Emeka Ucheaga Advisory

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

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

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

Dear Speculators, One thing for sure this week is that the monetary policy committee will not be short of hot topics to discuss during the upcoming meeting. From big global events in developed markets like the surge in the euro since Macron's victory in France to political uncertainty in Britain as the parliamentary elections draws closer and finally to Trump's row with the intelligence community that is weakening the dollar. Some more interesting topics like the possibility of a second impeachment of a Brazilian President in less than two years and military unrest in Ivory Coast that is driving up cocoa prices will also be on the table. Troubling news closer to home is the current crude oil price spending more time below $50 than above it as OPEC tries it's best to manage the oil glut. Still none of these issues rocks the monetary policy boat as much as the proposed 2017 budget of 7.44 trillion Naira currently on the President's desk. Why? The government pl

Dear Speculators, The value of Naira has changed, the price of crude oil has appreciated significantly from January last year but nothing really has changed in the way Nigerian government carelessly plans and budget for the year ahead.  A budget is too important to be built on a shaky foundation. The 2017 budget is far too important considering the current economic recession in Nigeria. Keynes strategy of an expansive fiscal policy during economic slowdowns seems to be the country's favoured approach to pulling the economy out of recession. It's a goldilocks strategy considering it pushes Nigeria further into debt at a time when the cost of borrowing in the country is too high but the benefit of increased spending in the country is too important to ignore. Budget estimates for 2017 will see Nigeria spending beyond N 7.4 trillion, a 21 percent increase to last year record spending which was still unable to prevent the country from entering a recession. Crud