The lack of knowledge of what it takes to move forward in the adventure of buying and selling stocks has discouraged many potential investors from investing in stocks in Nigeria and beyond. Even most of those who already trade stocks often get their fingers burned due to inadequate knowledge of stock analysis. It was the desire to guide such people that made Ayo Arowolo, my former managing editor/CEO at “Financial Standard” newspaper, Lagos, Nigeria, write this text entitled “Fire Your Share Analyst”.
Arowolo, also the author of “The New Millionaires Capsule,” is a Reuters Award winner who has been involved in financial education for more than 20 years as a financial and investigative journalist. He has worked for major Nigerian newspapers including the Concord Group, “The Guardian”, “The News” and “This Day”. Arowolo was the founding CEO of The Investment Club Network (TICN), Lagos, Nigeria. He now speaks to audiences across the country, focusing on how people can take full charge of their personal financial affairs.
The author says that this text is designed to help personal finance consumers acquire the basic skills necessary to make sound and prudent investment decisions. He adds that the purpose of the text is to create an easy-to-read guide that allows people to easily navigate today’s complex investment market. Arowolo emphasizes that the text contains a lot of practical advice, which will help people spot any shortcomings they may have, as well as how to take advantage of the shortcomings.
He teaches that a requirement for making money in any investment is to gain a thorough understanding of the particular investment terrain before making any financial commitment.
Arowolo explains that there is a prosperity banquet in the Nigerian stock market, because it turns individual investors who invest in shares of listed companies into millionaires on a daily basis. However, he adds that many private investors also lose money in the market on a daily basis.
The text is segmented into six chapters. Chapter one is titled “The Basics.” Here, this author says that many people who put their money in stocks don’t realize that investing in stocks is like buying a company. That is, you are a co-owner. Therefore, Arowolo advises that before you put your money into the stock of any company, you should ask some relevant questions. As he puts it: “Would you invest, for example, in a company that you know nothing about running? Would you put your money into a company without the proper paper investigations that will reveal the financial health of the company… Yet this is what many stock investors do. They put their money in the hands of brokers who might be experimenting with their retirement money.”
Arowolo adds that this explains why many investors see their financial fortunes disappear on a daily basis. He illuminates that a smart stock investor only calls his broker after he has decided the stocks he wants to invest in through research. The author states that an intelligent investor would not rely solely on what the newspapers say to make decisions because it is often too late when the information is in the newspapers.
He advises that you should instead snoop around the company you want to invest in and gather relevant information that can help you make informed investment decisions. Arowolo interestingly says that this exercise is usually not as difficult as many people think. “Do you know, for example, that if you know how to read the daily official stock market listing, with a little bit of analysis using the companies’ published accounts, you can make smart investment decisions for yourself?” he asks quite rhetorically.
On the choice between putting your money in the bank and investing in stocks, the author says that if you put your money in a bank, you can only get back what is known as “interest”, which is your reward for letting the bank use your money. money It extends that if, however, you invest in shares of a good company, you can obtain what is called a “dividend”, which is a part of the profit that the company obtains that is distributed to the shareholders. Arowolo emphasizes that, in addition, if you decide to sell your shares, you can get a capital appreciation if the price you are selling is higher than the price you bought the shares for. Educate that some companies also reward shareholders with free shares, that is, bonuses.
Chapter two builds on the topic of getting started. Here, Arowolo says, before you invest in stocks, you need to be clear about your goal of wanting to buy stocks. The author cautions that your investment objective should be determined and understood first, even before you begin inquiring about investment opportunities. Arowolo says that starting to invest in stocks without a clear goal is a recipe for confusion and retirement misfortune.
He advises that the next step is to look at industries that have growth prospects that you can consider. According to Arowolo, part of his research at this stage is also discovering the key economic indicators and how they would impact industries. He adds that he must also find out if there are any government policies that could have a positive or negative impact on the target sectors and, ultimately, on the companies in which he wants to invest. The author says that he should also evaluate the companies whose shares he may want to include in his investment basket.
According to him, “Factors you can consider include dividend and bonus history…, sales and profitability history. You can also decide whether to include companies whose shares are selling below N10:00 (penny shares) or the expensive stocks. You may not do any extensive research at this stage. The goal is to make sure you don’t waste time analyzing stocks that are worthless in the first place. You don’t need to go through the entire list of publicly traded companies Values before deciding the few to consider.”
In chapters three through five, Arowolo analytically discusses the concepts of stock market chart interpretation; do it yourself; and Moneywise analysis process.
Chapter Six, the last chapter builds on the theme of the Moneywise Guide to Analyzing Businesses. Here the author quotes John Maynard Keyness here as follows: “The corporate purpose of qualified investing should be to defeat the dark forces of time and the ignorance that enveloped us.” Arowolo emphasizes that a rewarding hobby he can pursue as a stock investor is learning how to use a company’s publicly available information, especially its annual accounts, to determine how good the company is.
He emphasizes that this surprisingly doesn’t require any special skills; neither does it require you to be an accountant or economist. In Arowolo’s words, “once you have a basic understanding of the components of an account, the balance sheet, profit and loss statement, and cash flow statements, and with determination, you can determine the health of the business you is investigating quite easily.” .”
Style-wise, this text is fine. Arowolo injects illuminating citations to achieve conceptual amplification and lend authorial credibility to the text. In addition, he also employs graphic embroidery for visual reinforcement of readers’ understanding. The language of the text is simple and the concepts are compelling.
However, some errors are noted in this text, but Arowolo has compiled these errors and corrected them in a section called “Corrigenda” on page one. He probably noticed the errors after printing the text.
In general, this text is intellectually rich. It is highly recommended for those who want to be successful investors through solid financial and investment knowledge.