Fire Your Stock Analyst
Lack of knowledge of what it takes to move forward in the stock buying and selling venture has discouraged many would-be investors from investing in stocks in Nigeria and beyond. Even most of those who already trade stocks often burn their fingers due to inadequate knowledge of stock analysis. It was the desire to guide these people that led Ayo Arowolo, my former managing editor / CEO of the “Financial Standard” newspaper, Lagos, Nigeria, to write this text entitled “Fire Your Equity Analyst”.
Arowolo, also the author of “The New Millionaire Capsules,” 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 Concord Group, “The Guardian”, “The News” and “This Day”. Arowolo was the founding CEO of The Investment Club Network (TICN), Lagos, Nigeria. Now he speaks to audiences across the country, focusing on how people can take 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 sensible 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 wealth of practical advice that will help people detect any deficiencies they may have, as well as take advantage of the deficiencies.
He educates that a requirement to make money on any investment is to obtain a thorough understanding of the particular investment arena before making any financial commitment.
Arowolo explains that there is a banquet of prosperity in the Nigerian stock market, because it turns individual investors who invest in the 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 divided 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 cautions that before putting your money into shares of any company, you should ask certain relevant questions. As he puts it: “For example, would you invest in a company that you know nothing about running? Would you put your money in a company without proper paper investigations that would reveal the financial health of the company …?? However, this is what a lot of 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 every day. He clarifies that a smart stock investor only calls their broker after they have decided on the stocks they want to invest in through research. The author claims that a smart 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.
Instead, he advises, you should snoop around the company you want to invest in and gather relevant information that can help you make informed investment decisions. Arowolo says curiously that this exercise is usually not as difficult as many people think. “Do you know, for example, that if you can read the daily official stock market list, with a little analysis using published company accounts, you can make smart investment decisions on your own?” 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 allowing the bank to use your money. He explains that if, however, you invest in shares of a good company, you can get what is called a “dividend,” which is a portion of the profits made by the company that is distributed to 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. Educate that some companies also reward shareholders with free shares, that is, bonuses.
Chapter two is based on the topic of the first steps. Here, Arowolo says, before investing in stocks, you should 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 start inquiring about investment opportunities. Arowolo claims that embarking on investing in stocks without a clear goal is a recipe for retirement confusion and misfortune.
He educates that the next step is to look at the industries that have growth prospects that you can consider. According to Arowolo, part of his research at this stage is also discovering key economic indicators and how they would affect industries. He adds that you also need to find out if there are any government policies that may have a positive or negative impact on your target sectors and ultimately the companies you want to invest in. The author says that you should also evaluate the companies whose stocks you may want to include in your investment basket.
According to him, “Factors you can consider include history of dividends and bonuses …, history of sales and profitability. You can also decide whether to include companies whose shares sell below N10: 00 (penny shares) or expensive stocks. You can’t do any comprehensive analysis 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 full list of publicly traded companies. before decide the few to consider “.
In chapters three through five, Arowolo analyzes analytically the concepts of interpretation of the stock market table; doing it yourself; and Moneywise analysis process.
Chapter six, the last chapter, is based on the topic of the Moneywise guide to analyzing companies. Here, the author quotes John Maynard Keyness here like this: “The social object of skilled investment should be to defeat the dark forces of time and ignorance that engulfed it.” Arowolo emphasizes that a rewarding hobby you can develop as a stock investor is learning how to use publicly available information about a company, especially its annual accounts, to determine how good the company is.
He emphasizes that, surprisingly, this does not require any special skills; it also doesn’t 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 will be able to determine the health of the business that is investigating quite easily.. “
Style-wise, this text is fine. Arowolo injects insightful quotes to achieve conceptual amplification and author credibility. In addition, it also uses graphic embroidery to visually reinforce 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. You probably noticed the errors after the text was printed.
Generally, this text is intellectually rich. It is highly recommended for those who want to become successful investors through sound investment and financial knowledge.