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It's a Dip not a Bear

Despite strong economic fundamentals and fairly optimistic market sentiments that have driven stock market prices in the past year and even stronger since the start of 2018, stock markets all around the world are witnessing an unexplained coordinated price descent in the past one week. Asides the biggest bitcoin price crash in years, now 66% lower than its record high price of $19,500 in December, nothing out of the ordinary has occurred. Yes, stock prices are at the highest it's been in since pre-crisis era in U.S and the market is due for a price correction but then how do we explain market dips in relatively cheap emerging markets? Something is amiss! As Central Bankers around the world have begun to discuss monetary tightening in a coordinated fashion as the quest for 2% inflation seems more achievable this year due to strong global economic and rising commodity prices, bond prices have dropped precipitously and the U.S 10 year Treasury bills risen above 2.5% a
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Ten Surprises of 2018

Dear Speculators, Let's face it, 2017 was a bad year. The only things that went the right way in '17 were crude oil, equities and the decelerating pace of inflation. From fuel scarcity to periodic power outages, rising unemployment to terrorism perpetrated by herdsmen, Nigeria looked more or less worse of the same. As usual, the new year has started with a lot of hope but the long queues at filling stations is enough to beat out the optimism out of most realists. To help in putting the most important things into perspectives so we do not dwell less on minor things rather than channelling all our attention to major possibilities this year, we have put together 10 of the biggest surprises this year you should pay attention to. Ten Surprises of 2018 1. The stock market ASI crosses 65,000 2. Banks post record annual profits for 2017 3. 1-year TBills rates fall below 13% 4. Inflation falls below 12.5% 5. Nigeria's economy expands by more than 4% 6. Crude oil price exceeds $
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Is Bitcoin Really a Bubble?

I do not like calling anything a bubble if it's true value cannot really be ascertained. But for lack of a better term most people refer to the price surge in the value of bitcoin as a bubble. While most economists and financial expert agree that bitcoin is a bubble, it will be quite ridiculous to assume that bitcoin should trade at zero since it has infact been used as a form of payment for transactions. The value of the cryptocurrency must then be measured against the relative cost of purchasing such a product or service in dollar terms or any other fiat currency. This concept of currency valuation is known as purchasing power parity. While to most monetary economists, it is no news to hear that all fiat currency or paper money is a bubble (since the paper in itself is worth nothing), in truth all commodities, products and services are all either in a positive or negative bubble since their intrinsic value cannot be ascertained easily or universally accepted. The only reas
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The Market Inefficiency Risk Created By Index Fund Domination

Dear Speculators, Theoretically, equity market investments provide the most attractive returns of any financial market. Since investors assume higher risks when purchasing common stocks, they are rewarded with high returns if the risk fails to materialize. Value conscious investors invest capital in stocks to gain returns in excess of inflation whilst moderately increasing their real wealth. However stock picking and market timing are two very important elements of investing that most (if not all) investors are still yet to perfect. While active money managers for decades have tried to outperform the market, very few have achieved this feat. This has increased interests in passive investing over the last few decades. In fact the introduction of index funds which allows investors to earn market returns at very little cost has provided investors an opportunity to quit fighting and accept the inevitable that they just can't beat the market! Today index funds manage trillion
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Stock of the Week: Access Bank

Dear Speculators, Access b ank has been my favourite stock since 2016, not because it's the best bank in Nigeria but because of how low the market undervalued the company. I've been talking about it for a year, now I'm writing about it. When big macro events like the '16 recession starts to cloud people's judgement, that's the best time to be a bargain hunter in the stock market. With about 3.5 trillion in assets and just over 3 trillion in total liabilities, Access bank is one of the largest banks in Nigeria. Book value of the company exceeds N467 billion while its current market value as at 2nd June, 2017 was N258 billion. Thus, the company is selling at a discount to book value of almost 45 percent! With pretax earnings doubling in just three years between 2013 and 2016 from 45 billion to 90 billion while earnings per share increased from 114k to 221k, it is mind boggling to imagine why the company is still trading at a price-earnings rati
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