Strategy is Key, Even at the Bus Stop

I was at the very popular Obalende terminal, when a slim lady, probably in her mid- 20’s, walked past me in a jolting manner. She carried a rather heavy bag, almost resembling the size of a 25 liter jerry can and managed to lift the daunting weight through the crowd. Her movement was rhythmic, almost as though she was walking the runway at a fashion show, and the next minute the rhythm would stop and she would continue in that jolting manner. Again, she would drop the bag, sit on the luggage for a short while, and then continue with the journey.

I watched her from the entrance of the terminal to where she was, and observed in more detail how she carried the bag, looked around and continued in the same jolting manner. I almost could not predict what she was going to do next, as almost immediately, she screamed loudly at the bus driver who was beckoning at her to hurry up.

What actually caught my attention was the similarity her display had to the stock market. I almost could not predict what she would do next and this is typical of what you get when trying to forecast the stock market. Stocks are turbulent and unpredictable in nature and it would take careful research and analysis to understand some market trends.

I was with my colleague from work and as we made our way into the bus, I noticed how occupied the bus was, almost full, to its maximum capacity, and how everyone was trying to rush into it to get a seat. To give you a clearer understanding, this bus plied my daily travel routes, was notorious for having nearly damaged seats and the decent seats were the ones directly behind the bus driver. We had waited faithfully for thirty minutes for the bus to arrive and in that time had calculated our strategy on how to get the desired seat that was not damaged or broken.

This is where my investment management training comes to play. When the bus arrives, we don’t just board it. We must have calculated how to achieve our goal, which is similar to what an investment counselor would do when working with his clients. Short term goal is to get the seats behind the driver, so we can sit comfortably on the way home and talk about work. Our long term goal is to stay abreast with the industry working out strategies on how to dominate the market.

Why do we refer to dominating? Well, while we are both innovative, analytical, and risk tolerant we also have liabilities. Our liabilities? We are both short sighted and wear glasses and coincidentally we both need a change of lens, as it is not clear enough to spy out the bus at a far range to keep us on our marks. I also do not have a huge body frame to push people out of the way and neither does my colleague have a face to scare people away.

Since we are both constrained by this liability, we have come up with our own little plan to achieve our goal. What we have is our strategy and this is what would see us through. As with every investment, strategy is key. Yes we hear it all the time that ‘past performance is not an indicator of future success’. This quote shows up after any promo for investment advice, which means that the past really isn’t a good indicator for the future. This does not mean that you should not have a strategic plan. Remember, strategy remains the key!

Sometimes it’s not easy to analyze these things and some critics would say that sector rotation in the stock market is rigorous. They say some stocks would win in one week and lose the next week and consumer staples would win in another week. Truth is it’s a vicious cycle but then again, it’s probably because they haven’t really been to the bus stops to see the number of people with hungry and tired bellies waiting to get home. The traffic to get through is a topic for another day, and the random nature of buses that arrive at the terminal daily is another thing to reckon.

Sometimes I feel the bus that I have placed my stake on doesn’t come often enough. The buses pull in at random but cannot leave the terminal till their seats get filled up, maybe because they came in too early. This is the same as stocks, they cannot rise without a catalyst, so also the bus drivers cannot leave the terminal until their buses are filled up.

Sometimes there are erratic drivers who would pick up a few passengers and then leave the terminal to pass through strange routes to avoid traffic. Just as an upgrade or tip of from an influential analyst can spark a run off in the stock market.

Other times , there would be fairly sane drivers who would remain calm until their buses get filled up and would pass the mapped out routes, thereby making the bus’ destination obvious. Just when I think that I have perfected my analytical and prediction skills, the bus develops a flat tire and the driver does not have a spare one.

Haha, there goes my prediction skills, I didn’t see that one coming!

Read More

Passionate about football?? You'd make a Great investor!

The thought of investing in the stock market scares away lots of people. Many get nervous thinking about it like it’s some alien concept. This need not be the case. Chances are that you are already making investments in other areas of your life with a deep sense of commitment. The fundamentals are the same.

Following a football club is one of such areas. Have you ever encountered a circle of friends discussing the performance of their favourite team? They discuss with zeal. They spend a lot of time researching players, deciding which player will fit the team’s philosophy and recommending who the club should buy or sell in the next transfer window.

Some go as far as betting their lives on the outcome of games based on the confidence they have in their analytical skills.

