Stop the bleeding of your portfolio, don't sell, reduce loss and hold

The Ghana Stock Exchange ended the week positively, following 0.22% rise in GCB's stock price. The GSE-Composite Index closed recording a year to date of 7.11%. The GSE-FSI gained 0.73 points to close trading at 1,695.04 points reaching  a CYTD of 9.64%.

There have been a lot of activities on the exchange this year with some stocks recording their highest trades ever since inception of trading. This looks promising after a tough year in 2016.

Some investors who got into the market whiles the market was at its low point are beginning to get out retrieving their gains in some good performing stocks like Fan Milk (FML) and GCB bank among others. The issue of timing is very crucial when it comes to investing. Others are still taking advantage of the relatively low prices of stocks in the market hoping for a better year under the new government.

Despite all these some investors are just totally giving up on the capital market and resorting to the money market hoping it gets back to its 2016 form.

Dumsor threatens, Inflation drops, IMF support to stay, probable drainage of Heritage fund to commence, what should one do with the bleeding portfolios of stocks.

This morning, I decided to mitigate the losses by buying more of the stocks I hold at a lower price than I earlier bought them. By so doing, a slight increase in the share price will restore me to the profit zone than waiting for the market to fully recover.

To stop the loss and start seeing gains, you need to consider buying more at the current lower price. How much more will depend on how deep the fall is from your cost price and how much you already hold.

I guess this is your best way out at this current state of the market. It is better than selling you out hoping on the money market.

What if things turn the other way round? Won't that cost me more? Yes..... It surely will. That's why it's a risky market hence you need to be tough and make that decision to stop the breeding.

14-day winning streak halted on GSE as 2 becomes greater than 5

Upward price movement in five stocks failed to hold off losses in two stocks as the stock market's 14-day winning streak was halted. The GSE Composite Index was down 30.85 points to 1,794.74 from a record high of 1,825.59. The year-to-date return on the bourse fell to 6.26%. The GSE-Financial Stock Index slipped 40.79 points to close at 1,684.33.
 
Trade volume and value increased by 24.37% and 23.77%, compared with the previous session. The volume traded was 0.14million, and the corresponding value, GHS0.14 million. UTB recorded the highest volume of trade, with 42.10% of the today's volume whiles TOTAL trades accounted for 38.34% of the total value traded.
 
There were five gainers, BOPP, GCB, SOGEGH, TOTAL and UNIL, and two losers, GOIL and SCB. - CBL

What To Do Before Buying Any Stock

In all my investment coaching I tell my clients who want to venture into stocks trading or investment, to do one thing and that's what you should do before buying any stock in 2017.

And that is; READ MORE ABOUT EVERY COMPANY YOU DESIRE TO OWN.

Knowing more about the companies you buy or sell always gives you some upper hand and courage.

So get to work. And this is how;

On the Ghana Stock Exchange for instance there are about 35 listed companies. In 2017, target to read the Annual Reports, related news and learn more about what each of these 35 companies do.
You can dedicate one week to study about one company and before you know it, you will be more abreast with what's happening in the Market and then you can make informed decisions.
Most of the information you will need can be found here (www.annualreportsghana.com)
Fast readers can take two companies a week and read on.
Do not be scared of the figures and do not worry about interpreting the financial statements. The goal here is to know what these companies do to make profit, nature of their business, what industry they operate in, who is on their boards or management, who are the top 10 or top 20 shareholders, and any other relevant information you will get in their annual reports.

Doing this will not only get you informed but also build up some zeal or interest in you towards investing on the stock market.

You can apply this principle to other Investments you intend to hold, being it real estate, mutual funds, fixed income securities etc.

Simple task that always pays. Enjoy reading.

Young means Equity &The Fallacy of time diversification

From my earlier post against diversification, let me take time to address the flawed logic people have about diversification which is captured well in Jordan, Miller and Dolvin book on Valuation and Management.

Has anyone ever told you “ You’re young, so you should have a large amount of equity in your portfolio?  I know some of the people I coached during my early days of the Investment Coaching would say, Yes Patrick, you told me that. Well, while this advice could be true, the argument frequently used to support the strategy is generally incorrect. People say, although stocks are more volatile in any given year, over time this volatility cancels itself out. Investment professionals say this is a flawed argument. And they refer to the phenomenon as time diversification fallacy.

