Investing clues for mid-year 2008

For sometime now, there has being a deluge of company’s audited and quarterly results that show credible performance, released on the floor of the Nigerian Stock Exchange. The impact of these results is yet to be felt, but as the bounce in the All Share Index is being expected anytime within June and July 2008, a wise investor would begin to take position on such stocks to maximize gains. Some of the newly listed equities should be target points too, as the new NSE rules provide a level playing field for trading in these stocks. Most of those recently introduced rank as penny stocks and as the anticipated liquidity expansion hits the market, these stocks are going to be sought after.

However, it is important to know when to move how to move, how long to hold and when to bail out of stocks. To achieve this, an investor needs to be pro-active. Investors, who do bandwagon investing, risk losses arising from ill timing. The current trend has made the prices of most stocks dip considerably, and this affords an opportunity for investors seeking maximum yield to take positions on such stocks. To be able to make a smart decision, an investor should consider the company’s fundamentals.

Issues that have to do with strategic moves that would impact the company’s financial outlook and enhance its wealth should be a key consideration in the choice of which stock to buy. Some indicators in this regard may be new products that promise a competitive and profitable edge for the company, change in management and/or ownership, expansion drive, mergers and acquisitions etc. These fundamental issues would influence share prices when the bulls return. Considering company fundamentals remains one of the best ways of insuring wealth preservation on the long run, as a hold decision offers the option of cutting, if not avoiding losses when the short run objective has been overridden by the unforeseen/error judgment.