Why This Might be The Best Time to Buy Nigerian Stocks


Today, 12th January marks the first trading Monday in 2015; yet, it doesn't look as if we have entered into a New Year in the Nigerian capital market where stocks are traded on the Nigerian Stock Exchange (NSE). Latest news reports from the capital markets shows that stocks traded on the Nigerian Stock Exchange lost a combined N1.5 trillion in the first trading week of 2015.

As at market close on January 9 (last Friday), the combined market value of the publicly traded companies on the Nigerian Stock Exchange was N9.980 trillion compared to an opening value of N11.478 trillion to mark a loss of N1,498 trillion or 13% within one week.

The performance of stocks in the first trading week of the year looks to be a continuation of the trading down that characterized much of the last year. For instance, in 2014, Nigerian stocks took a seat among the worst-performing stocks globally as they recorded an average full-year decline of 13.05%. Hence, the losses recorded in the first trading week of 2015 suggest that 2015 might also be a bearish (losing year.

Value in the Dregs for Stock Investors

One of the best investing advices that could lead to profitable stock trading activities is the simple concept of "Buy Low and Sell High." The concept teaches that the best time to buy stocks is when they are trading at an historical low price in relation to their business fundamentals and that the best time to sell stocks is when they are trading at "high" prices in relation to their business fundamentals.

We can then combine the "Buy Low, Sell High" concept with the contrarian investment thesis of Warren Buffet, which suggest that value investors should "Be Greedy when others are Fearful and Be Fearful when others are Greedy."

A combination of the two theses suggests that 2015 might be great year to buy Nigerian stocks at a discount to their intrinsic/fair values. Hence, instead of being worried that 2015 has started on a losing note, you can use the general sense of apprehension in the market to seek out great companies and buy their stock at a fraction of what they are intrinsically worth. Hence, you can simply buy low by being greedy when others are fearful and then, you can sell high by being fearful when others are being greedy."

Happy Investing!
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