If you find yourself deeply involved in football in this way, with the patience to follow through season after season then you already have what it takes to be a good investor.

Investing in stocks is not much different from investing your time following a football club. In following stocks, however your analysis and recommendations actually count - you’d no longer be frustrated with Arsene Wenger for not listening to you! More importantly you stand a chance of making money investing your time in analysing stocks.

A real football fan understands that football requires diversification and depth. While football is ultimately about scoring more goals than your opponent, a team with only good strikers but no strong midfield or defence has no good chance of winning trophies.

In the same way, a good stock portfolio needs to be diversified. It should have different stocks playing different roles to help achieve the ultimate goal of net gains. It should consist of different types of stocks - growth stocks as well as income stocks - in different industries.

You can think of the growth stocks as the strikers in football. These are stocks have a promise of high capital gains for your portfolio. They would typically be stocks with high price earning (P/E) ratio.

While it is good for a team to have high quality strikers, the team must be prepared to handle a counter-attack successfully so it doesn’t suffer a sudden loss while focused on trying to score lots of goals.

For this the team needs a reliable midfield and defence to fall back on. In the same way, your portfolio needs a fine selection of reliable stocks to fall back on when things get tough. These will usually be blue chip companies. They don’t necessarily promise high capital gains but their stability means your overall portfolio can stay sane when the market goes crazy. Also, stocks like this usually pay dividends regularly to give you a steady stream of income.

From time to time there is a need to strengthen the team by buying one or more new players. Each player is chosen after assessing the needs of the team, the players strengths, past performance etc. Sometimes the new player brings the expected change and fresh energy needed to improve the team, at other times the new player turns out to be a disappointment.

You have probably heard this quote many times: “Past performance is not an indication of future performance”. This is true in football as well as the stock market. One good example is a striker called Fernando Torres. He had an excellent scoring record one season at Liverpool FC, and was bought by Chelsea FC for a record fee the following season. Unfortunately, he failed to live up to the hype at Chelsea and hardly scored goals. He eventually had to be let go by Chelsea to make room for other strikers.

Some stocks may behave the same way when they are added to your portfolio. When this happens, you have to take the decisive step of cutting your losses and getting rid of them. This might be an important step to improve the overall health of your portfolio.

Although you can do a lot of planning, analysis and preparation, when it’s game time, chance becomes an important player. Some games are charged with more emotion than the norm, the referee can be in a mood to dish out cards for almost no reason and these factors can change to outcome of the game in unpredictable ways.

The stock market is not much different in this regard. There are times when unfounded rumours, panic and speculation drive things crazy and the script fails to go according to plan.

Fortunately, each season consists of very many games and there are a few trophies up for grabs. A few bad days are inevitable. The teams that are balanced and smart enough to consistently improve and adapt their game to changing circumstances will have a better chance of winning trophies.

Perhaps you have invested a lot of time and emotion in following your favourite football club simply for bragging rights. Why not channel that energy and enthusiasm to investing in stocks? You have what it takes to be a great investor!

Read More

Tips for Nigeria investors

For those heavy on stocks, below are some of my opinions on current happenings and what I think you should be aware of (be prepared for, be not caught in a surprise about).

1. Global financial markets have been awash with cheap money and government funded assets purchase pushing assets value (bonds, equities, derivatives etc except a few commodities).

The result is that very many assets are selling at prices above their usual long term average

2. Frontier markets, where we fall in, have been somewhat insulated from these global assets over-valuation due to our uncorrelated risks factors -- political, commodity, currency etc.

However, due to the low activity levels of our financial markets, how much impact the foreign money movements (that are actually small in global relative scale) have in our markets and how little those movements correlate with actual fundamental values of our assets, our markets can be affected by these global markets issues.

3. Currently our stocks are fairly priced (not over priced as those in the developed markets) but still carry a considerable risk of going down due to the global assets sales US, EU and Japan central banks are embarking on.

These activities will jolt the market and most likely bring a price correction (a sort of painful reversal to mean) that often leads to foreign investors pulling money from emerging and frontier markets to "safe" assets like Gold, Bonds (especially as the US rates are rising).

Also, factor in the usual outflow around our election period.

4. If you are stocks heavy and might need to meet some financial obligations that may mean using some of your stocks money soon (technically speaking, less accommodating of volatility), you should rethink your portfolio now and do an optimal mix of assets type.

