Sunday, September 27, 2020 / 11:50AM/Nifemi Taiyese for Proshare WebTV/ Header Image Credit: WebTV
Millennials have been advised to emphasize value when investing in the Nigerian stock market. Mr. Chibuzor Odita an equity sales trader at United Capital, said this in a recent discussion on 'Investments and Millennials in Nigeria".
As a young stockbroker, Odita tasked millennials who want to invest, to ignore immediate price gains and investment yields when making investment decisions. He insisted that the price of equities should be assessed against underlying future earnings and book values. According to Odita, value helps individuals to understand the fundamentals of what they are investing in.
He noted that Retail investors are coming into the market to buy and keep, as it is a wise thing to do because after the COVID-19 pandemic stock prices will begin to adjust upwards "there is a likelihood of increased retail activities when compared to 2019 because the average person wants to make money right now through getting returns from capital appreciation," he said.
Speaking on what must be done to attract the millennials to the market, Odita stated that it must begin from the federal government and the Nigerian educational system.
He called for courses on the capital market and investing to be introduced in secondary and tertiary institutions. Students should be able to understand the process and impact of the capital market in the Nigerian economy, he said.
Giving his experience he said he started at age 16 when he worked as an intern learning from his Father and became a chartered stockbroker at the age of 21 in 2019. Odita believed that retail investors are very important people in the stock market because they are critical to the growth of the market.
Speaking further he said analysts observed that in March 2020, there was a decline in the market because of the coronavirus pandemic and there was a big reduction in investors coming into the market, which sent the All Share Index (ASI) into a downward spiral.
In terms of the retail space, after March/April there was an increase in retail investors edging into the market as investors started recognizing the market's hidden value.
The stockbroker shared the following tips for millennials coming into the market for the first time;
He brought to the fore the need for individuals to invest in fundamentally strong stocks. He noted that young investors need to be aware of what is happening in the Nigerian economy, from the inflation to interest rates to gross domestic product (GDP), which all influence the stocks an individual is investing in. Talking on stocks for millennials he suggested investments in the telecommunications, industrial, banking and brewery sectors. "Investing in necessity products will take you to where you necessarily want to go" he observed.
Looking at the EEG Strategy he described it as the analysis of Entry, Exit and Greed. As an investor, he emphasized the need to know what price line to enter and also exit price, but investors should not allow the greed factor to come between the entry and exit plan.