I got my first bonus in 2001 during my NYSC service year. Well, it wasn’t a bonus really, it was more of an allowance which the bank I worked for back then paid to I.T staff for working late nights, all nights, weekends and holidays. Even though we were corpers (there were 3 of us back then), we weren’t excused from any rotations including working throughout the 4 day Easter break, which was the best time to carry out updates, upgrades or disaster recovery scenarios on the bank’s banking app. My manager subsequently had to convince management not to exclude us from the allowance also.
So here I was, a corper with N250,000 in the bank; not the kind of money that will get you far in today’s money, but for a corper in 2001, it might as well have been a jackpot! Thankfully, I was a sensible young man back then. I asked my dad how I could invest the money and he asked me if I was interested in buying shares. I said something along the lines of, “if it will turn this N250,000 into N250 million, why not”.
Little did I know I was boarding an edge of your seat emotional roller-coaster that would have me checking stock prices in fear and/or elation every day for the next seven years. Anyway, he introduced me to his broker and after filling a bunch of forms and cutting him a cheque for the full amount, I was the proud owner of some blue chip shares in Nigerian Breweries, First Bank and some other “safe” companies.
Fast forward to 2007/2008. The market was on a spectacular bull run. People were making a killing within months. I remember a friend of mine who set up his own stockbroking firm during this period made so much money, he was living a lifestyle like one of those Wall Street types; fast cars, cigars, champagne and other thigs I don’t need to mention; you get the gist. Back to my story. The shares that I bought back in 2001 (and never sold) and other shares that I had picked up along the way were worth multiples of what I paid for them.
To give you an idea of the returns I got, here is just one example. I bought units of Zenith Bank during their 2004 IPO at N10.90 and sold the same shares in 2008 at over N60. A 450% gain! I was fortunate that I came out of the market at the very peak of the Bull Run because I had a project to buy a house at the time and I sold almost all my shares.
Also read: How To Buy Your Home Without A Mortgage Loan
Since 2008 however, I can only share stories of woe. Luckily again, most of my spare cash was tied up in the building project so I wasn’t very active in the market. I can’t say I lost my shirt but some of my stock picks were complete disasters. I bought into Oando plc in 2014 at about N30. A year later, I sold about half of my holdings for N15 taking a 100% hit (before fees). As I type, it’s trading at N5 and from the chatter about the company lately, the price is not going up anytime soon.
I also put some money in Oceanic Bank shares in 2014. Today, the bank has been swallowed up and my annual dividend cheques are not even worth the paper they are printed on. Believe me, it’s pathetic. I’ve been out of the market since then. It’s almost impossible for a novice like me to make any money in a bear market so I tuned out completely.
It turns out that I made a huge mistake by tuning out. Fast forward to December 2017. Unknown to me and many of us laymen and woman, the All Share Index returned a 32% gain as at the end of September 2017 and over 36% at the end of November. As I type this post in December 2017, it has surpassed 40% return for the year. In fact, the Nigerian exchange is one of the top 5 performing exchanges in the world for 2017. To put things in perspective, if you had bought shares in GTBank a year ago, you would have over 77% return by now.
The market is expected to grow again next year and the foreign portfolio investors who are mainly responsible for driving market direction through volumes are paying attention to Nigeria again. Stocks truly surpasses all other investment instruments when it comes to annual returns. I think it’s time to go back in, don’t you? After all, it’s been 10 years and the boom bust cycle is due a boom.
Come January 2018, I’ll be in the market again with both feet. This time though, I plan to go in armed with more information. I looked around for a book that would make my trading more scientific but also one that was not too technical and turn me off. I found the right book written by Nicolas Darvas. This guy was a dancer back in the 1950s and was given 6,000 shares in a Canadian company called BRILUND as payment for a job he did in Canada. It turned out that 2 months later, when he checked the price of his 50 cents stock, it was valued at $1.90. He made a profit of $8,000 in two months!
This new introduction to stock trading led him to make over $2 million in 18 months. During this period, he also lost money, but he eventually came up with a system which has now become one of the methods casual traders around the world use to make money trading stocks. It’s a fascinating read and it definitely gave me a better insight into how to trade more effectively, minimize losses and maximize gains. It’s a book I recommend you read and you can get a copy on Amazon either in Kindle format or paper.
You can also read my review of the book on the next page but I still recommend that you get a copy of How I Made $2,000,000 in the Stock Market to learn how to use the Darvas system for yourself and make money on the stock market.