I am putting money I may need this year and next year in low volatile (actually, high-yield savings type) assets.

5. If you have foreign investment assets, then you need to take these current happenings really seriously. Think through the impact of a likely market correction to your investment assets and your ability to handle the outcome (losing or not losing your sleep).

Also, think about the opportunities that a market correction will present. That's my favourite part, the opportunity to buy cents on a dollar value.

6. We are fortunate in Nigeria. High ranking hedge fund managers, Vanguard fund managers and celebrity status investment managers in the developed countries seldom do as well as our money market returns.

Even, academic and research publications extolling the superior returns of stocks investing over other investing vehicles (real estate, bonds etc) always state that the S&P 500 has a long term returns of 9% annual rate.

To grow your money in Nigeria, you just need to have a good savings habit!

Yet we get way more than that in our money market. And with the magic of compounding that means your money doubles every 7 years for a 10% return rate and every 5 years for a 15% return rate. That is a very big thing that turns to pure magic if you save/invest periodically (monthly or quarterly). It is called the magic of compound interest.

So, to grow your money in Nigeria, you mostly just need to have a good savings habit.

And about the effect of inflation, in reality, it is not as terrible for an individual as it is often painted.

Beyond a few multiples of your autonomous consumption (living expenses), the effect is very muted for an individual. If you have N25 million growing at 10% yearly and your yearly living expenses are N1.5 million, even if inflation rate is 15%, it will take decade(s) before it will ever affect you.

The problem is if you borrow money, then the effect is greatly accelerated as you must pay positive real interest rate on the loans taken.

Read More

How to teach your children to be investors rather than spenders

During my interaction with students in high school, I discovered that most teenagers are clueless about investing. They get an “A” for knowing how to spend money, and many work hard for income, but few know how or why they should invest in stocks, mutual funds, or index funds. Typically, most teenagers haven’t thought about building wealth by paying themselves first. This is a consequence of the wrong orientation about money.
Sometimes the biggest obstacle to making money is our perception. We believe investing is rocket science, or something that only professionals can do. By giving your children the confidence to manage and invest their own money, they can learn to be financially independent with the freedom to do what they want in life.
Do you want your children to be spenders or investors? In reality, they can be both. Before your children get their first credit card, show them how to make money work for them by investing.
Here are some actions you can take if you want your children to build wealth:
1. Teach them how to save: You can channel their cravings for material things like toys into an opportunity to learn how to save. You can provide piggy bank for them and encourage them to put out some amount of money periodically until the piggy bank is full. Then, they can go ahead to acquire whatever they want. I can remember vividly how we used to construct wooden containers popularly known as "save" mostly at the onset of the ember months. Then we save all the monies given to us by our generous uncles. During Christmas, we break open the "save" to know how much we were able to accumulate. Often we were astonished by the amount we saved. That singular act thought me the importance of savings. It equally increased my craving for investment. Kiddies find such ventures exiting.
2. Teach them with stories and pictures: Have you ever wondered why kiddies texts are filled with stories and pictures? The answer is not far fetched. They learn more when you tell them stories. To make the learning process more fun, you can use diagrams to illustrate the connection between savings, investment and financial prosperity.
3. Teach them the principle of compounding: the concept of money making more money was once regarded (by Albert Einstein) as the eighth wonder of the world. Kiddies should be taught how money "grows" through compound interest.
4. Keep it simple: It'll not make any sense to them if you start by  telling them about stocks, bonds, mutual funds etc. Rather, you can start by teaching them how they can save money and how to use the savings to have ownership stake in the company that produces their favourite toys.
4. Practice what you preach: Children learn a lot by observation. So, you can't be teaching them how to save and invest when you're financially irresponsible. You can't teach them how to be prudent when your spending and indulgence is out of control. Your lifestyle should be a lesson to them.
Indeed, the confidence and knowledge to invest is a critical gift to your children.

Read More

If you can't save, please read this!

Ordinarily, savings means regularly putting aside a portion of the money you are given or earn in a safe place that pays interest.

We live in a society enmeshed in consumerism. Everyone crave for societal recognition by indulging in mindless acquisition. The importance of savings had been so relegated, especially among the youths. I keep wondering how far this generation can go in wealth creation with this poor attitude towards savings and investment. 

It is high time the young ones stopped believing that savings and investment are meant for parents alone. It is time to key into the financial system by adopting savings culture and other financial management techniques that would help secure our future. Imbibing sound financial principles at an early age would go a long way to help students and young ones manage their resources effectively, appreciate how money works and how it can be channeled to productive ventures now and in the future.

