In all my investment coaching I tell my clients who want to venture into stocks trading or investment, to do one thing and that’s what you should do before buying any stock in 2017.
And that is; READ MORE ABOUT EVERY COMPANY YOU DESIRE TO OWN.
Knowing more about the companies you buy or sell always gives you some upper hand and courage.
So get to work. And this is how;
On the Ghana Stock Exchange for instance there are about 35 listed companies. In 2017, target to read the Annual Reports, related news and learn more about what each of these 35 companies do.
You can dedicate one week to study about one company and before you know it, you will be more abreast with what’s happening in the Market and then you can make informed decisions.
Most of the information you will need can be found here (www.annualreportsghana.com)
Fast readers can take two companies a week and read on.
Do not be scared of the figures and do not worry about interpreting the financial statements. The goal here is to know what these companies do to make profit, nature of their business, what industry they operate in, who is on their boards or management, who are the top 10 or top 20 shareholders, and any other relevant information you will get in their annual reports.
Doing this will not only get you informed but also build up some zeal or interest in you towards investing on the stock market.
You can apply this principle to other Investments you intend to hold, being it real estate, mutual funds, fixed income securities etc.
Simple task that always pays. Enjoy reading.
Some number of readers think a 60 year old Ghanaian should invest in the Money Market other than the capital market. Although, it’s wise for a 60 year old to invest in the money market (to put the hard-earned money to less risk), I wont, even if I’m 60 years. I’ve grown to understand and appreciate the growth potentials of the Ghanaian capital market, and since my children will continue after me, I’ll rather hold a 70-30 portfolio in favour of the capital market.
|Result in favour of the Money Market|
The Money Market:
A segment of the financial market in which financial instruments with high liquidity and very short maturities are traded. The money market is used by participants as a means for borrowing and lending in the short term, from several days to just under a year. Money market securities consist of negotiable certificates of deposit (CDs), bankers acceptances, Treasury bills, commercial paper, municipal notes, federal funds and repurchase agreements. ( courtesy: investopedia).
Learn how to invest in the Money market in Ghana and find out the Various Types of investments in Ghana with respect to the Ghanaian Money market.
Results from the Stocks polls on my blog for last month revealed that, 34.48% of some readers on this blog think Fan Milk ltd is the best stock to buy on Ghana Stock Exchange among the options presented to them ( Ghana Commercial Bank -GCB, Fan Milk Ltd -FML, HFC Bank ltd -HFC & Ghana Oil Company -GOIL). HFC Bank ranked second among these stocks according to the polls.
To find out more about FML and what other investors think, read my post on “The Fan Milk (FML) Debate: Is FML over-valued on GSE? #FMLdebate
|Results from Stocks Polls
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Where should a 60-year old man in Ghana invest? Capital market or Money market?
BOAKYE OGYEM EMMANUEL. ( 0261528542 / firstname.lastname@example.org)
A few days ago, I decided to research Africa’s capital markets, and to my astonishment I realized that most of these markets were very resilient to exchange rate fluctuations and the debilitating effect of inflation. These findings fascinated my imagination and re-oriented my negative stereotypical perception about Africa’s capital markets. However my greatest disbelieve dawn on me when I realized that the GHANA STOCK EXCHANGE (GSE COMPOSITE INDEX) far out-performed the S&P 500 of the UNITED STATE OF AMERICA in terms of dollar adjusted returns within the years of 1992-2013, this means that passive investors in Ghana within the aforementioned years were better off than their counterparts in the united States. The research choose 1992 as the base year solely due to two reasons, firstly it was the year Ghana declared democratic rule and entered into the 4threpublic, making its capital market attractive to foreign investors. Secondly, it marks the start of the longest bull market in the history of the United States, which spanned for almost 7yrs, between the years of 1992-1999. The Ghana stock exchange in the mist of significant macro-economic pressures such as ,an annual