Blood on the Dance Floor
Michael Jackson Lyrics
Blood On The Dancefloor Lyrics
Do you know any better way to describe the current events on the Nigerian Stock Exchange? I don’t. I don’t know of any more graphical way to paint the picture of what is going on in the Nigerian Stock Market right now! I think Michael Jackson got the phrase right, “there is blood on the dance floor”. Reading the lyrics of that song in detail, it even amazes me that the girl that spilled the blood was a one night stand 
Now parallel that with being a speculator rather than a long term investor in today’s market. If you look at it that critically, you might see Michael as a prophet :). You come to the dance floor to enjoy, to let you hairs down, to celebrate… and you are about getting into the groove, and you see a splash of blood, you are shocked and everybody panics, is this a drink, ketchup or someone’s blood? You look around to see the source, and then the whole club spots it all at once, there is blood on the dance floor, and the blood, is yours!
It wouldn’t amaze any avid stock market investor now, that people have started committing suicide. People have lost millions, some billions in this “market correction”, and if it was only money that was lost, one might not be so bothered. The average person has already lost about 50% of his capital in this craziness, and the end is yet to come. Many who have a normal penchant for taking higher risks, by using the bank’s margin facilities in this market, are crying - sorry, weeping! Week after week, I have studied different opinions on what was causing the land slide of share prices and where hope lies, and honestly it got to the point where I figured it all out. I not only figured it out I figured out what to do. I’m sure you are wondering what exactly that is?…Read on.
1. All, I want to say is that,they don’t really care about us!: It didn’t take me long to discover that all the dailies, all the expert perspectives were very wrong. No one can put their fingers on what exactly is the 20% that is responsible for 80% of the downturn. I have watched the experts change from it’s foreign investors, to it’s lack of margin facilities, to it’s the change in share price movement indices, to it’s the banks even end of year, to it’s Yaradua and his influence or lack of it on the economy. Please let’s relieve pap of it’s tribal marks - pap doesn’t have tribal marks ( e ko ila kuro leko, eko kan o kola) or as my Warri brothers will say, “let’s leave story for tortoise”. All we have been fed is one story gradually migrating to the other. But of course what can you expect? There is no information source to the market that is currently not also in the market. Everybody is offering wishful, hopeful and anticipatory information, no clear direction! Fundamental or not, everything is going down right now :). And how I love the analysts, I have even seen some of their well thought out bar charts, but ask yourself when listening to them - “Isn’t it easy to study a trend in it’s history and come up with postulations based on it? Here are the facts the way I see it. a. This market is not coming back up in less than 6 months, except of course the government goes to hire people to consistently pump money into the market like Abacha did to keep the value of the dollar constant. b. Investor confidence has been shattered by too many inconsistencies in policies - me too c. Some of fundamentals that support local businesses are being eroded, power is still unfixed (don’t be deceived by what is happening currently, it’s the rain :)) it’s not 2yrs, and Obasanjo is already looking like a Messiah. d. The down slide, is not over yet.