Jordan, Miller and Dolvin helped with this line of reasoning. You might remember from your statistics class that we can add  variances together. The fact means that annual variance grows each year by multiplying annual variance by the number of years. Standard deviations (SD) cannot be added together because the SD is the square root of the variance, however, an annual SD grows each year by the square roots of the number of years.  This feature is very handy when we are describing the returns and risk of an investment.  For example, If  we take a randomly selected portfolio of large –cap stocks of standard deviation of about 20%, and hold this portfolio for 16 years, the SD would be about 80%, which is 20% multiplied by the square root of 16.

Bottom line: Volatility increases over time – Volatility does not “cancel out” over time.  Whiles investing in equity gives you a large chance of having a portfolio with extremely large value, it also increases the probability of ending with a really low value.

So, should younger investors put more money into equity?  Probably YES, but for a more logical reason other than the reasoning underlying the fallacy of time diversification.

It is advised by professionals that, if you are young and your portfolio suffers a steep decline in a particular year, you should make up for this loss by changing your work habits / job / source of income or getting a second source of income.  People approaching retirement have little future earning power hence a major loss will have larger impact on their wealth no wonder the young should rather consider more equity.

Fan Milk Ltd (FML) hits year high amid low turnover

The GSE-Composite Index recorded its fourth win in four trading days, following positive returns on FML. The index closed trading 3.63 points higher at 1,771.47 points. The year-to-date return is -11.20%.

A 0.07% dip in Standard Chartered Bank (SCB) forced the GSE financial stock index down 0.29 points, closing at 1,656.27 points from 1,656.56 points.

A total of 0.04 million share exchanged with a corresponding trade value of GHS0.01 million. The turnover and trade value was 66.53% and 82.30% less than the previous session's volume and value respectively. CAL chalked up 39.64% of the traded volume whereas FML dominated in terms of value traded, accounting for 55.05% of the trade value.

FML gain more ground, climbing to a year-high of GHS8.00 from GHS7.82.

Courtesy: CBL

Stocks to invest in on Ghana Stock Exchange - May Results

Results from the Stocks polls on my blog for last month revealed that, 34.48% of some readers on this blog think Fan Milk ltd is the best stock to buy on Ghana Stock Exchange among the options presented to them ( Ghana Commercial Bank -GCB,  Fan Milk Ltd -FML, HFC Bank ltd -HFC & Ghana Oil Company -GOIL). HFC Bank ranked second among these stocks according to the polls.
To find out more about FML and what other investors think, read my post on "The Fan Milk (FML) Debate: Is FML over-valued on GSE? #FMLdebate 

Results from Stocks Polls
Click to Enlarge

Join the next poll for the next weeks. The question this time is,

Market Watch for the day - Trades on the Ghana Stock Exchange.

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Top Ten Places EPACK Puts Your Money

Stock Picks: Recommended Stocks for Investor on GSE

On Wednesday, 27th March, I posted a comment on Facebook trying to pick people's mind on the stocks they would recommend for an aggressive investor on the Ghana Stock Exchange.  The GSE Composite index and the GSE Financial Stock Index have been bulling from the beginning of the year. Most stocks on the market as at now are probably over-valued, meanwhile activity on the market is heightening.
This is what I wrote on Facebook;
"I am an aggressive investor who has Ghc 50,000 and want's to invest all on the Ghanaian Stock Market for 5 years. What stocks would you recommend?" 
Below are some comments and recommendations from some readers on Facebook with their various reasons;

The Choices of Warren Buffett on the Ghanaian stock market

I have been thinking of what stocks or companies Warren Buffett would pick or invest in. What I mean about this is that, if he’s to invest on the Ghanaian stock market, what would be his choice knowing what he stands for and his style of investing.

Warren Buffett is popularly referred to as the greatest investor and his investment strategy or philosophy is highly and widely seen as superior. Buffett’s investment philosophy comes from Benjamin Graham school of value investing. An article published by Investopedia reveals that, value investors look for securities with prices that are unjustifiably low based on their intrinsic worth.

Banking stocks pulled the market down as all indexes recorded significant loss

CBL - The GSE-Composite Index declined by 1.25 points, as the stock market recorded its third successive loss. The index closed at 1,043.18 points from 1,044.43 points. With three out of the four losers being banking stocks, the GSE-Financial Stock Index fell 1.58 points to close at 874.75 points.