compounded cedi depreciation rate of 18.54%, unwarranted high levels of inflation in the 90’s and a sluggish economic growth amid lackluster energy sector , surmounted to become more profitable than the S&P 500. Now let’s move on to the number crunching that reinforce these assertions, in 1992 the GSE all shares Index traded with a value of 62.17, by the end of the year 2013 the value of the GSE COMPOSITE INDEX was 2,145.20 after adjusting the Composite index to the ALL SHARES INDEX which was previously used by market participants until 2010,we arrived at a value of 16313.66 for year 2013. This value reflects an annualized return of 28.90% for all investors who had invested during the aforementioned investment horizon. One may ask how do these numbers translate into millions of cedis for the average Ghanaian who had invested in the GSE within the 1990’s? the answer will be an enormous amount of wealth, if an investor had invested a sum of GH₵1000 on the exchange within the year 1992 he/she would have pocketed a whooping sum of GH₵266,418.3791 (the equivalent of 2.6 billion old Ghana cedi’s) by the end of 2013 , not convinced? then add a zero to the initial amount invested , that is if an individual had invested an amount of GH₵10,000 in 1992 for his kid or dream house , that individual would have now pocked almost GH₵2.66million new Ghana cedi (the equivalent of 26 billion old Ghana ), yes!!! The individual would have been a millionaire due to the power of compounding, and the resilience of a stock exchange that has triumph against the overwhelming odds of high inflation and significant exchange rate fluctuations. One amazing discovery is that many Ghanaians during this same period gave far more money needed to invest and achieve these sterling results to dubious connection men, in other to seek greener pastures outside the country. However, the returns from the exchange indicates that those who stayed behind and placed their bet on the stock exchange are now better off and perhaps “millionaires” relative to their foes who went outside for greener pastures. As a value oriented investor I deemed it necessary to determine if there existed significant value in stocks trading outside my home land , due to this I decided to compare the results of the GSE to the US dollar and the S&P 500 index. Thorough data gathered from renowned investment sites (CNN MONEY, BLOOMBERG DATA etc.) indicates that the S&P 500 started with a value of 262.79 in 1992 as at 31st December 2013, the index was trading at a value of 1813.036; this represents an annualized value of 9.1759% on a compounded basis. That means that if an investor had invested $1000 in the S&P 500 for the 22yrs period he/she would have pocketed an amount of $6,897.79 for year-end 2013. In order to reasonably compare these exchanges a dollar adjusted return for the GSE Composite index was computed to be an annualized 10.35% for the same investment horizon. However the S&P’S annualized gain was 9.1759%. Data used for the dollar adjusted return was acquired from Dr. Mahamadu Bawumia’s speech titled “RESTORING THE VALUE OF THE CEDI”. According to the article the cedi value against the US dollar during 1992 was at GH₵0.05208 (the equivalent of ₵520 old Ghanaian cedi), as at 2013 the value of the cedi was GH₵2.20 (the equivalent of ₵22,000 old Ghana cedi). This represents an annualized compounded depreciation rate of 18.55% which lags against the GSE index’s sterling performance. Finally, from the research it’s apparent that the GSE (GHANA STOCK EXCHANGE) has shown its superiority amid a turbulent exchange rate fluctuations, economic sluggishness and unabated inflationary pressures , to emerge as the best investment entity for the long term. Furthermore, it’s strategically positioned than ever before to produce sterling performance going forward, this can partly be attributed to increase positive inflow of FDI, strong economic growth fundamentals, stable political climate and copious oil /natural gas reserves. With all these positive factors looming in the long run, I think we should all start investing into the future to realize our unlimited gains in the stock market.
Source: (CNN MONEY, ANNUAL REPORT GHANA, REUTERS, ARTICLE FROM DR.BAWUMIA, WIKIPEDIA , INVESTINGAFRICA.COM)
Under the theme “The Capital Market: A key to Economic Growth and Development”, the Securities and Exchange Commission (SEC) in collaboration with the Ghana Stock Exchange (GSE) and Ghana Securities Industry Association (GSIA) are convening a two-day conference at the National College of Physicians and Surgeons in Accra on 9th and 10th May.