2. She says I am the one, but the kid is not my son! That seems difficult to judge doesn’t it? If she says you are the one, she probably has a reason, if you say the kid is not your son, you are saying it didn’t happen in your watch, how do we really know until we can do a blood test. That’s also true of the market, everybody has been dodging - what do we do? But we don’t have to wait until the house falls on us before we run. We don’t have to sleep with Billy Jean and wonder whose kid she’s having. Here is my own 2 cents on how to handle the present predicaments. a. If the money you are playing with belongs to the bank. RUN! Sell it off and return the banks money now! You have lost, live with it, and move on. If you don’t the loses are not likely to reduce for the next 6 months, and the bank may pressure you to sell later. If you wait, it’s a gamble. b. If it’s all your money and you are bereft of ideas on what else to invest in or do with money, stay and lick your wounds, it’s not forever. Like they say, you don’t lose until you sell. c. if you know other things you can invest in, that can make you as much as 40% in the next one year - move and come back later, when the dance floor is not so red. Don’t move into one thing as well, move into 2-3 things. Not diversifying is why you are where you are now
3.Beat it! Well, that’s not advice for everybody, that’s my own personal direction at the moment. It means to scram to run away. We need to run away from everything that has falsified what real investment is to us. 100% gain per annum is not normal, the reason why we waited in the market this long, most of us, is because we are used to seeing it double and triple. Wonderbank syndrome, is what I call it. In this day and age, people still frown at proper small time returns. The 3million plus I made in 3 weeks in this same stock market, I lost in 3 months, doing what? Waiting… waiting for it to pick up, waiting for the banks to have different end of year, waiting for margin trading, waiting. Why? It can turn around. Don’t get me wrong, I am diversified, in fact, what I have in the Stock Market is small compared to what I have else where, but even that can be better spent. I have a friend offering me a 45% guaranteed on a real estate project he’s doing, I’m taking it. I have another friend offering me 60% or more on a PPP with the Lagos state government, I took it. I also have a novel concept guaranteeing me of a minimum of 30% with potentials of up to 80%, I’m doing it. All in all, I’m beating it, now, before my nett loss surpasses my nett profit. And if for you it has, learn the lessons and forget the details. If you can’t stay without the funds for the next 6 months to 1year, then beat it!
What I have written is not the encyclopedia or dictionary of how it must be done, they are my opinions based on my play in the NSE and what I have observed. The market is in perilous times, and we should not all be caught in it. I was tempted to start this off in the old style of Nospetco, how much longer… and say NSE, how much longer? But we all know the answer to that now, don’t we?
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My Brother!
Its been hope without end, kind of.
All these coupled with the “Africa for Obama” controversies, your guess may be as good as mine.
God help us!
Luv U!
A good lesson for us and a reminder to use the stairs to success
Hmmmmm………. words full of wisdom and insight, like the days of old your candid advice is on the table again. I remember 2007 taught us also a great lesson to what real investment is, here we are again 2008 on the floor of NSE an additional investment lesson.
Thanks so much Deolu for sharing your opinion with us, ‘a wise man foresees evil, he hides his head’ ” those who have ears to hear let them hear what ……….”
Mr Akinyemi,
What happened to me on the floor of the NSE is truly a repeat of the Wonder Banks Trojan Horse. I have only realised that once again, the capital is a no safe playing ground not even for those who claimed to have mastered the art of HOW TO READ THE SIGNS.
Where do we go from here!!!!
Buy a piece of Land in Lagos, Omonile wont let you be.
Buy a piece of Land in Abuja, Who knows the next demolition man.
Sit back and dont invest at all, Patkinson Law of insatiability befriends you.
Who will save our soul, where is our solace. where do we go from here and where is our HARRRDDDD EARNED money safe????? and who will give answers to these questions?
Deolu Once Again, thank for the exposition.
Bright O
Your excellency,
thank you so much for the insight.
May God continualy favour u as of a shield.
Amen.
……….i no fit shout about the market! I blv it’s more of lack of confidence about inconsistent gvt policies!
It is well o!
Uncle Deolu,
Nice post once again. You never cease to amaze me with your abilities.
The NSe is still shroded in a lot of mystery recently. Even the guys at stockwatch magazine are having a hard time reviewing the market.
Anyho…..thanx for shifting people’s thinking towards diversifying.
@ All,
I think other thoughts that can show what’s happening on the NSE are … “you are not alone” and “it doesn’t matter if you are black or white”
Sincerely, diversifying is the only way. And the options exist.
i love the Michael Jackson concept… and the message is in black and white, diversify!
Abeg the market crash has come to probably rise and come again asit wishes. na those other investment that can secure 30% or thereabout that are now important. connect the men, arrange betta for us ohh,funds dey na where to put them be the question.
Quite thoughtful…I’m seeing the word diversify to much this days. I believe the issue of diversification must start with us as a person before it can transcend to other part of the economy… Thank You Sir
Deolu,
Nice one you write here.I observed that bearish trend early enough and i quickly diversify my portfolio into precious metal.
