Finance

Understanding the big picture that will change your trading strategies for profit

Understanding the big picture that will change your trading strategies for profit

The investing public at this time should be able to understand and identify the stage the nation’s economy is now in the economic cycles as different impetus associated with various stages to guide investors in analyzing sectors, industries and companies. 

This would help then to know which sectors does well at different time and how to pick the best industry or company at the right time. 

The economic cycles are in five stages, the early expansion, middle expansion, late expansion, early contraction and late contraction that come with different investment opportunities. 

How to know what stage of the economic cycle we are in is to, first of all, identify the current stage of the economy and which sectors have done well by looking at the economic indicators like interest rate, inflation and industrial production which is the nation output. 

Its better investors understand this economic cycles now as the post-election economy is disintegrating, so as to know where to pitch their tent in the new dispensation. 

The early expansion stage of an economy is where the interest rate is relatively low, inflation has decline to its low level as the nation output is increasing on the strength of industrial production to drive the whole system. 

Our economy is not at this stage now, but investment thrives in these sectors and industries, like capital goods, technology, transportation, manufacturing, communication equipment, airlines and construction. 

At the mid expansion of any economy, the interest rate is on the gradual increase as the inflation rate remained down for a time while the output of the nation has increased geometrically on the strength of low cost of funds for expansion of business and take off of new enterprises in the system to boost development and growth. 

At this stage, manufacturing, machinery, construction and industrial goods does well, meaning that companies in these sectors or industry would thrive well and investors will put their gaze on the companies in this sector. 

The late expansion of an economy is at the point where interest rate has increased geometrically with inflation to keep the nation output at a constant level. 

Here the cost of borrowing is high and the prices of goods and services are high as a result of inflation in the system. 

The sectors that perform well are the energy, consumer staples and basic materials. Like the power, oil & gas, chemicals, Alumium , Beverages, foods, distributors, health care, hospital management, household products and medical products. 

Inflation Rate 

The early contraction stage is where the economy starts dwindling because the interest rate has remained high as the inflation continued to increase, thereby causing a serious decline in the nation output as industrial production decreased on the influence of high cost of production. 

The sectors or industries that thrive at the stage are the financial services, utilities and consumer staples. Examples are the energy companies, house-wares and electric companies. 

Industrial Production 

Finally, the late contraction, occurs when interest rate is declining with high inflation rate and the nation output had continued to degenerate due to high cost of goods and services. 

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At this stage, it’s the financial and consumer cycles sectors that do well while the industries are insurance brokers, investment bank, banks and savings and loans. 

Understanding the big picture in equity investment would go a long way to help traders and investors in the prevailing economic and market situation. 

The stock market cannot be separated from the economy, as a leading indicator that tells what is happening now and pointing to the future of the sector, industry and company which is the economy. 

In stock trading, what influences share price is beyond the company performance, as 80 percent of what move equity prices comprises of the economy, the market, the sector and the industry. 

When the economy is recovery the share prices of listed companies are likely to be in the same direction of recovery or looking up, also the market itself has influence on prices when it experienced system or economy induces downturn or upturn. 

The sector and industry also have influence on share prices, when a sector or industry is doing well it goes down to impact companies operating in that line. 

As earlier mentioned, the economy has cycles of boom and bust which goes with the different stages of early expansion to late contraction. 

After identifying the stage our economy is now, which of the sectors should you invest in for profit as the market remained in the red for over three months? 

The bearish market has created another opportunity to buy low and sell high when prices bounced back. 

To identify value in a recovery economy is when the market is oscillating in upward direction due to happenings in the global and domestic environment, just like policy formulation and direction of the government. 

The sectorial performance YTD would reveal industry that had witnessed slowdown or suffered losses, but has huge upside potential as yearend seasonality and others are expected to playout before the year winds down. 

SECTORIAL INDEX PERFORMANCE YTD. 

From the sector performance, there is indication that prices have change from low to high as showed by the indices above except for NGX Insurance and Consumer goods that are negative due to relatively unstable price movement year to date. 

The down trodden sectors that have been affected by the economy and the market, but some of the companies operating within the sector still have strong fundamentals regardless of market perception and sentiments for low share prices that have value now for investors to identify. 

At the current market situation price is key but let value guide you, what gives value is derived at the right time when position is taken at a lower price because equities that have high margin of safety at relatively high price before now are selling lower due to prevailing condition that had forced prices down. 

In the current situation cash is key as it allows investors to reposition on time at any breakout of the market from the current trend that had characterised the up and down movement of prices in recent time. 

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Exiting position in toxic stocks and selling at a discount for stocks with low marketability to hold cash is necessary in order to help traders and investors take advantage of positioning at the reversal of the market trend. 

Do not make the mistake of staying in toxic stocks as they suffered huge losses first. 

Leaving your money in any company that has no clear business model that can support its performance or you do trust is very dangerous to your portfolio. 

Identify the stocks that would attract the attention of the foreign investors when they start return to the market, as their standing at the sideline has not affected the market negatively. 

They are the driver of the market due to high volume of transaction they control, which the local institutional investors or players have taken over. Coupled with the advantage of exchange rate that is in favor of international investors that comes in with little money and buy over the market. 