Saving money from early age guarantees financial independence, prudent management, planning and overall success of individuals and society.

The money saved should be placed in a financial institution for safekeeping and to earn interest on your money. But remember that the interest on your savings should be above inflation rate. This reduces the risk of spending, theft and gives your money the chance to grow. Savings is a precursor to investment. 

Conceptually, investment is the acquisition of assets (real or financial) for income generation and capital appreciation. I also consider intellectual property an asset. The economic growth of any society is hinged on the depth of investment of the people. On the other hand, the depth of investment is determined by the people's propensity to save. Any society with poor savings culture is doomed to remain in economic stagnation. Sadly, this is the situation in Nigeria. Our propensity to consume is on a stratospheric increase while our propensity to save is cascading rapidly. 

There is need for the young ones to change this tide. It's time we realize that economic growth is not determined by how much we make but how much we save. We can only invest when we have robust savings. It is impossible for a society without savings culture to grow. 

Fortunately, there are institutions with great commitment to drive and deepen prudent and effective management of resources among the populace, especially youths. Prominent among them is Investment One Financial Services. 

Investment One is a financial power house in Nigeria, a former investment arm of Guarany Trust Bank. They're registered with Securities and Exchange Commission as Fund managers and stock brokers. They have a number of financial products tailored for different category of investors. This investment bank is involved in securities brokerage, fixed income and mutual funds investment. These funds are invested in stocks and other money market instruments like government treasury bills, company commercial papers, FGN bonds, state development bonds etc. 

The following funds are professionally tailored to meet the needs of young Nigerians who are keen on preserving and stealthily growing their capital;

Abacus Money Market Fund is an open-ended Investment Scheme with competitive returns. A diversified portfolio with investments in quality money market instruments, short term debt securities, such as banker’s acceptances, Commercial papaers, and treasury bills.

The Investment One Vantage Balanced Fund (VBFUND) is a balanced mutual fund that was created to maximize long term capital growth and maintain regular income.These funds are invested in Equities, Fixed Income, Money Market and Real Estate.

In 2017 alone Abacus money market fund and Vantage Balance Funds  both managed by Investment One Funds Management returned 17 and 25 percent per annum respectively to their investors as interest income. Interest are paid on quarterly basis. There's also provision to reinvest earned interest.  No commercial bank can beat that. Most commercial banks pay between 3 and 4 percent per annum on savings account. 

 I enjoin everyone to key into this avenue provided by Investment One financial services to invest in our financial market and reap the benefits therefrom. Being a participant in our financial system provides an amazing opportunity to fully understand how the principle of compound interest works. It enables us to earn a decent income while learning financial management from a practical perspective. 

I want our youths, who are the hope and future drivers of Nigeria, to understand and appreciate the importance of prudent management of resources and other initiatives that have the capacity to positively impact lives and by extension, the society. This is to ensure their financial security and independence in future.

Read More

You can't afford not to invest

If you are not investing you are giving away money, simple as that. If you have your money under your mattress, or in a save deposit box, this money is losing value. Why? As we all know, due to inflation. Most of the developed economies are pursuing monetary policies that try to achieve higher inflation rates, known as expansionary monetary policies.  Every single person that has an income should be investing a percentage of its money, period. If you have a salary and you are keeping all this money in your account without producing any return, you are not financial savvy, and what is worse, your bank is not doing you any favor by failing to educate you on the time value of money. So, if you don’t have anything invested… START NOW! You can thank me in when you see the power of compounding working miracles for you.

Investing is not a game, it is not science either. This is why statistics plays such an important role in investing (a topic that we will leave for a different post), and why no one should believe statements from financial advisers such as: “I assure you 10% annual return,” “This investment offers 5% annual return and is risk free,” and so on.

What I am trying to get across is that everyone that has an income should be investing, but that it is important to acquire a basic knowledge of the financial markets before doing so, even if you are going to go with a financial adviser, a private banker or any type of asset manager. Why? Because the most important person for each of us is ourselves, and if a money manager has to pick between the well being of himself and the one of the client, it will definitely pick himself. It gets worse if you are a medium or small investor, since your financial adviser will always fulfill the big client’s necessities before yours. So, to sum up we all need to have a basic understanding of the financial markets before starting to invest, this is the only way to shield our patrimony.

