OPTING FOR AN INVESTMENT STRATEGY

OPTING FOR AN INVESTMENT STRATEGY.

Few years ago, precisely in the mid 80’s and early 90’s a popular TV soap opera in Nigeria BASSEY and CO, has a household phrase accredited to one of its dramatis personae named Mr. B, he was fond of saying, “if you want to be a millionaire, think like a millionaire!” should that be true, the mantra that success has a pattern stands tall.

Thus for any one aspiring to be anything, he must have an idea or someone he or she is looking up to as a guide. The field of investment is not left alone in this quest.

Not long ago, the Nigerian stock market experienced a boom with such frenzy as never before. Short term investments gave returns at an unbelievable positive rates. Even the foreign media joined in the hype as the market become the toast of all and sundry. Many financial tabloids were given birth to, many become stock analyst in both print and broadcast media. Stock marketers, promoters and stockbrokers had a field day even selling moribund company shares and private placements at premium price. Business was good.

When the ovation was loudest, the burble burst. That many lost money is to say the least. Crisis of confidence went on the prowl. Even new listings and good co-operate results could not lift the market. Calculations failed woefully.

Talking of investment and taking the stock market option, we will look at the investing strategies of the gurus in the arena. I will like us to look at the most successful stock investor. Utilizing the slogan, if you want to be a millionaire, think like a millionaire, lets look at a part, just a part of investment strategies of the Sage of OMAHA and the richest entity on planet earth, Warren Buffet.

Two major characteristics are found in his kitty.
buy and hold for a long term period
buying a fundamentally good stock below its real value.
Added to these two points are buying and going to sleep and even buying more if the prices were still on a downward trend.
The above mentioned formulae of investing has been mentioned more often but only a negligible few understands and uses it as it is required. Let’s take these two points one on one. What period is a long term? 6 months, 2,5,10 or 20 years? Any could be for an individual but an average gestation period is between 3 to 5 years.

Then, how and when can one buy a stock below its nominal value?
Option A, could easily be addressed, but option B is technically configured though on a common sense level. Warren Buffet is an American and trades in American, let’s take on his investment in BUDWEISER.
According to him, he only invests in companies he, himself understand their business. BUDWEISER brews a fine quality beer, has long established history, has a good market fellowership and remains innovative in its existence. Thus when their stock price was not attractive to the general public and all the good fundamentals were intact, it was the best time to move in.

Why did he move in? Once a good company is re-engineering, its stocks can be unattractive to the untrained eyes. Do we see when we can buy a stock at discount?

Let’s localize all these analogies.
Is there any replica of such in our dear country Nigeria?
Yes, Nigeria Breweries!
They have all the attributes of BUDWEISER. About five years ago, when the company was re-engineering, most people were not interested in their stocks. Just last year, it was selling at about N25.00 but now, it has moved above N50.00 returning above 100% less than two years.

As soon as the ground work is done, the stock has been fine and moving forward. Bearing in mind the above given analysis and our remarks at the beginning “wanna be a millionaire think like a millionaire”, Can we play the market here in Nigeria like Buffet? If he, the stock billionaire is about to invest in Nigeria which stocks will he buy?

Using the following guides:-
long sustained history
known and understood business
good network of distribution
excellent services
Urge to remain on top.
I can confidently say that he will invest in companies like FIRST BANK OF NIGERIA PLC, NIGERIAN BREWRIES PLS, DANGOTE SUGAR REFINARY PLC, COSTAIN WEST AFRICA PLC to mention but a few.

May I give you reasons why FBN must be in his portfolio, ten years of unbroken reward to investors in both bonus and dividends, slow yet steady service, a branch is always in your neighborhood, and an unalloyed urge to remain the big elephant.

Now coming home more, one out of every three fund managers have at least one of the five mentioned stock in its portfolio. Also, one out of every two fundamental investor has one of the five in his kitty. Children educational investments and that of retirement also have them in a good quantity.

Most stocks may have fast price appreciation, but many of them as history has it have not stood the test of time. They crashed and are swept away.

As Mr. B will always say, wanna be a millionaire, think like one.
The slogan slow and steady wins the race is still a golden rule.
Invest with the mind of millionaires and join the millionaires.

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