Sectors to target in this economy situation are the banking industry, but few of the stocks in that sector, Healthcare if the government and regulators of that industry wakes up to their responsibility to protect the locally manufactured products. 

Conglomerates sector especially the companies that are highly diversified, Agribusiness, Consumers and Industrial goods. 

Invest 2022 Traders & Investors Summit 

Theme: “Master the Market: Get The Best Of Pre-Election Year 2022 

Sub-Topics 

1. Balanced Trading: Playing Nigeria’s Multiple Exchanges For Diversification, Mr Olatunde Amolegbe, CEO, Arthur Steven Asset Management Ltd &President of CIS 

2. Agriculture, Economic Recovery & Diversification: Where Is Commodity Trading In Your Portfolio, Mr Akinyinka Akintunde, Business Development Manager, AFEX Commodities Exchange Ltd. 

3. Technical Outlook & Indicators For Profitable Market Timing, Mr Abdul-Rasheed Oshoma Momoh, Head Capital Market at, TRW Stockbrokers Ltd 

4. Benefits & Dangers Of Fixed Income Instruments In An Inflationary Environment, MrTeribaAdeboye, MD/ CEO, Qualinvest Capital ltd 

5. Economic Outlook and implications of the N16.45 Trillion 2022 Budget On Sectors/Stock Market, Mr Oluwasegun Akinwale, Senior Portfolio Manager, Coronation Asset Management Ltd 

 6. Profitable Stock Picks Made Easy, Using Fundamental Tools, Mrs. Ebiere Helen Fumudoh, MD/CEO, Norrenberger Securities Ltd 

7. The Role of Real Estate & REIT Instruments In the Ecosystem, Mr Tope Ojo, Managing Partner, Tope & Tunde Estate Surveyors &Valuers 

8. Trade Opportunities & 10 Golden Stocks for 2022, Mr Ambrose Omordion, Chief Research Officer, Investdata Consulting Ltd 

Investdata Consulting Limited holds the 10th edition of its annual Investment conference tagged Invest 2022 Traders & Investment Summit, which has over the years remained a game changer for market players. 

This edition is aimed at helping stakeholders identify opportunities and bringing ideas for profitable trading as we enter a pre-election year. 

Invest 2022 is a not-to-be missed summit capable of completely changing your view about where the economy and stock market are headed and when you should fully plunge in or hold cash. 

Join the experts and experienced professionals to discuss a Big Picture Perspective of where the stock market and other investment windows are currently placed and what signs to be vigilant about over the coming months and year 2022. Don’t miss this summit. 

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We have held this annual summit since 2012, to give investor and traders’ insight, perspective and expectation in the New Year. 

This year Invest 2022 Summit is exceptional being vaccination driven economic recovery after Covid 19 disruption. 

The big picture of what is happening and outlook for 2022, analysis of the status of different investment windows and opportunities, ranging from the economy, equity, bond, commodity, real estate and others using fundamental and technical tools. 

More than 80% of the golden stocks pick during Invest 2021 Summit have beaten their targets, returning more than 40% to 60% in less a year. 

Due to growing concern and fear around the globe and domestic economy/stock market as analysts are predicting a big melt-down in stocks from ant time soon, to sometime in 2022. 

Looking at history, there is no doubt that correction or pullbacks are on the cards at some stage. However, these big questions on everybody minds are when will this occur and whether it will end this Bull Run or market recovery. 

Whatever happens, what is the best way to Prepare rather than try to Predict? This is what Invest 2022 Summit will address. So you are invited to Speck or facilitate at this event 

What to expect at this Summit? 

A. Why the market is on high alert for the New Year rally, or Correction 

B. Strategies to stay in profit, overcome market correction/pullbacks 

C. How to position in stocks for robust profit ahead of 2022 

D. How to take advantage of the circular flow of funds in financial markets 

E. Risk/return from Bonds to stocks right now. 

F. Key to profitable trading and investing in the stock market/other investment windows 

Benefits For Attending 

1 10 Golden Stocks for 2022 

2 Admission to Investdata Buy & Sell WhatsApp Platform 

3 Among others 

Do not miss this summit, if you have any exposure to the stock market, either directly or indirectly via managed funds of any kind……. 

“Invest 2022 – Connects you to new trade opportunities and ideas to boost your trading results/bottom line” 

Don’t miss this summit, if you have any exposure to the stock market, either directly or indirectly via managed funds of any kind…….. 

Date: December 4, 2021 

Time: 9am 

Venue: Zoom 

Want to be among the successful investors and traders in 2022? Send Yes to 08028164085, 08179547605 now. 

Meanwhile, the home study packs on Comprehensive Stock Market trading course video, Stock Market Analysis Beyond Fundamental & Technical Analysis, INVEST 2021 New Opportunities & New Paths To Profits Summit materials and 10 Golden Stocks for 2021, 

Strategies and How to invest profitably in this Changing Market Dynamics/ Recession, Mastering Earnings Season For Profitable Investing and Trading in any market situation/ cycles, Life Beyond COVID 19 Investment Opportunities In The Stock Market are now available. To obtain your pack send ‘Yes’ or ‘Stock’ to 08028164085, 08179547605 now. 

Independent

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