick and you will get something good.
Foreigners always say it is easy to make money in Nigeria, do you agree?
Anything you can do in a virgin land like Nigeria will guarantee you good income. If you travel outside to developed nations, nearly all ideas have been exhausted there and they are only refining ideas. But here we have not even started with any idea.
By Okechukwu Nnodim