Growth vs Value: Where I’ll put my money in 2016

In the first quarter of 2016, I hope to put more of my money (60%) in safe income securities like short term mutual funds and treasury bills. This I believe would give me enough time to make some important financial decisions in my life.

In terms of stocks on the Ghana Stock Exchange:
In 2015, Aluworks (ALW) was my greatest gainer (about 138% gain) whiles UTB was my greatest loser (about 52% loss).  I’m looking at buying more of UTB in the first quarter of 2016 before it gets to 0.12p. It’s currently trading at 0.10p per share.
GCB Bank, Benso Oil Palm Plantation (BOPP), HFC Bank  and PBC surprised me alot in 2015 hence and they made it to my wish list for the 1st quarter of 2016.
In my opinion, PBC should not be trading at 0.09p per share. Its year high is 0.13p. I’m looking at PBC climb to 0.20p by the end of 2016.

Secondly I hope BOPP which is about Ghs 2.5 now climb to Ghs 5.00 in 2016. Its year high in 2015 is Ghs 5.01 and honestly I think it should be trading around Ghs 4.5.
GCB is one of my favourite stocks on the Ghana Stock Exchange. It had a bad year with a year low of Ghs 3.69 and a year high of Ghs 5.82. In my opinion, it should be trading around Ghs 5.00. In 2016, I hope to buy more of GCB regardless of how it ends the year 2015.
HFC is also closing in 2015 with a 0.78p with a year high of ghs 1.72. It surprised me in 2015 though, however I still have confidence in it.
SIC is one particular stock I am monitoring closely and hope to decide on it in the first quarter of 2016. 
Buy No Matter What:
There are 3 Stocks on the exchange I won’t hesitate to buy in 2016 regardless of their numbers and they are Enterprise Ghana ltd ( EGL), Standard Chartered Bank (SCB) and GCB Bank.

Applying Parkinson’s Law to Investing & Yielding Greater Returns

Parkinson’s Law is mostly applied to productivity which states that work expands to fill the time available for its completion – and this means that if you give yourself a week to complete a two hour task, then (psychologically speaking) the task will increase in complexity and become more daunting so as to fill that week.

Let’s now look at how this applies to investing and yielding of greater returns. I have over the years learnt that, in the course of investing, it’s better to work smarter than to work harder. Most times, it is not the amount of time you spend on cultivating a particular investment, but it’s about how smart and fast you position yourself to make the best out of that investment. If it’s a business you are investing in, if it’s a stock or bond you are investing in, it’s always good to work with time. This is because time can change the value of your return on the investment.
 For instance, let’s say Mr. A, invested in a stock, GCB and gained 100% over two months, and Mr. B invested in the same stock but gained 100% over 10 months although he could have sold in the second month as Mr. A. If they invested the same amount, Mr. A’s gains will be valuable than Mr. B’s (holding all other factors constant) in this global economy.
I know other school of thought holds the view that, holding for long as Mr. B did in the analogy could be a bargain on stock GCB’s performance and could swing in his favour. (Let’s say: 200% profit). However, it’s good to know from the start how much time you are allocating to a particular investment and what percentage gain or loss you can take. And when you reach that level, ACT fast.

There is limiting belief that working harder is somehow better than working smarter and faster. That’s related to the idea that the longer something takes to complete, the better quality it must inherently be. But this is not the case, in investing; you have to learn to work against the clock. You have to win against the clock; strive to beat it as if it were your opponent, without taking shortcuts and producing low-quality output or low return on your investment. Cut off the time-fillers and focus on the main thing.

Ghana Stock Exchange Composite Index: So far in 2012

The Ghana Stock Exchange Composite Index (GSE-CI) includes all ordinary shares listed on the GSE with the exception of those companies whose shares are listed on other exchanges. (e.g.  ETI, TLW).  The base index is 1000 and the index is a market capitalization weighted index.
Last year, the index closed at 969.03 (30-12-11) below the base index. There were some highs and lows this New Year and investors are hoping to see the index above the base index.
Below is how the index fared so far in 2012. [22-12-11 to 19-01-12]

This Week in focus on the Ghana Stock Exchange (16-01-12 to 20-01-12)

2011 Year Review of CAL Bank on the Ghana Stock Exchange.

Overview of Company

 CAL Bank Limited formerly Continental Acceptances Limited and then CAL Merchant Bank was incorporated on March 20, 1989 but the bank was licensed in June 1990 and commenced business in July 1990. With issued shares of 238,802,978, CAL Bank is listed on the Ghana Stock Exchange (GSE) and the share price is 0.23p as at December 6, 2011. We would be looking at how this bank performed on the GSE for the 2011 financial year.
As at 31st December, 2010, the Social Security and National Insurance Trust (SSNIT) held 82,363,074 shares in the bank making 34.13% whiles Mr. Afare Donkor, the largest individual shareholder and second largest shareholder held a stake of 7.51% representing 18,120,000 shares.



