ALANGRANGE SECURITIES LIMITED

(Member of the Nigerian Stock Exchange)

INVESTMENT OPPURTUNITIES IN A BEAR MARKET

The year 2008 began on a brilliant note following the domination of the Bulls in the market in 2007.
However, this euphoria was short-lived due to the emergence of the bears in the market since march
2008 and all through the year. It will be recalled that investors in most advanced and emerging
markets of the world suffered tremendous losses as a result of the meltdown. The NSE had its own
bath too

In a bear market such as we are experiencing in Nigeria presently, the first thing an average investor
does is to abandon the existing basket to the bears or rush out of the market for refuge in fixed return
markets. This write-up is aimed at providing an insight:
o to knowing Investor’s mistake in a bear market
o to knowing a better way to invest/ prosper in a sluggish market or bear market for
Investors that felt the heat of the market meltdown in 2008
o for new investors who are skeptical about high returns on investment in the Nigerian capital
Market
Investor’s mistake in a bear market
o Some investors lose interest completely in the market while some keep mute until the
rebounds or swings. The fact is that unit holders or shareholders hold unto their stocks when
the market rebounds but waiting for market rebound keeps the cost of acquisition high.
o Another is hunkering down and refusing to make portfolio changes.
o A third classic investor mistake during bear markets is converting all or most assets to cash as
a presumably safe haven. On the surface, this seems a prudent strategy, since cash is not
actually losing money. But if cash assets are earning you 3%, and inflation is running at 5%,
then the returns on holding money is watered down by inflation.
When the stock market moves from a bull to bear phase, there are a number of ways you can
respond. The following are recommended:
o Buy more stocks to reduce average purchase cost
o Invest in stocks that have fallen more than 50% below their year high, or most recent Public
offer price or Right price
o Invest in stocks that the yield is in excess of 8%
o Buy more stocks with regular corporate benefits( bonus & dividends)
o Invest a portion of your portfolio in fixed income securities( fixed term deposit and bonds)
On a conclusive note we recommend the following:
o Long- term investment Horizon
You should maintain a long- term view of the market and invest in companies with strong
fundamentals
o Define or know your investment objective:
The first thing anyone should do before making changes to their portfolio is to think about
what the purpose of the investment is. Is it for short or long term i.e. retirement? Generate
income, academic savings? A down payment on a loan or mortgage?
o Consider Your Risk forbearance
Always determine the extent of loss you can bear and exit at that point to another stock. If
you do not, chances are that you are taking more risk than you should
o Regular reallocation of portfolio mix
Reallocate your portfolio regularly to reflect an emphasis on diversification and long-range
thinking.
 ALANGRANGE SECURITIES LIMITED
(Member of the Nigerian Stock Exchange)
o Do not be too greedy
Do not be too greedy. As the market recovers, take profits on a systematic basis. You may be
caught off when market swings in opposite direction

Our forecast reveals that the market decline will gradually bottom out giving way for the bulls. We
expect improved earnings, high dividend yields, and some degree of stability in nation’s polity and
macro-economic policies.

Below are selected stocks and sectors to consider.

S/N Sector Securities

A 1 Airline NAHCO
B 2 Banking First Bank
3 ‘’ Guaranty
4 ‘’ UBN
5 ‘’ UBA
6 ‘’ Oceanic
7 ‘’ Zenith Bank
8 ‘’ Platinum
C 9 Breweries Nigerian Breweries
10 ‘’ Guinness
D 11 Building Materials Ashaka cement
12 ‘’ Benue Cement
13 ‘’ WAPCO
E 14 Construction Julius Berger
15 ‘’ Costain
F 16 Food & Beverage Dangote Sugar
17 ‘’ Dangote Flour
18 ‘’ Big treat
19 ‘’ Flour Mills
G 20 ‘’ Tantilizer
21 Healthcare Glaxosmithkline
22 ‘’ Fidson Health
H 23 Insurance Mutual Benefit
24 ‘’ Aiico
25 ‘’ WAPIC
26 ‘’ UNIC
27 ‘’ Goldlink
28 ‘’ Prestige Insurance
I 29 Mortgage Abbey Building
30 ‘’ Union Homes Savings
J 31 Other financial institution Deap Capital
32 ‘’ Crusader
K 33 Petroleum AP
34 ‘’ Mobil
35 ‘’ Chevron
L 36 Publishing University press
M 37 Real Estate UACN