In this post I am going to provide the 10 most important points that you should have clear before you start investing.

1. Should you be investing?

I know that before I said “anyone with a salary should be investing,” but there are particular cases in which this might not be true, at least for some time. If you have debt at a high interest rate (almost all credit card debt will match this definition) you should pay it off entirely before even thinking about putting any money into the market. It is simple to understand why. If you owe money and the interests are, fore example, 10%, it doesn’t matter if you can invest in the markets and make an average return of 9%. You are still losing 1% in comparison with the situation in which you pay off all this debt. Now, if you have a mortgage with an interest payment of 3%, you should not pay off the whole mortgage before you start to invest. In this case you can make, using our previous example, 9% investing and only pay 3% interest for the mortgage. So you will make 6% more than if you just completely pay off the mortgage. The relationship is oversimplified in this explanation, for example that 9% return is not secured; it might vary depending on the market conditions, while the debt will still be due regardless. This is why a lot of radical risk-averse people would prefer to pay off the debt before investing, despite of proven fact that, in average, they are losing money. The second situation in which you should not invest, even if you have a salary, is that one in which you don’t have an emergency fund. Every rational person should keep some amount of money  in an account just to make sure that an adverse event does not challenge her financial situation and that she doesn’t need to pull money from her investments. However, if you are debt free, you have an emergency fund, and you have a salary… You better be investing!

  2. What are you investing for?
Are you investing to pay for your kid’s university, to buy a new car, to take that around the world vacation that you have always dreamt of, to enjoy a nice retirement, to have a passive income? As you can see, there are a limitless number of reasons to invest. You need to understand yours because depending on what you want to invest for; you are going to use different investment vehicles to achieve your goals. Let’s give a few examples to better understand it.
If you have a sizable amount of money and you want to leave of it, or just have it produce some income for you, you can buy dividend stocks and bonds that will assure you a stream of cash. If you get the right mix, you can enjoy a steady income over the years in order to use as you please.
If you meet the following criteria
You are in your 20s or in your 30s
You have an emergency fund
You have a salary
You are debt free
You don’t have the need to pull money out in the next decades
you should create a balanced portfolio with a high level of risk. Most likely it would include a high percentage of equities and a sizable exposure to emerging markets with a high growth potential.

3. There is no return without risk
No one, wait I’ll repeat: NO ONE is telling the truth if they say they can offer a return higher than the risk free with no risk. It is just not possible. In our post Risk in finance and the why of risk management  we gave a comprehensive explanation of what risk is and how to measure it, so take a look to refresh your mind.

4. You have an optimal risk target, find it!
In the investment world, you should not aim for a particular return; it is never the right strategy. The process should start by identifying your level of risk, and only then maximize the level of return for that particular level of risk. The real key variable is risk because at the end of the day, if you risk too much you might go bankrupt and you don’t want that! This is why we need to decide what level of risk is appropriate for us. How do we do it? We need to assess our risk profile. In most developed countries, registered financial advisers are required to assess the risk profile of their clients. These financial advisers will provide a questionnaire that will try to gauge the following characteristics of the investor:
Time horizon
Cash requirements
Attitude towards risk
Financial situation
At the end of the day what the financial advisers are trying to find out is what amount of money are you willing and able to lose within a particular level of probability. You should try to find this number before committing any money to the financial markets. It will be truly dangerous to invest in a vehicle in which you can lose more money than the amount you are comfortable with losing. As you can see, you not only have to understand your level of risk but also the different investment vehicles in order to know what is the risk of investing in them.

5. Diversification is key
In order to diversify you need to know about the different asset classes. We are currently building a database with as many possible investment vehicles that exist with their description and characteristics. For now, this are some of the most common investment vehicles, including alternative assets: stocks, bonds, derivatives, real estate, commodities, derivatives, hedge funds, venture capital, private equity…

6. Economies follow boom/burst cycles
Economies, as human emotions, rise and fall. Understanding how the economic cycle works, in which phase do we stand, and which type of companies and investment vehicles perform better in each particular phase of the cycle is completely crucial to perform in the investment world.

7. Always question your investment selection
Understand that if you are selling, someone is buying and that if you are buying, someone is selling. So, there is someone in the other side of the trade that is, on average, as smart as you. Try to find out why that person is taking the other side of the trade. In other words, take your strategy and try to see how it could go wrong and with what probability. This reflection might show you that your strategy is not as robust as you thought or it might give you even more reasons to invest, regardless; it is a necessary and sometimes forgotten step.

