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Found 6 results

  1. You can access the Excel file here: NSE Daily Trade Data
  2. Michael Olafusi

    Investment 101

    image: quizzle.com This post is a summary of what I would tell anyone new to the world of investment, from a practical standpoint. So let's start from what we all know and hear a lot. "Anyone who bought land in Lekki 25 years ago when the world's eyes hadn't opened to it are now multi-millionaires". "Those who bought land in Ikorodu in as little as six years ago are now making over 10 times return." We all know how lucrative and wealth building buying land cheap and selling after a few years can be if one chooses reasonably. What most of us don't pay attention to is that it is not only land (real estate) that generate such generous long-term returns. There are many other types of genuine investments with proven excellent returns other than flipping land and houses. Investment should be looked at through two lenses of the same spectacle. One is long-term investment and the other is short-term investment. Short-term investments are the ones that guaranty the original capital invested. More like a better alternative to putting your money in the bank. Long-term investments are like building a house to rent out. You first have to spend the money, tying it down for years, before thinking of getting back the capital. The trouble I see most people make is that they want what is not realistic. Like expecting a short-term investment to yield returns only possible in a long-term investment. In the real world, the guy who puts his N50 million in a fixed deposit account should not expect to make as much gains as the guy who used his to build a house in Ikeja for rent and ultimately sell. Why? The real estate guy had to tie his N50 million for the number of years it took him to buy a land, build the house and patiently collect yearly rent before he could get back the N50 million naira while the other guy could walk into the bank any day to demand his N50 million. In 20 years time, the real estate guy's property would have fetched him his original capital, an income flow of N2 million per year and the property would be worth N200 million; while the fixed deposit guy would be permanently hooked to a 10% interest rate. Whenever I see someone who is looking for an amazing return on his investment without wanting anything to happen to the capital, I shake my head. We all know that setting up your own business is the ultimate investment, the one with the highest potential returns. But have you seen someone who wants to start a business without first burying the capital? Who wants to be able withdraw the startup capital any day, anytime from the day one? If you are serious about building real wealth then you have to think long-term investment. You have to be comfortable with burying the original capital invested for months and years. If real estate is your thing, then good luck. If you are wanting to start small then consider long-term focused mutual funds. But if you understand stocks and can put in the due diligence, then we are comrades. I do stocks. I understand it and have almost all my investment money in it. I do it for the long-term. Not that I buy a company's stock and go sleep for 5 years but that I am okay with leaving my money there without the intention of cashing out for the next 5, 10 years. I buy and sell shares like a thorough real estate investor will sell low potential properties to fund buying of higher potential properties with an eye for a bumper harvest 10 years down the road. And that's my Investment 101 for anyone just starting out.
  3. image: marvingermo.com One question I get asked a lot is: "Michael, that your stock investment, what is the rate of return?" They are always disappointed with my answer. I have been invested in the stocks market consistently for the last six years and I can't really say I have gained more than I put in, money-wise. My investment knowledge has skyrocketed but the money has stayed flat. I made some losses, made some gains; in the end they evened out. It is appropriate to compare one savings account to another by the interest rate they give you. It is even appropriate to compare bonds and money market investment account based on the monthly increase you see on top of your original investment amount. But with stocks, it is not appropriate. And in a country like Nigeria, things are even much worse for the person seeking a stable return rate for his stocks investment. For the last ten years the market has lost more than it had gained for investors. I remember in 2007 when I was an ardent reader of the stocks report page of Punch newspaper. I used to see market capitalization at 12 trillion naira. Today, Ten years later, it is less than 9 trillion naira. A whooping 3 trillion naira plus have been wiped off. A gigantic loss for investors; that's like 25% loss. That's the equivalent of putting 1 million naira in an investment account in 2007 and today you find that it has just 750,000 naira. 250,000 naira wiped off. And to make matters worse, every other thing has been rising in price. From price of house to price of car to price of bread and to price of coca-cola. In fact, I have been lucky to have evened out. On the contrary, if you had put your money in Federal Government T-Bills or a money market fund that accurately tracks it, you would have seen you money more than doubled within that same time period. Your 1 million naira in 2007 will now be more than 2 million naira. And that is some scary anomaly, T-Bills are called risk free and expected to deliver the lowest rate of return over a long time period especially compared to stocks. But in our dear Nigeria, logic is a laggard. Yet the reality is that stocks will always outperform the other investments -- real estate, savings and bonds. I know that not many people will agree with the real estate part. But here is the abridged logic behind it. The very land that is growing in value is also owned by the companies you buy on the stock exchange, and they don't just sit and wait for it to double in price. They make more productive use of it to generate ongoing income/profit than even the real estate guy. Imagine comparing the profits of an estate agent with that of a bank. For sure the banks make more from their land assets than the guy who rents house to people. The big trouble here is that the reality doesn't have a time tag. It is like the quote about a lie going round the world before the truth is able to get his trouser on. Here, reality can take, as we have seen, more than a decade to surface. In summary, the stock market is more for people who can have the patience to wait out the years of anomaly. And it starts with forgetting about a guaranteed rate of return or even yearly return. You just have to trust that logic will catch up and the reality we all read in the books will come to pass. If it is too much of a work, then please stay off the Nigerian Stock Market.
