MISSING THE BOAT - THE DILEMMA OF THE INVESTOR
Tuesday, January 25, 2011 at 7:15PM Basic human reasoning, termed common sense, rationalizes that when the Nigerian stock market prices are moving up; jump in, buy and ride the market. On the contrary, when the Nigerian stock market is failing, you jump out of the boat as fast as you can. Unfortunately, this approach to investing defiles investing principles.
Speculative market timing is a real issue, since most of us reckon or rather come to terms with our instincts at different times and at different levels. While few jump in the boat early and ride the wave and jump out at the right time, most of us wait until the excitement has reached a certain decibel before we jump in and or jump out. Often times it is too late. A case in point is, when the market is on its way back up. Most investors, who suffer from what behavioral finance refers to as “myopic loss aversion”, do not recover in time from their previous losses and spend more time nursing their losses than capitalizing on the turn around. The fact of the matter is they simply miss the boat…
The Nigerian Stock Markets experiences dips and peaks. By leveraging the MonGran Financial platform, not only can you validate your time of entry by analyzing historical performances of a company against its peers and its sector, you can actually proactively set entry and exit criteria’s. The MonGran financial platform will notify you via email, SMS and on your SMART phone to take an action.
STRATEGIES
Reader Comments (2)
No one has been known to time the market entry and exit perfectly. The market is for the long term and speculators usually make suboptimal returns versus fundamentalist. Follow Warren Buffets' principles and you are better off on the long haul. It is against logic that capital follows the market when prices are going up and have the higher chance of being overvalued and capital runs from the market when the market is down have the lower chance of being undervalued.
@Folabi and all others, Thank you. How do we go about educating investors who look at the Nigerian Stock Market, not as a strategic wealth creation tool, but as a quick money making scheme? Would education work or is the urge to play the market so deeply rooted that education will have marginal impact...