8. What is the cost of investing?
Now that we know our risk level and that we should diversify we need to focus in which investment vehicles we are going to use to create our portfolio. We cannot stress sufficiently how important the cost of an investment is for its final return, and how many times these costs are completely neglected by the investor. The costs come from different sources: brokers, financial advisers, investment vehicle, and others. You can understand how to minimize these costs and control them, and only then, it will make sense to invest.

You should always do the appropriate due diligence, find out how the fees of the different brokers, financial advisers and investment vehicles relate. This is substantial to realize the highest potential returns. The final, but not least important, type of cost that we should care about is the cost associated with taxes. Understanding the tax treatment of the different type of investment vehicles and their returns is key for investors.

9. There will be ups and downs
The markets are not gentle, be prepared. You might see green from the moment you start your portfolio, but most likely it will be a bumpy ride. The best strategy is not to continuously check how your investments are doing. This might make you sell at lows and buy at highs. You invested due to some reasons, and while the reasons that make you invest in something do not change you should not care about the short and medium term price action. History teaches us that in the long run a buy and hold strategy in a diversified portfolio should enjoy significant returns. Just to put an example, there is no 20-year period in the history of the NSE in which, after adjusting for inflation and accounting for dividend reinvestment, you would have had a negative return. I understand that the fact that this hasn’t occurred yet doesn’t mean it will never occur, but is just some nice food for thought. So, once you invest, stay patient and calm, try to keep emotions out as much as possible and only rebalance your portfolio once some change in the markets makes your portfolio inefficient.

10. Stay current with what’s happening in the world
There will be economical, political, environmental, social… and many other types of events that are going to be affecting your investments. It is really important that you understand what is happening in the different fields that affect your investments in order to understand what can happen to them. An early identification of a future trend can save you or make you a lot of money. Imagine that you have a lot of your money tied up to oil related investments. If suddenly a new energy is discovered that can displace oil due to its better characteristics, cost, quality, power, availability, environmental impact, accessibility… you might want to start limiting your exposure to oil, and the only way to find out about this type of news is by reading what’s happening in the world. I recommend to always read the news from different countries and also associated to different types of political affiliations because how some news are presented will be affected by the background of the news provider.
Keep on optimizing your strategies.

Read More

Optimize your investment strategy with these tips

After the 2008-2009 consolidation in the banking sectors, there was a massive boom in the Nigerian Stock Market. This made a lot of people to invest in stocks. But not long thereafter, many of them lost their investments, because they were ill-prepared before dabbling into the market. To avoid making some of the mistakes you have to take heeds to some of these admonition before you invest in shares:

Seek advice

Working with a qualified financial adviser is one way to make a real difference to your wealth. An adviser can help you shape your investment goals and strategies and provide peace of mind when markets become more volatile. There are many investment bankers around who could be of help to you.

Educate yourself

Education they say is power. An informed investor is a good investor. So, be abreast with the happenings in the financial market. Get analysts’ reports on the shares you are planning to buy. Issues like changes to interest rates, currency movements and any geopolitical issues that have the potential to move markets must be of interest to you.

Keep an eye on fees

The fees you pay will affect the return you achieve from your investments. So make it your business to understand the fees you are paying on your investment as well as the fees you pay to your adviser. This little money often adds up to be substantial amount if you don’t keep tab on it.

Consider the impact of forex on your portfolio

Currency movements can have a significant impact on your overall return, both positively and negatively. Whether you choose to hedge your currency exposure will depend on your view of how the value of the currencies to which you are exposed will move. Some investors wish to be exposed to currency movements and others don’t. What is important is to work out which camp you are in and structure your investments accordingly.

Set your investment timeframe

It is easy to be caught up in short-term market moves. And if you like to trade assets on a short-term basis it’s important to keep a close eye on what is happening in markets at all times. But if you have a long-term view, avoid basing investment decisions on what is happening in markets right now. You should be concerned about long-term factors.

Buy when prices are down

Sometimes, it is a prudent strategy to buy quality stocks when their values are depressed because of short-term issues affecting the price of the stock. This can be a great time to buy. But make sure the business is not in a sector experiencing structural decline, satisfy yourself the problems are of a short-term nature only and make sure the business has the potential for long-term growth.

Read More