NEWS RELEASE: AngloGold Ashanti Update on Unprotected Strike at South Africa mines

NEWS RELEASE: (Johannesburg)  –  AngloGold  Ashanti (AGA)  confirms that  its  mines  in  South  Africa remain  at  a standstill  amid the unprotected  strike  which  began  on 20 September  2012 at the Kopanang operation  and spread to the  remaining  five  operations  on  25  September  2012. Our priority remains to protect the safety of our employees and the communities in which we operate and we continue to work with the authorities to that end. AngloGold Ashanti has

Ghana Stock Exchange begins week with five gainers as trade volume hits record high for the year

This week has begun on the Ghana Stock Exchange with smiles on the faces of some investors as equities from different sectors of the economy gained some cedis. There were five gainers namely AngloGold Ashanti, AGA (Mining), Enterprise Group Ltd, EGL (Insurance), Ecobank Transnational Inc. ETI, (Banking), Ghana Oil, GOIL (Oil) and

The Reason Why Cocoa Processing Company (CPC) is a Good Stock on the Ghana Stock Exchange

I am writing this to first of all restore confidence in the market and reveal some golden opportunities that some type of investors overlook in the market. I would use Cocoa Processing Company(CPC) as an example and let investors know what they miss when they look at only one side of issues.

Price movement of CPC from March to August.

Over some time now, there have been so many complaints from fellow investors, friends and some stakeholders of the market over the low trading price of CPC on the Ghana Stock Exchange. In actual fact, CPC is the lowest priced stock on the exchange and currently 0.02p.

Ghana Stock Exchange (GSE): Market update for Friday, 11.05.12

Friday GSE Market Update:


Let's look at what happened in the market today. The market closed on a bad note recording losses in four equities. The GSE-Composite Index closed the week at 1,050.34 points from 1,053.65 points. 

GOIL dominated trading for the third time in five successive sessions, the sixth in ten sessions, with 67.79% of the 0.4million shares traded and 58.86% of the GHS0.20million realized.

The corresponding year-to-date change for the exchange is 8.39%. The GSE financial stock benchmark fell 0.99 points to close trading for the week at 908.34 points.

Trade volume and value increased by 51.75% and 93.65% respectively, when compared with the previous session as reported by CAL Brokers.

Aluworks Ltd (ALW), Guinness Ghana Brewery Ltd (GGBL) and Ghana Oil Company Ltd (GOIL) gained a pesewa each to close at GHS0.07, GHS1.76 and GHS0.41 respectively. 

Meanwhile losses were recorded in four equities, PZ Cussons Ghana Ltd (PZC), Tullow Oil (TLW), Total Petroleum (TOTAL) and HFC Bank (HFC).

Analysts predict similar trend in stock prices for next week.

CAL Brokers still recommends Benso Oil Palm Plantation (BOPP) and Enterprise Group Ltd (EGL) for the fourth successive week.

Courtesy: Ghana Stock Exchange & CAL Brokers

2011 Year Review of CAL Bank on the Ghana Stock Exchange.

Overview of Company

 CAL Bank Limited formerly Continental Acceptances Limited and then CAL Merchant Bank was incorporated on March 20, 1989 but the bank was licensed in June 1990 and commenced business in July 1990. With issued shares of 238,802,978, CAL Bank is listed on the Ghana Stock Exchange (GSE) and the share price is 0.23p as at December 6, 2011. We would be looking at how this bank performed on the GSE for the 2011 financial year.
As at 31st December, 2010, the Social Security and National Insurance Trust (SSNIT) held 82,363,074 shares in the bank making 34.13% whiles Mr. Afare Donkor, the largest individual shareholder and second largest shareholder held a stake of 7.51% representing 18,120,000 shares.



Analysis

CAL Bank began the year, 2011 with a share price of 0.33p (04/JAN/2011) and because of investor activities & active trades, share price of the bank rose to 0.39p (04/FEB/2011). Meanwhile, the stock price dropped steadily after that time to close at 0.26p on 22/March/ 2011. Further fluctuation of price was recorded from July to October 2011. Ten months down the year, CAL recorded a Year high of 0.39 pesewas and Year-Low of  0.25 pesewas (p). The volume of trade heightened at the end of October and hence was reflected by an increased in share price by some pesewas.
CAL stock and other financial stocks performed badly in November making the Financial Stock Index remain lower than the Base index of 1000.

The Year 2011 obviously was not the best year for most stocks on the GSE and CAL Bank is no exception.

I would be writing on Ecobank Ghana Limited (EBG) in my next post. I would be reviewing EBG stock on the Ghana Stock Exchange for the Year 2011.

[Courtesy: Ghana Stock Exchange, Bloomberg]

Looking at the GH 2012 Budget, the Bond way.

The 2012 Budget with the theme “Infrastructural Development for Accelerated Growth and Job Creation” was described by the Majority in Parliament as the best ever but the Minority said it was a repetition of the past budget. The Minister for Finance and Economic Planning, Dr. Kwabena Duffuor outlined in his speech, the plans for the Bond Market and that was what caught my attention.

