Investment Opportunity In Bear Market

ALANGRANGE SECURITIES LIMITED (Member of the Nigerian Stock Exchange)

INVESTMENT OPPURTUNITIES IN A BEAR MARKET The year 2008 began on a brilliant note following the domination of the Bulls in the market in 2007. However, this euphoria was short-lived due to the emergence of the bears in the market since march 2008 and all through the year. It will be recalled that investors in most advanced and emerging markets of the world suffered tremendous losses as a result of the meltdown. The NSE had its own bath too In a bear market such as we are experiencing in Nigeria presently, the first thing an average investor does is to abandon the existing basket to the bears or rush out of the market for refuge in fixed return markets. This write-up is aimed at providing an insight: o to knowing Investor’s mistake in a bear market o to knowing a better way to invest/ prosper in a sluggish market or bear market for Investors that felt the heat of the market meltdown in 2008 o for new investors who are skeptical about high returns on investment in the Nigerian capital Market Investor’s mistake in a bear market o Some investors lose interest completely in the market while some keep mute until the rebounds or swings. The fact is that unit holders or shareholders hold unto their stocks when the market rebounds but waiting for market rebound keeps the cost of acquisition high. o Another is hunkering down and refusing to make portfolio changes. o A third classic investor mistake during bear markets is converting all or most assets to cash as a presumably safe haven. On the surface, this seems a prudent strategy, since cash is not actually losing money. But if cash assets are earning you 3%, and inflation is running at 5%, then the returns on holding money is watered down by inflation. When the stock market moves from a bull to bear phase, there are a number of ways you can respond. The following are recommended: o Buy more stocks to reduce average purchase cost o Invest in stocks that have fallen more than 50% below their year high, or most recent Public offer price or Right price o Invest in stocks that the yield is in excess of 8% o Buy more stocks with regular corporate benefits( bonus & dividends) o Invest a portion of your portfolio in fixed income securities( fixed term deposit and bonds) On a conclusive note we recommend the following: o Long- term investment Horizon You should maintain a long- term view of the market and invest in companies with strong fundamentals o Define or know your investment objective: The first thing anyone should do before making changes to their portfolio is to think about what the purpose of the investment is. Is it for short or long term i.e. retirement? Generate income, academic savings? A down payment on a loan or mortgage? o Consider Your Risk forbearance Always determine the extent of loss you can bear and exit at that point to another stock. If you do not, chances are that you are taking more risk than you should o Regular reallocation of portfolio mix Reallocate your portfolio regularly to reflect an emphasis on diversification and long-range thinking.

ALANGRANGE SECURITIES LIMITED (Member of the Nigerian Stock Exchange) o Do not be too greedy Do not be too greedy. As the market recovers, take profits on a systematic basis. You may be caught off when market swings in opposite direction Our forecast reveals that the market decline will gradually bottom out giving way for the bulls. We expect improved earnings, high dividend yields, and some degree of stability in nation’s polity and macro-economic policies. Below are selected stocks and sectors to consider.

A B

C D

E F

G

H

I J K

L M

S/N 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37

Sector Airline Banking ‘’ ‘’ ‘’ ‘’ ‘’ ‘’ Breweries ‘’ Building Materials ‘’ ‘’ Construction ‘’ Food & Beverage ‘’ ‘’ ‘’ ‘’ Healthcare ‘’ Insurance ‘’ ‘’ ‘’ ‘’ ‘’ Mortgage ‘’ Other financial institution ‘’ Petroleum ‘’ ‘’ Publishing Real Estate

Securities NAHCO First Bank Guaranty UBN UBA Oceanic Zenith Bank Platinum Nigerian Breweries Guinness Ashaka cement Benue Cement WAPCO Julius Berger Costain Dangote Sugar Dangote Flour Big treat Flour Mills Tantilizer Glaxosmithkline Fidson Health Mutual Benefit Aiico WAPIC UNIC Goldlink Prestige Insurance Abbey Building Union Homes Savings Deap Capital Crusader AP Mobil Chevron University press UACN