The Nigerian stock market has been pretty darn ugly, and if you ask me, it’s going to get even uglier.You could go looking for the few stocks that could buck the trend and go higher in spite of the bear market, but that is harder than finding a needle in a haystack. And even companies with strong business models, defensible niches, and great products are going to struggle.But we will be affected by the effect of economic depression if we choose to Watch. What is the best thing to do in difficult times like this?
The simple answer is invest in a tangible assets like Gold.In times of crisis, people naturally gravitate toward gold, because it’s the one investment that can hold its value when the fertilizer hits the fan.
I observed that bearish trend early enough and i quickly diversify my portfolio into precious metal.
My decision really pays me alot,i never regret taking that decision.
Though i started with a very little capital but now i had make over 30% of what i invested.I could i have made much more but the fact that i’m new to this market(Gold Market)has limit my ability to make more ROI.
Nevertheless,i wouldn’t mind to share this information with who so which to know how to invest/trade in gold online with a reputable company based in U.K.If anyone so which to know more about this,you can reply my comment including your e-mail address so that i can send you all the details.
Believe me,we about to withness an economic depression in world and the bset thing to diversify into now is something a tangible value like Gold and real estate.
Deolu,thanks for this is wonderful opportunity of informing the public about this disasterious economic crisis that’s about to happen,GOD FORBID IT!
my chair tanx for dis.pls any information about clubfreedom sir?pls help me
The magic is diversification. The most dangerous thing anybody can do to himself is to put all his eggs in one basket. Some people call it multiple streams of income. It could be property, trading, manufacturing. To build real wealth you need to grow and nuture it over time. What has been happening in the stock market, especially within the last six years is nothing short of voodoo economics. I have less than 20% of my investment in the NSE because of the way the exchange has been manipulated over the years. I made a contribution on forum that I am member on investment and would like to share it with you here.
Happy reading!
The shifting of the deadline for banks to adopt a uniform accounting year-end from December 2008 to December 2009 may actually cause more damage. It is simply incapable of reversing investors’ confidence. What has just happened is like covering a cancerous skin with bandage which is more like playing the Ostrich by wishing the problem away and postponing the evil day. The best thing would have been to stick to the directive and take whatever step necessary to manage the fallout. This is a grave sign that the regulators are incapable of taking the best decisions in the interest of market.
Now that the truth is out, whatever results the banks declare would be taken with a pinch of salt. I know a lot of people who will never touch the stock with the longest pole. I guess we will have to wait until 2009/2010 to know the true state of these banks. The banks themselves are the major cause of these problems. To illustrate this point, the astronomical rise in the price of bank shares from 2004 before the recent freefall is simply illogical, irrational, unsustainable and unjustifiable. That is why bank shares are the worst hit by the ravaging bear. Unfortunate the banks that pushed the market up is now about dragging it down.
Let me use my personal experience as an example. From 2004 to 2005, I bought the following bank shares:
1) Access Bank - N6.46 (I bought at N3.23 before 2:1 reconstruction)
2) Zenith Bank - N10.49 (the first public offer)
3) FCMB - N4.86 (PO)
4) Intercontinental Bank - N6.00 (IPO)
5) First Bank - N31.76 (Before 1:1 bonus
effectively N15.38)
What miracles did the bank performed within this period to merit such unprecedented rise? Not much. The truth is that most banks have manipulated all known financial regulations in their craze to reach the $1 Billion shareholders’ fund. They came up with numerous public offers, manipulating their share prices, reporting rigged financial information and ended up selling their share far above their fair values. I belief that the most expensive bank share in Nigeria should not be more than N25, majority should be selling between N10 to N20 and some should be less than N10.
I never belief in all these figure anyway! The most expensive bank share in my portfolio is my First Bank shares which I bought at N31.00. My investment philosophy in the capital market is long-term and my strategy is to buy cheap. I am a bargain hunter and once a share appears too expensive, I changed my focus I began my search for the next bargain. You could say my approach is conservative, but I have never belief in instant wealth. I don’t gamble and I don’t play lottery. I see investment in stocks, property, money market, etc as a way of building wealth.