Over the years, the capital market has been growing slowly and highly dominated by activities in the stock market. The bond market on the other hand is dominated by the Government bonds with very few corporate bonds. In order to ensure accelerated growth as predicted by the budget, the government plans to deepen the bond market. To ensure long term debt instruments, the government of Ghana would be issuing a 7-year and 10-year fixed rate bond next year. In addition, the government will set up a National Bond Market Committee in 2012 to undertake the tasks. Dr. Kwabena Duffour mentioned that, this Committee would be tasked to first of all, identify the constraints in the development of corporate bond market. Moreover, it would study and recommend legal, institutional and process changes needed to accelerate the development of a corporate bond market.

 The Minister further outlined that; this committee would monitor the performance of the government bond market and to improve its effectiveness as an anchor for the corporate bond market. In regards of deepening the bond market, this committee would finally assist the private sector to access the bond market by proposing appropriate financial/technical assistance mechanisms.

This move by the Government for the 2012 fiscal year is good for the bond market and the capital market as a whole.

We hope to see it manifest. Else...................... 

11/11/11 on the Ghana Stock Exchange.

The number 11 is perceived by many people as 'A LUCKY NUMBER'. In Astronomy, Apollo 11 was the first manned spacecraft to land on the Moon and  in religion, the Eleven apostles of Jesus (i. e. Judas excluded) were perceived to be the blessed and righteous ones. On this special day, 11th Nov., 2011, let us take a look at what happened on the Ghana Stock Exchange to see whether the fortune of the day had an effect on trading.

A volume of 130,810 shares were traded today, which was barely half of what was traded yesterday and the GSE Composite Index (CI) dropped by -0.86 points to close at 997.42. 

Meanwhile, the GSE Financial Stock Index gained 2.72 points to close at 900.31. 

GSE-CI is lower than the base index of 1000 that was valued on December 31, 2010.

Six (6) stocks recorded changes in price today. 

TOTAL traded 180 shares and lost 0.01p to close at GHC 21.00.

Tullow Oil (TLW) also traded 161 shares and lost 0.08p to close at GHC 31.00.  

Two banking stocks, Standard Chartered Bank (SCB) and Ecobank Ghana (EBG)

closed at GHC 45.50 and GHC 3.45  by losing 0.02p and 0.05p after trading 100 and

14515 shares respectively. SIC Insurance and Benso Oil Palm Plantation (BOPP)

also gained 0.01p each to close at 0.41p and 0.86p respectively.

Today's trading only favoured some financial stocks but not the Composite index. 

Shareholding of The Trust Bank (TTB) as Ecobank tries a Takeover

The Trust Bank (TTB), with about 20 networked branches covering Ghana,  is undergoing a takeover by Ecobank which most people including the Coalition for the Protection of Individual and Constitutional Rights are against. Meanwhile, shareholders of TTB, are strongly in favour of the takeover by Ecobank, the leading Pan- African Bank. Who then owns TTB?

The shareholding structure of TTB reveals that, The Social Security and National Insurance Trust (SSNIT), the single largest pension fund in Ghana is the largest shareholder with about 61.11% stake. SSNIT, with reference to the recent pressure from pensioners supports the takeover. 
The second largest shareholder is Compagnie Africaine de Financement et de Participation (COFIPA), a Paris-based investment company owned by West African businessmen. COFIPA has also agreed to the takeover by Ecobank. 

 The Trust Bank which remains one of the fastest growing banks in Ghana gained so much trust from Ghanaians and that reflected in the Total Bank Deposits rising from about 39.17million GH cedis in 2003 to about 239.55 million GH cedis in 2010.


The 3rd largest shareholder of TTB is FMO – The Netherlands development finance company,which has about 10.00% stake. FMO, like other shareholders have voted in favour of the takeover by Ecobank.
The Ghana Reinsurance Organisation remains the second major local shareholders of The Trust Bank. It has about 9.39% stake in TTB making it the 4th largest shareholder. With a stand just like SSNIT, Ghana Reinsurance Org. supports the takeover despite the rumour that the Minister of Finance, Dr Kwabena Duffuor, has blocked the takeover.


Africa Tiger Mutual fund, an investment company registered in Ghana, is the smallest shareholder of TTB. And with 6.00% stake, it stands to be the 5th and the 3rd local shareholder of TTB.


Only time can tell whether the sale of TTB to Ecobank Transnational Incorporated (ETI) would be successful. 

JP Morgan, IBM & Goldman Sachs Daily Charts.

 
                                                        JP Morgan Daily Chart. (14-Oct, 2011)

                                                                     
                                                                      IBM Chart (14 Oct. 2011)