Emeka Ucheaga Advisory

Dear Speculators, Too many a times I have heard people complain bitterly about receiving peanuts as dividends from their stock investments. My first response usually is how much did you buy at and what was the stock actually worth? Too many times we fail to comprehensively value the assets we wish to purchase in the market. Sometimes, we buy based on historical price trends or from hearsays. We say "surely, XYZ stock will go up!" But the market is full of uncertainty. If everyone in the market believes that a stock will go up then no one will sell and every owner will hold. This has never happened!! If you think something will go up, the other person selling it to you believes it will go down. You better make sure you are on the right side of the trade! If the stock neither goes up nor down, it is therefore imperative that we buy the stock at good value if we wish to receive a reasonable dividend from our investment. For simplicity, let's say only 2 things dete...

Dear Speculators, It's been quite a while since our last letter. Series of events have kept us from writing. Nevertheless, we apologize and hope that it never repeats itself. Since our last letter, the market has risen around 10%, bank stocks like GTBank and Access Bank have grown over 25% since the last week of February. UBA, Skye Bank and Zenith Bank are not so far behind in these upward price reviews. Blue Chip companies like Total and Dangote Cement have also performed decently in the last 3 months. Oando seems to have bottomed out at NGN5 but we are still worried about the company's finances and we think it's too early to start jumping into this ship. Nigeria is still yet to devalue her naira but the possibility of this occurrence is becoming more and more obvious as it has been covered a lot in the press recently with many public officials now accepting that no other options exists for the country outside devaluation at this point in time. The economy has con...

Dear Speculators, We all need to buy some important assets during our lifetime. Sometimes when the need arises, we are without sufficient cash and we need to borrow to acquire such assets for example cars, gadgets, etc. Quantum leaps in technology have continued to make assets like phones, computers, television, internet data etc cheaper and better. As such it will be somewhat unwise to purchase an asset which will immediately start losing value by paying in installments or with a loan. In essence, you will be paying more for an asset which is losing value. You must note that when we purchase certain items like vehicles with a loan for personal use, it produces no returns for the owner but only yields personal satisfaction. These loans bear interest rates and since you will be paying more for the depreciable asset with borrowed capital, it simply means you are spending more to get the same satisfaction. This utility will fall gradually as the asset wears over time. Capital exp...

Dear Speculators, Many a times individuals believe that the only way to build wealth is to own a big business or to have a high paying job. This is not always true as even a man so far back on the earnings tree can build his wealth and be richer than his peers. Some big businesses like Twitter, Whatsapp and The New York Times are actually multi-million dollar loss making firms in America. Sometimes we read the news and see multi-millionaire celebrities like Kanye West and 50 cent become heavily swamped in debts. So even those who are rich don't know how to stay rich. I want to teach you all an easy risk free formula to becoming rich and conserving that wealth. Warren Buffet once said the only way to build wealth is to live beyond one's means. He also advised that we save before spending instead of saving what is left after spending. That way you can control yourself from binge spending. Savings is very important. As we grow older, we move from being net spender...