Phew! It isn't easy when you are trying to do so many things at once, or be so many things to so many people at the same time. Anyway, I believe you understand by now, if you have been following this series on 40 different ways to making money online, that most of these tips and articles are meant to be a guide. A big thank you to my friend and colleague Dr Oluwole Adegbola, who follow the Nigerian stock market ardently, for his help in my research.
I since lost interest and passion for buying Nigerian stocks late in 2008 during the crash, when a stock broker collected N25, 000 from me for some stated shares. But instead of giving me the stated shares worth that amount, he dumped First bank shares worth N15,000 into my CSCS account. Anyway, Dr Oluwole has encouraged me again when we talked recently.
To really know more about any industry or to delve deeply into any of these ways of making money, you will need to read more about it, liaise or network with someone already making money in it, and then of course, put your money where your mouth is by investing in that thing.
Moreover in this section on online trading - making money trading Nigerian stocks, I will share a couple of articles with you on what shares are, how to find and register with licensed stock broking firms online, and how to buy the shares of companies on the Nigerian Stock Exchange using their online portals. I will also give you tips on how to trade profitably.
But first, why trade shares at all?
Gone are the days when you could only trade (buy and sell) the stocks of Nigerian companies on the Nigerian Stock Exchange (NSE) by going physically to a stockbroker’s office. Now, thanks to the internet, you can trade both Nigerian and international stocks online from a laptop in your living room.
According to Investopedia, a share is “a unit of ownership interest in a corporation or financial asset. While owning shares in a business does not mean that the shareholder has direct control over the business's day-to-day operations, being a shareholder does entitle the possessor to an equal distribution in any profits, if any are declared in the form of dividends. The two main types of shares are common shares and preferred shares.”
When you buy the shares of a company, you are buying into it's present value as indicated by it's stock price, believing that that value will appreciate in the nearest future. And a lot of calculations and permutations go into valuing a company.
Most people know what a share is/shares are, what they don’t know is how to choose a winning stock (called stock picks by the pros), or how to value a company truly by looking at the numbers in its financial reports.
Robert Kiyosaki of Rich Dad Poor Dad fame advises against buying shares of a company through an IPO (initial public offering) because he believes that by then, you are too late. He says that the investors who really make the money are those who get to buy the shares very cheap in the private offering before the stock is declared to the investing public. He is of the opinion that if you are to really make money in the stock market, then, you should be the one taking a company public –start your own company and take it public. And there is a lot of sense in that.
This also informed why I stopped investing so much in the shares of other people’s companies and I began to invest heavily in myself and in my ideas.
Anyway, not all of us can and will do that. As I shared in this other article, some of us might just become like the greatest investor alive –Warren Buffet, who bought the shares of Berkshire Hathaway, a cotton processing company, in the 60s for $20. And today, Berkshire Hathaway’s A-stock (preferred share) is worth over $200,000 each (actually $224,000 today!), while it's B-stock (ordinary share) is worth $149, and it continues it's policy of buying and controlling majority shares in companies such as IBM, Coca-cola, American Express, Gillette, and many others.
As mentioned above, there are two types of stocks
a.) Ordinary shares(Nigeria), also called Common shares (in USA), or Voting shares.
b.) Preferred shares (or preferreds) are commonly sold to private investors.
Ordinary shares are the ones that are commonly bought during an IPO. Generally, the ordinary shares have more rights when it comes to voting in AGMs, etc, while the preferred shareholders have more rights when it comes to dividends (payment).
A stock market index (Pl. Indices) is simply a statistical measure of change in an economy or a securities market. In the case of financial markets, an index is an imaginary portfolio of securities representing a particular market or a portion of it. Each index has its own calculation methodology and is usually expressed in terms of a change from a base value. Thus, the percentage change is more important than the actual numeric value.
Examples of common indices include the New York’s NASDAQ, the America’s Wilshire 5000, and S&P 500, and Japan’s Nikkei 225, among many others. In Nigeria, we have the All Share Index, the NSE 50, NSE-LII and so on.
Exchange Traded Funds (ETFs) and bonds are also traded though the online platforms.