Analysis

CAL Bank began the year, 2011 with a share price of 0.33p (04/JAN/2011) and because of investor activities & active trades, share price of the bank rose to 0.39p (04/FEB/2011). Meanwhile, the stock price dropped steadily after that time to close at 0.26p on 22/March/ 2011. Further fluctuation of price was recorded from July to October 2011. Ten months down the year, CAL recorded a Year high of 0.39 pesewas and Year-Low of  0.25 pesewas (p). The volume of trade heightened at the end of October and hence was reflected by an increased in share price by some pesewas.
CAL stock and other financial stocks performed badly in November making the Financial Stock Index remain lower than the Base index of 1000.

The Year 2011 obviously was not the best year for most stocks on the GSE and CAL Bank is no exception.

I would be writing on Ecobank Ghana Limited (EBG) in my next post. I would be reviewing EBG stock on the Ghana Stock Exchange for the Year 2011.

[Courtesy: Ghana Stock Exchange, Bloomberg]

Is Ghana Stock Exchange a company? Who owns it? What is it then?

Hello reader,
I decided to write this because of some questions posed to me by some followers of this blog and it is all about the Ghana Stock Exchange. “Is the Ghana Stock Exchange a company?” she asked, If it is a company then who owns it and what do they do? If not a company then what is it?
Just like a market for trading fish, tomatoes, yam and other products, the Ghana Stock Exchange is a platform for trading securities (shares, bonds, futures, etc). Sellers bring their products and buyers come to buy. But because there are a lot of sellers and buyers, they are represented on the Exchange by Licensed Dealing Members (LDMs), (what people called Brokerage Firms or brokers). This means as a buyer or a seller, you cannot go to the exchange to buy or sell yourself (although some do).
The Ghana Stock Exchange plays a major role in securities industry regulation and is thus classified as a Self- Regulatory Organization. With respect to its numerous responsibilities, it simply monitors trading. It has Directors just like a company but the Securities and Exchange Commission oversees its regulation by making sure they do what they are supposed to do in the market and what is appropriate under the Security Industry Law (SIL)- the principal regulator.
When Public Limited Liability Companies want to raise capital for their business, the list shares on the exchange (that is, allowing people to own part of their company), so when investors study the company and find that the company is good and strong among other factors, they contact their brokers for them to make the trade – money, for part of the company. That is what the Ghana Stock Exchange oversees; that the right amount is paid and the ownership rights of part of the company is transferred to the name of the buyer or investor (in form of shares).
Finally, the Ghana Stock Exchange is privately financed and managed with the budget mainly financed by its members (LDMs and Associates) and issuer companies.

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Growth Stocks on the Ghana Stock Exchange

Growth stocks are stocks in a company that are growing fast and reinvesting their profits rather than paying high dividends. The share prices of such stocks grow and double or sometimes triple in days or months on the Exchange. Investors with the purpose of keeping their monies in the market for a longer time invests in this kind of securities to gain on their capital.
On the Ghana Stock Exchange for instance, shares of FML,EBG,FML,GCB,GGBL,SCB,TOTAL and UNIL are growth stocks since for the past five(5) to six(6)years their share prices have been increasing and profits are being reinvested. Standard Chartered Bank shares are currently priced in the Market at GHC 64.00 per share, meanwhile less than 3 years ago, this stock was priced than lower GHC 25.00 per share. This obvious is almost a triple jump in capital gain of the stock(SCB). Other growth stocks also perform really well on the GSE in terms of share prices.
One question is that, what is the benefit of investing in Growth stocks on the GSE? CAPITAL GAIN, is the answer. These stocks grow in share price because directors of such companies do not focus on only paying high dividends but rather reinvest the profits and in that case the company grows and investors build confidence in the stock hence invest. The demand of the stock on the market positively affect the prices of the shares on the market.
Growth investing is good and very rewarding but remember it requires time and patience. Keep investing and invest wisely.


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First Time Investors on Ghana Stock Exchange

In 2009, I bought my first stock as a first time investor which was an IPO of ETI. I bought 500 shares at 0.29 cents (about GHC 0.34) per share. I bought this stock without any market analysis but just out of desperation to own shares on the GSE. I must say that I was also happy for the fact that the dividends were paid in dollars and at that time, the dollar-cedi rate was in favor of the dollar.
This stock performed badly when it started trading and now it has fallen lower than half its initial share price.
One lesson from this investment is that, an investor should not to rush into investing but to study the market very well especially IPOs.
As an investor, one must consider so many factors before buying a stock or venturing in the capital market. The Ghanaian Capital market is becoming robust every single day and hence requires more attention and advice to invest and gain from it. Brokerage firms are sprouting from time to time and that means people in Ghana are now seeing the need to take the investment job serious hence the need for investment advisers. Competition is getting keen but the question is how prepared is the market for first time investors- those that know very little about investing. Is it true that the majority of investors on the exchange invest with their sentiments with very little or no investment advice?

How many investors understand the GSE Security Depository (GSD) System and know the investment laws enacted by the Security and Exchange Commission (SEC)? Answers to these questions should caution the Ghana Investment Promotion Centre (GIPC) to be more active. I entreat all first time investors to study the market or seek advice from experts (brokerage firms) before investing. You can make a lot of money in the stock market, just ask how?


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