#RonaldNzimoraTalksBuiness: Investing in the stock market is for idiots (Y! Business)

by Ronald Nzimora

320-Stock_Market_Investment_Advice

Gather all the cash you have, get a bottle of kerosene and a box of matches. Pour the kerosene on the cash, and then light a match to it. You’ll derive better pleasure seeing your money burn than you will ever hearing about the value evaporating over the news.

 

Are you planning to invest money in the stock market?

Hold on!

Let me show you a better way to pour money down the drain.

Here’s what to do:

Gather all the cash you have, get a bottle of kerosene and a box of matches. Pour the kerosene on the cash, and then light a match to it. You’ll derive better pleasure seeing your money burn than you will ever hearing about the value evaporating over the news.

In 2007-2008 I realized the folly of putting your money in the hands of people you know their first names only from the pages of a newspaper.

Thousands of investors lost billions of naira. Stock value disappeared overnight. It was one hell of a vulture feeding frenzy, only the vultures were those in the ‘know’. The vultures were the folks who created value out of stock certificates that were not even worth the paper they were printed on.

Speaking of paper, if you bought any of the IPOs and POs sold between 2007 and February 2009, did you receive your certificate as at when due? I mean early enough for you to sell off your shares before all the ‘value’ was eroded?

Let me guess.

No, you didn’t.

You simply watched the news every night or read the papers every morning seeing your hard earned money going down, down, down. By the time you received it, if at all, selling the shares was useless because it would cost you more to do the run-around trying to authenticate the certificate than you’d receive selling the shares.

So you dumped the certificates and occasionally receive dividend slips that proclaim you just earned another =N=200 on your “investment” this year.

The irony.

What happened?

People were deceived.

Their monies were fleeced from them by smart alecs in the companies and the stock exchange who left us for dead, and basked in the euphoria of their wit and awards.

Did you know JaPaul Engineering was selling at some time then for above =N=15? What’s it worth now? What about the bank stocks? Bank PHB as selling for above =N=32, pray tell me what it’s worth now. Or better, where is it now?

Straight up, people were duped and the Government agencies stood by and let it happen.

It was a classic case of the rich getting richer.

Now before you get started with the treatises and theories about market forces and how it affects market prices. Don’t.

Who creates forces in the market? You? Me?

Stock gurus can try to give me the run-around by saying it’s “supply and demand”

My reply is bullshit.

In Nigeria, it’s mostly them! Them being the guys and gals who pull the strings and decide what becomes what and who sells what.

They sell you shares via IPO, then delay your certificate for two years. By the time you get it, the value is less than 1% of what it was when you invested.

Who’re these people saying these things anyway? Just people with vested interests:

– Stock Brokers

– Listed company owners

– Bankers

– Discount house managers

– Mutual Fund managers

– Stock Market executives

– Paid newspaper publishers and columnists

– Every other person who trying to look sharp by regurgitating what they heard on the radio or read in the   papers.

All of the above want you to invest in the sock market because it benefits them if you do. They don’t care if you lose your money. They’re just after their commissions, salaries, kickbacks and egos.

Investing in public stocks where you cannot influence outcomes is foolishness.

If you’re trying to build wealth, going to the stock market is the worst thing to do ever, despite what you’ve been told.

Okay. Rant ends.

Where should you invest?

Below I show you how I do it. This is not financial advice and you won’t necessarily succeed if you follow my path but I dare say you won’t fail if you do.

Once realizing that almost no one can predict risk tolerance and response to losses, I moved all of my investments into fixed-income and cash-like instruments.

A business is the best investment you could ever make. If you know what you’re doing, your business could give you a 10,000% or more return on investment right off the starting line and even more continuing. I’ve seen this many times especially first hand.

In my own life. I started mine with just =N=690 and a borrowed laptop, yes I know, that’s hard to believe but it’s the truth before God. Today it’s a multi-million naira company group with interests in several areas.

A dear friend of mine Otunba Akin Alabi started his own business, NairaBet in 2009 with about =N=50,000.

I literally watched it grow from scratch. Today they do business in excess of =N=3 billion naira per year.

A business you start and build for yourself is the ultimate investment vehicle you can ever put your money into.

Now with money from a business, you can also have fixed deposits with a few banks and buy Federal Government backed treasury bills.

Banks routinely offer 5 – 10% interest on fixed deposits monthly, some more. The higher the amount of money you earn the better.

The Federal Government also sells treasury bills of between 1, 3 and 5 year tenures at the end of which you get paid a fixed amount of interest, sometimes as high as 100 to 300 percent. Treasury bills are backed and guaranteed by law, so long the country doesn’t go up in flames and our oil doesn’t dry up overnight ;-).

Come on, relax! I’m just kidding.

Now before you say, ‘Ronald, that’s so dandy for you to say because you’ve got money,’ I only ask. What’s stopping you? In 2007 I was a broke ass 27 year old man. Three years later a millionaire. YOU can do it too.

Instead of handing your money over to people you don’t know, to invest in stuff you can’t control and give you paltry returns or none at all, learn how to build a business and use the proceeds to invest in fixed income and cash-like money instruments.

I hope that helps.

I’ll be writing more about this topic in future, so if you have any questions, let me have them in the comments section below and I’ll give you answers.

 

————————-

Ronald Nzimora runs Profits Marketing Systems Limited, an online marketing communications and publishing firm. He’s also invested in two more. He tweets from @ronaldnzimora

 

Op-ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija.

Comments (2)

  1. what can i start with 50,000 advice me please

  2. Interesting,what can 100 000 naira do 4 me I nid ur advice

Leave a reply

Your email address will not be published. Required fields are marked *

cool good eh love2 cute confused notgood numb disgusting fail