Universal Laws

UNIVERSAL LAWS FOR PROFITABLE INVESTMENT IN A BEAR MARKET A bear market is when there are continues fall in prices as we are witnessing now. We say universal law. These are laws that work whether you know them or not or even have faith in them. You just have to believe in these laws, as they will work all the time irrespective of the country you are or who you are. Example of a universal law is the force of gravity, no matter who you are, rich or poor if you jump from a height you will fall down. Nigerian will remember the Mobitel MD sometimes ago. The following laws affect everybody and will work for you whether you are black, white, brown, yellow on whichever continent you are. Aligning yourself with these powerful tools will enable you to achieve profit on your investments in this time of recession. There are no sentiments if it is your money. These laws are:  Buy when the market is pessimistic, thus this is the time.

This period is a time that wealth is about to change hands. As the people who has been affected by the “banking tsunami” and the general falling price. This is the time for a fresh investor and an unknown face to surface as the biggest investor. I am sure we are going to see this within the next one year.  Investment is for long time.

Just recently law of leverage worked for some people. The Jimoh Ibrahims, Capital Oil owners etc, now this law is working against these people making them to incur huge losses to save their neck and one person’s loss is profit for another. These people had to sell their shares which were acquired with short term funds borrowed from the banks. It is not advisable to do a long term investment with short term funds from the financial institutions except in rear cases where the capital market is extremely bullish.

 Avoid Negative Sectors - As you know about the crises in

the banking sector, this sector and those related to it must be

avoided, except the companies involved are exceptional, thus as at September 2009 you avoid: i) ii)

ready

Insurance Stocks Banking Stocks iii) Automobile mobilies companies Goods, Transport and Chemicals. iv) Leisure / Hotel. Leisure spending is first to be leasing companies. v) Airline – Depending on expensive equipments capital is not available in developing countries thus airlines in Nigeria, Ghana and other developing countries are always collapsing. 

Invest only in large companies that have strong balance sheet any one with capitalisation of less than billion should be avoided. Low capitalisation companies be avoided also.

 Buy companies that have good dividend yield, but are outside the industries that are in turbulence situation.  Invest in companies with high and increasing net profit

margin. These are samples of margin as per the attached results. 2008

2007

REMARKS

 Management – Avoid companies where the management is tainted by any shade of suspicious i.e. avoid ethics in high standard for any bad result you hear the actual situation many be worst.  Company must have positive working capital. At this instance there is no money. Therefore, the company must have cash for development. Cost cutting is very essential.  Buy shares in Defensive Sectors

Pharmaceuticals – Fidson M&B Sterling Pharmaceuticals Breweries - Nigerian Breweries Guinness These companies always do well in downmarket and are insensitive to market moments i)

ii)

iii) Conglomerate – Unilever PZ AG Leventis  Avoid companies with highly cyclical business Non Essentials i) Automates (Assemble plants) ii) Chemicals iii) Transport iv) Leisure & Entertainment v) Software Services vi) Media Others to avoid - company needing high capital ** -Oil Companies and Oil Servicing Companies -Stock market business related businesses e.g Deap Capital Limted, Crusader Insurance

Conclusion The purpose of Investment is not to look at what is going on today but what is likely to happen tomorrow. It is all about anticipating economic developments. If you want to wait till there is a confirmation that economic recovery has fully taken place, then you may miss the opportunities. I encourage you to take the dive into the seemly shark invested ocean capital market today and I am sure you will come out at the other end, a victorious investor very soon. You can tell me your testimony at [email protected]

Next outlook for some Industrial Sectors the rest of 2009 and the rest of 2009 and 1st half of 2009 for Nigerian and Ghana market. Liz-olofin & Company Plc