Investing in buying shares at the Nigerian stock exchange is a task many people want to accomplish. The present economic crisis has created a lacuna of doubt in the mind of some who are very cautious and never want to get their fingers burnt. The news media is already awash with tales of woe of investors who have suffered a great loss since the bears started reigning. This article is for those who want to continue to invest in shares and keep on searching for strategies that will guarantee they make more money from shares in the Nigerian stock exchange. The ideas I’m going to share with you here are the insight I got from one of my mentors. If you apply these strategies, you will discover the age-long secrets of making great profits investing in the Nigerian stock market. This is where you must begin. For what purpose do you want to invest? What horizon of time do you have in view?
Do you want to invest for the short term or long term?
When you make a profit, what are you going to do with it? Short-term investors are not interested in the fundamentals of companies that is why they are called speculators. A long-term investor should ensure that the investments made are in strong companies with impressive fundamentals. They must be companies you are sure cannot go out of business in the nearest future. The vocabulary of investing in shares should be at your fingertips. Your learning curve must be continuously upgraded to stay ahead of the average individual if you really want to make money investing in shares in the Nigerian stock market. Investing in shares is just like any other business. Your search for knowledge should include common terms relating to shares, government policies, world economics, finance, and commodities just to mention a few. Regular subscription to investment publications and stock market news should be an acquired hobby. You should also be interested in knowing what is making prices go up or down.
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Don’t invest in any company you know little or nothing about. That is a bad investment strategy and can take you to the slaughter house. Be interested in the management of the companies and the individuals calling the shots. What’s their history? One thing you must never forget is that winners in this business spend substantial amount to acquire investment education. Many people get it wrong here. There is no how you can profit from shares if you miss the right time to buy or sell. Astute investors made good money and exited the market before the bears began to reign in May 2008. Money is really made when you buy a stock when its market price is below its real worth. You will then wait until it gets to a level where you can sell and make a tidy profit. There is no way you can make profit when you buy shares when they are most expensive. That was the great investment mistake countless investors made in 2008. The result was fatal in some instances.
Remember that a popular Stockbroker died on the floor of the exchange when the prices continued to slide. His company was engrossed in margin debt. There is a rule of thumb you must keep at your fingertips as an investor in the Nigerian stock market although this rule could be adopted universally. This rule will greatly influence your investment decisions and guide the risk you can take in any investment. It is a profitable rule for portfolio management. What is the rule? Deduct your age from 110. Whatever is left is the percentage of your portfolio that should be in shares’. For example, if you are 30 and you deduct it from 110, you are left with 80. That is to say, 80% of your investments should be in shares at age 30. If you are 60, 50% of your portfolio should be in shares. The younger you are, the more aggressive your investment in shares should be.