  4. Today's post will be a very short one. I am watching The Last Samurai and I have a training to prepare for tomorrow. Time is already 11:00pm. So I have to do a quick one today, more urgent than the training is the movie I have to get back to. Whenever I am under pressure, my way of coping is to walk away from it all. Today I have been under immense pressure. We have our Lagos class holding next week and not one single person has made payment. Upper week we have our Abuja training. I have booked both training room and hotel room and have to factor in that no direct flight to Abuja anymore, again not one person has paid. Also next week I have a training session for a mix of managers and operations team at Promasidor. So the pressure is really up my neck. Luckily, I love the thrill it brings. My heart pounds rather than beat and I have Excel/power BI dreams when I sleep. So back to today's post. I hope you remember the one I made not long ago about same Nigerian Stocks analysis but with R. Well, I have replicated the major one with Python. Below is the code and the analysis chart. I am also already working on the next phase -- building a predictive model from the time series data. I have started already with R, but I am having trouble with the time series function I am to use, it's not working well for stocks historical data because weekend dates are missing making the time portion irregular. It's a small bridge and I hope to cross it soon. Till then, enjoy this.
  5. Today, I woke up to a good news. Microsoft approved my "Nigerian Market Data" Excel App. So it is now globally available via the Office App store. If you use Excel 2016 or Excel Online, you can install and try out the app. Below are the installation steps for Excel 2016. And if you use Excel online: Upon successful installation, you will find the add-in under the Home menu as the last item on the right. It is the first version and I plan to radically improve its design and add to the functionality. You can help shape future updates by installing it, using it and letting me know your feedback. Thanks!
  6. image: marvingermo.com One question I get asked a lot is: "Michael, that your stock investment, what is the rate of return?" They are always disappointed with my answer. I have been invested in the stocks market consistently for the last six years and I can't really say I have gained more than I put in, money-wise. My investment knowledge has skyrocketed but the money has stayed flat. I made some losses, made some gains; in the end they evened out. It is appropriate to compare one savings account to another by the interest rate they give you. It is even appropriate to compare bonds and money market investment account based on the monthly increase you see on top of your original investment amount. But with stocks, it is not appropriate. And in a country like Nigeria, things are even much worse for the person seeking a stable return rate for his stocks investment. For the last ten years the market has lost more than it had gained for investors. I remember in 2007 when I was an ardent reader of the stocks report page of Punch newspaper. I used to see market capitalization at 12 trillion naira. Today, Ten years later, it is less than 9 trillion naira. A whooping 3 trillion naira plus have been wiped off. A gigantic loss for investors; that's like 25% loss. That's the equivalent of putting 1 million naira in an investment account in 2007 and today you find that it has just 750,000 naira. 250,000 naira wiped off. And to make matters worse, every other thing has been rising in price. From price of house to price of car to price of bread and to price of coca-cola. In fact, I have been lucky to have evened out. On the contrary, if you had put your money in Federal Government T-Bills or a money market fund that accurately tracks it, you would have seen you money more than doubled within that same time period. Your 1 million naira in 2007 will now be more than 2 million naira. And that is some scary anomaly, T-Bills are called risk free and expected to deliver the lowest rate of return over a long time period especially compared to stocks. But in our dear Nigeria, logic is a laggard. Yet the reality is that stocks will always outperform the other investments -- real estate, savings and bonds. I know that not many people will agree with the real estate part. But here is the abridged logic behind it. The very land that is growing in value is also owned by the companies you buy on the stock exchange, and they don't just sit and wait for it to double in price. They make more productive use of it to generate ongoing income/profit than even the real estate guy. Imagine comparing the profits of an estate agent with that of a bank. For sure the banks make more from their land assets than the guy who rents house to people. The big trouble here is that the reality doesn't have a time tag. It is like the quote about a lie going round the world before the truth is able to get his trouser on. Here, reality can take, as we have seen, more than a decade to surface. In summary, the stock market is more for people who can have the patience to wait out the years of anomaly. And it starts with forgetting about a guaranteed rate of return or even yearly return. You just have to trust that logic will catch up and the reality we all read in the books will come to pass. If it is too much of a work, then please stay off the Nigerian Stock Market.
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