Investors have been urged to invest in stocks using professionals who understand the stock market so as to reap the expected returns.
The Head, Office of the Chief Economist, Securities and Exchange Commission (SEC), Mr. Okey Umeano, gave this advice while speaking at the 2019 annual workshop of the Capital Market Correspondents Association of Nigeria (CAMCAN), held in Lagos recently.
According to him, despite the bearish trend the market has witnessed since 2018, many investors were still counting gains of investing the market. He said the best way to play the market is using securities, assets and fund managers among others who are trained professionals in the art of investing.
He said despite the current bearish trend, a look at the market in the three years showed a positive return. Umeano, explained that in 2017, the market appreciated by 42.3 per cent, while it declined by 17.8 per cent, indicating that an investor who has remained in the market is still boasts of a gain of about 24 per cent.
“And from every indication, the market may decline by about 14 per cent at the end of this year. Even at that, it will still lead to a final growth of about 9.5 per cent looking at the past three years. So, it is not as bad as people think.
“Investors, who are losing now are those who take investment decisions by themselves. If you do not understand how to pick stocks, you should not be picking stocks. Give your money to a professional who can help you. The SEC is encouraging investors not play the market by themselves,” he said.
According to Umeano, with continued education and enlightenment more investors will patronise the stock market in order for the deepened.
The Nigerian Stock Exchange (NSE) in collaboration with the Association of Securities Dealing Houses (ASHON), Fund Managers Association of Nigeria (FMAN) and the Central Securities Clearing System (CSCS) Plc, had launched the NSE Mutual Fund trading platform.
And the Chairman of ASHON, had said the platform was the simplest way investors can achieve a reduction in risk through portfolio diversification.
“It is the simplest way to achieve a reduction in risk by way of diversification of one’s portfolio. Investors will enjoy the expertise of a professional fund manager without paying extra for the service. It affords them the opportunity to enjoy economies of scale which is achieved through the pooling of other peoples’ funds to increase bargaining power.
“They have the opportunity of easy entry and exit which this platform further provides. It also encourages the financial inclusion of the retail investors.”
The ASHON boss said rather than get discouraged by the volatility the stock market has witnessed in recent times, investors should have faith and hope in the market.
Commenting on the platform, the Chief Executive Officer of the NSE, Mr. Oscar Onyema said: “We are delighted to provide a solution that will enhance visibility for the listed mutual funds and promote financial inclusion, while stimulating retail investor participation in our market.
“The trading platform will facilitate the ease of doing business in trading and distribution of mutual funds, it will inspire small savers thereby promoting financial inclusion which is an important focus of our members.
“We congratulate everyone that contributed to the success of this initiative and encourage all operators to embrace this new aspect of deepening of our market which is a formidable incursion into an erstwhile grey sector.”