I have always belief in qualitative Analysis before buying any shares. I study the less tangible factors surrounding a business - things such as the quality of a company’s board members and key executives, its brand-name recognition, business model, competitive advantage, corporate governance market share, industry growth, competition, regulation, etc.
The lesson for investors, I am not taking to speculators here, is to have a clear investment strategy and the best strategy is a combination of long/short term. For the large chunk of your investments you need to pick your study the stocks carefully, have clear understanding of their fundamentals both qualitative and quantitative’. They should be companies with strong history of excellent performance, sound management and great plans for the future. You then add new promising stocks from emerging sectors coming to the market on a regular basis. Examples of such emerging stocks are those in the mortgage, insurance, IT, manufacturing, telecommunication, etc. In addition to fundamentals, the next most important thing to ensure diversity across the key areas of the economy. If you adopt this strategy, you will survive most major disasters. That is why in spite of this bearish trend, my portfolio valuation still shows a gain of about 250%. The only red in my portfolio is Transcorp IPO shares which I bought at 7.50, which I have refused to sell for sentimental reasons or probably because the value or the loss is insignificant to my portfolio.
Let us all learn from our mistakes and hope a better tomorrow.
you are grate you have really toch many life .
Thanks
Hey all! Yeah I know… I’m respoding like a month since the last entry… Truth is I kinda like the flow of the conversation but clearly I must add a new perspective… Following the Michael Jackson analogy I will add - ‘The man in the mirror’ and ‘Heal the World’
1. We must see that the ‘depresssion’ has clearly surpassed the issues we have in Nigeria. Please don’t get me wrong because we reaallllly do have issues here. Sometime in May Bear Sterns - A topmost international investment firm went bankrupt - had to sell their shares in shillings to Merryl Lynch or was it JP Morgan. What was Bear Sterns major product? Derivatives in Stocks and Bonds. Following suit in June-July IndyMac Bank - A big mortgage bank also went down! Now what was their major product? Real Estate Financing! Now the latest happened just yesterday! Lehmann Brothers - The Investment company for Bonds, what we consider more stable in the context of fixed deposits, declared bankruptcy!
2. Now to bring a little more illumination, we need to ask ourselves this simple question - ‘What is my motivation for investments?’ I feel to a large extent we have become greedy. The true motivation is I WANT TO BE A PART OF THIS COMPANY! I WILL PUT MY RESOURCES SUCH THAT IF THIS COMPANY GOES DOWN I AM WILLING TO GO DOWN WITH IT! Hard nut to crack right? But this is the honest truth. If this is ur motivation, then it won’t matter what the share price is! You will just look at the company results and know that you are alright. So there… the man in the mirror? Let’s buy only what we can die with! I hear a lot of clamour for real estates and precious metals… interesting prospects yes but I can tell you all for free that there will soon be major shakings in these alternatives. Think about it. There’s this saying in equities investments that once a pepper seller/shoe maker/vulcanizer begins to think to buy stocks as securities, there will be a depression! It has happened before in America. Once people begin to think that they can build up assets buying taking up loans to sell in the short term, like folks have started in Nigeria now (You can go to a bank, pick a loan - margin to buy real estates and stocks with the mind of paying it back with interests), markets crumble immediately. This has happened in Japan and China before (Hope you know no bank will give you a loan to buy Land in these countries now!). Gentlemen, we all have to remember that hard work and producing things, and entrepreneurship is dieing in our land! If nobody does these things how can our markets function? How can we be properly industrialised when what we all want to do is make margins and our definitions of long term is 2 years and less?! How? Please educate me!
2. Let’s heal our world, gentlemen. Invest in men that have great creative ideas in maunfacturing. For we all know that human capital is always a competitive advantage. Let’s not forget that God actually blesses us to bless people as well. I have lost a lot of money in the stock market. Straight up! But a question and eventually the pain that always come to my mind is this, Bros, If you had given all that money to ur guy that said he wants to set up fish farm and supported him through it, and he makes it and didnt remember to give you back your money, would you feel better? I answer that question with an affirmative. And deep pain goes courses through me and I weep…