Tuesday, May 30, 2023

Fire Your Share Analyst

The lack of knowledge on how to proceed in the venture of buying and selling shares has discouraged many potential investors from investing in shares in Nigeria and beyond. Even most of the people who are already trading in stocks often burn their fingers due to insufficient knowledge of stock analysis. It was the desire to guide such people that Io Arowolo, my former Managing Editor/CEO, “Financial Standard” newspaper, Lagos, Nigeria, wrote this article titled “Fire Your Stock Analyst”.

Aerovolo, also author of “The New Millionaire’s Capsules,” is a Reuters Award winner who has been involved in financial education for more than 20 years as a financial and investigative journalist. He has worked for major newspapers in Nigeria including the Concorde Group, “The Guardian”, “The News” and “This Day”. Airowolo was the founding CEO of The Investment Club Network (TICN), Lagos, Nigeria. He now speaks to audiences across the country, focusing on how individuals can take full charge of their personal financial affairs.

The author states that this text is designed to help personal finance consumers acquire the basic skills needed to make sound and prudent investment decisions. He states that the purpose of the text is to create an easy-to-read guide that allows people to easily navigate today’s complex investment market. Arevolo stresses that the text contains a lot of practical tips that will help people spot any shortcomings as well as how to turn those shortcomings to their advantage.

He educates that before making any financial commitment to make money in any investment it is necessary to get in-depth knowledge of the particular investment sector.

Arowolo points out that the Nigerian stock market is a banquet of prosperity, as it makes individual investors who invest in the shares of companies quoted, millionaires daily. However, he says that many private investors also lose money in the market on a daily basis.

The text is divided into six chapters. Chapter one is titled “The Basics”. Here, this author says that many people who invest their money in stocks fail to realize that investing in stocks is like buying into a company. That is, you are a partial owner. AeroVolo therefore advises that before investing your money in the shares of any company, you should ask some relevant questions. As he puts it, “Would you invest, for example, in a company whose management you know nothing about? Know the financial situation…? Yet, this is what many stock investors do. They put their money in the hands of brokers who can experiment with their retirement money.”

Aerovolo says this is part of the reason why many investors are watching their financial fortunes disappear on a daily basis. He clarifies that a smart stock investor calls his broker only when he has decided on the stocks he wants to invest in through research. The author claims that a smart investor will not rely solely on what the newspapers say to make decisions because by the time the newspapers have information, it is often too late.

He advises that instead, you need to research about the company you want to invest in and gather relevant information that can help you make an informed investment decision. Interestingly, says Arevolo, this exercise is usually not as difficult as many people think. “Did you know, for example, that if you know how to read the daily official list of a stock exchange, with some analysis using published accounts of companies, you can make intelligent investment decisions on your own?” he asks rhetorically.

On the choice between putting your money in a bank and investing in stocks, the author says that if you keep your money in a bank, you can only get back what is called “interest”, which is what the bank pays There is your reward for allowing. use your money. He elaborates that if you invest in the shares of a good company, you can get what is called a “dividend”, which is a portion of the profit distributed by the company to the shareholders. Aerovolo stresses that additionally, if you decide to sell your shares, you can receive capital appreciation if the price you’re selling for is higher than the price you bought the shares for. He educates that some companies also give free shares, ie bonus, to the shareholders.

Chapter two is based on the theme of getting started. Here, Aerovolo says that before investing in stocks, you should be clear about your objective of buying stocks. The author recommends that before you start inquiring about investment opportunities, your investment objective must first be determined and understood. Aerovolo claims that investing in stocks without a clear purpose is a recipe for confusion and retirement misfortune.

He educates that the next step is to look at industries that have growth potential that you can consider. According to Aerovolo, part of your investigation at this stage is to find out the key economic indicators and how they will impact industries. He says you also need to find out if there is any government policy that could have a positive or negative impact on the target sectors and ultimately the companies you want to invest in. The author says that you should also assess the companies whose shares you want. Add to your investment basket.

According to him, “Factors you may consider include dividend and bonus history…, sales and profitability history. You may also want to decide whether to include companies whose shares are at N10:00 ( penny stocks) or are selling below expensive stocks. You cannot do any comprehensive analysis at this stage. The aim is to ensure that you do not waste time analyzing stocks that are worthless in the first place. There is no need to go through the complete list of companies quoted on the exchange before deciding on something to consider.”

In chapters three through five, Aerovolo X-rays the concepts of analytically interpreting stock market tables; do it yourself; and moneywise analysis process.

Chapter Six, the last chapter is based on the content of Moneywise Guide to Analyzing Companies. Here, the author quotes John Maynard Keynes as follows: “The social purpose of efficient investment must be to defeat the dark forces of time and ignorance.” Aerovolo stresses that a rewarding hobby you can develop as an investor in stocks is to learn how to use a company’s publicly available information, especially its annual results, to determine how well the company is doing. How to use accounts.

He stresses that surprisingly it doesn’t require any special skills; Neither do you need to be an accountant or an economist for this. In the words of Aerovolo, “Once you have a basic knowledge of the components of an account, the balance sheet, profit and loss statement and cash flow statements, and with determination, you can determine the health of a company whose You are probing quite simply.”

This text is fine from the point of view of style. Aerovolo injects illuminating quotes to achieve ideological amplification and provide authoritative credibility to the text. What’s more, he also uses pictorial embroidery to achieve visual reinforcement of the readers’ understanding. The language of the lessons is simple and the concepts are impactful.

Although some errors have been observed in this text, Aerovolo has compiled these errors and corrected them in a section titled “Corrigenda” on page one. He probably noticed the errors after the text was printed.

In general, this text is intellectually rich. It is highly recommended for those who want to become successful investors through sound financial and investment knowledge.

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