ETFs are dynamic instruments usually designed to track different types of indexes such as equities, bond or commodity. The indexes can be sector specific such as those limited to oil and gas companies, construction companies, banks, financial services, or commodities such as precious metals, and export crops, among others. There are only two ETFs currently listed on the NSE. They are NEWGOLD ETF, which tracks the price of Gold Fix PM on the London Stock Exchange(“LSE”) and Vetiva Griffin 30 ETF, which tracks the NSE 30 index (a basket of the 30 most highly capitalised and liquid stocks on the NSE).
I am taking the pain to explain these terms in order to lay the foundational knowledge required for understanding the workings of most of the entities being traded online.
Many people lost money in 2008 after the stock market crash because they mostly bought shares on the recommendation of their stock brokers and didn’t understand in many instances the companies whose shares they were buying, the management behind the company or the financial health of the company because they couldn’t interpret its numbers.
I reiterate, “Don’t invest in what you can’t explain to a six-year old.” If you want to invest in a company, be like Warren Buffet –Buy to hold…for life! (So if you know you are not ready to commit your life to a company, its vision, mission and products, don’t invest in it, chikena!)
That is not to say you should not trade/hold stocks short term oh, but generally have a long term perspective first (even if you are only thinking of buying for the short term).
We will continue from here next.
Robert Kiyosaki of Rich Dad Poor Dad fame advises against buying shares of a company through an IPO (initial public offering) because he believes that by then, you are too late. He says that the investors who really make the money are those who get to buy the shares very cheap in the private offering before the stock is declared to the investing public. He is of the opinion that if you are to really make money in the stock market, then, you should be the one taking a company public –start your own company and take it public. And there is a lot of sense in that.
This also informed why I stopped investing so much in the shares of other people’s companies and I began to invest heavily in myself and in my ideas.
Anyway, not all of us can and will do that. As I shared in this other article, some of us might just become like the greatest investor alive –Warren Buffet, who bought the shares of Berkshire Hathaway, a cotton processing company, in the 60s for $20. And today, Berkshire Hathaway’s A-stock (preferred share) is worth over $200,000 each (actually $224,000 today!), while it's B-stock (ordinary share) is worth $149, and it continues it's policy of buying and controlling majority shares in companies such as IBM, Coca-cola, American Express, Gillette, and many others.
As mentioned above, there are two types of stocks
a.) Ordinary shares(Nigeria), also called Common shares (in USA), or Voting shares.
b.) Preferred shares (or preferreds) are commonly sold to private investors.
Ordinary shares are the ones that are commonly bought during an IPO. Generally, the ordinary shares have more rights when it comes to voting in AGMs, etc, while the preferred shareholders have more rights when it comes to dividends (payment).
A stock market index (Pl. Indices) is simply a statistical measure of change in an economy or a securities market. In the case of financial markets, an index is an imaginary portfolio of securities representing a particular market or a portion of it. Each index has its own calculation methodology and is usually expressed in terms of a change from a base value. Thus, the percentage change is more important than the actual numeric value.
Examples of common indices include the New York’s NASDAQ, the America’s Wilshire 5000, and S&P 500, and Japan’s Nikkei 225, among many others. In Nigeria, we have the All Share Index, the NSE 50, NSE-LII and so on.
Exchange Traded Funds (ETFs) and bonds are also traded though the online platforms.
ETFs are dynamic instruments usually designed to track different types of indexes such as equities, bond or commodity. The indexes can be sector specific such as those limited to oil and gas companies, construction companies, banks, financial services, or commodities such as precious metals, and export crops, among others. There are only two ETFs currently listed on the NSE. They are NEWGOLD ETF, which tracks the price of Gold Fix PM on the London Stock Exchange(“LSE”) and Vetiva Griffin 30 ETF, which tracks the NSE 30 index (a basket of the 30 most highly capitalised and liquid stocks on the NSE).
I am taking the pain to explain these terms in order to lay the foundational knowledge required for understanding the workings of most of the entities being traded online.
Many people lost money in 2008 after the stock market crash because they mostly bought shares on the recommendation of their stock brokers and didn’t understand in many instances the companies whose shares they were buying, the management behind the company or the financial health of the company because they couldn’t interpret its numbers.
I reiterate, “Don’t invest in what you can’t explain to a six-year old.” If you want to invest in a company, be like Warren Buffet –Buy to hold…for life! (So if you know you are not ready to commit your life to a company, its vision, mission and products, don’t invest in it, chikena!)
That is not to say you should not trade/hold stocks short term oh, but generally have a long term perspective first (even if you are only thinking of buying for the short term).
We will continue from here next.
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