Nigeria's Stock Market. Investor's Woes and possible Solutions

The recent economic recession that sent shock waves all over the world as a result of the housing crises in the U.S definitely had its own impact on the Nigerian economy also no matter how little, or how much we want to claim that it "didn't really affect our economy". Stock prices went on crashing like a pack of dominoes and what do we have today; some stock prices that are as low as 15% of their pre-recession prices. Who is to blame for that, the Nigerian goverment, the Central Bank of Nigeria, the NSE, or the Securities Exchange Commission, the American sredit system, or even the Stock market players(Banks and Dealing houses who through loan irregularities did their own share). Well, we cant really put the blame on anybody.

But what is done is done, blame or no blame, prices have crashed and the only thing to be on our minds now should be how to recover from the entire troubles.

Most people have suffered imeasurable losses from the recent downturn. Market capitalization is at a meagre 3 trillion naira compared to above 20 trillion, pre-recession. Even I myself have lost a relative amount of money some stocks. But all in all, we are all looking for repairs. I was having a chat with a banker friend who gave a relatively bleak outlook on the situation considering the fact that the Nigerian economy is in a position where the bounce back is not really feasible too soon due to a few factors i will not mention yet in this post. But sincerely, i have a few tips on how to make recoveries from this loss

First, there are indications that the markets would bounce back in a few years time, but truth be told, even then, they might not be as high as what we had before the recession. So, one good idea is to buy the stocks at the current market price so as to leverage whatever price you bought it before the recsession (Although, this is a strategy that will work for people who can afford a lot of money into long term investments). for example, assuming you bought 1000 units of First Bank shares at NGN33 per unit, you can buy an estimated 3,000 units at the current market price of NGN15. This effectively gives you ownership of 4,000 units of shares at an average cost of NGN19.50 per share. In this way, you have more shares at a lower cost and can vbe sure that when the market improves, you will be able to make more profit when selling off your shares.

Another idea is to start speculative trading (What i Call SPOT TRADING). I will elaborate more on this in my next post