I have problem with saving money. If I have more than N300,000 in my regular savings account, in 24 hours I will have a dozen different ideas of what to do with the money. Trying to permanently solve this problem was what motivated me to become a professional stocks investor some years ago. The only account I allow more than N300,000 in is my emergency account which I don’t touch except there is an emergency.
And my regular savings account? One good side of being a data geek is that I am excellent at budgeting. I have my expenses perfectly modeled and I always keep just what is sufficient for three weeks in my savings account. My income cycle is two to three weeks, being an entrepreneur in the consulting space. From what is due me, every extra above what is sufficient for four weeks, I put in my investment accounts which house a mix of Nigerian stocks, Nigerian bonds, US stocks, US bonds, Gold and two Nigerian equity mutual funds.
So what stocks am I invested in?
Nestle Nigeria: Over my investing years, I have analysed intensely the financial records of all the investment worthy companies on the Nigerian Stock Exchange from as far back as 2005 and none has an impressive one as Nestle Nigeria. Excellent cash flow management, lovely mix of debt and equity funding, satisfactory revenue growth rates and strategic positioning in their industry. Every year, I go through their annual reports and as long as the story has not changed for bad, I close my eyes to all the price fluctuations it is forced through on the stock market.
Total Nigeria: Last month I sold Mobil and bought Total. I had made a good profit off the price surge in Mobil shares after the NIPCO acquisition and Total looked like a bargain in comparison. Total is the largest downstream oil company by revenue in Nigeria. Now they are trading at a deep discount compared to Mobil. So I saw more potential returns in deploying to Total the money tied in Mobil.
Dangote Cement: It can be very difficult to love Aliko Dangote after hearing all the special perks he got from government to build the Dangote empire but one thing I can’t deny is that he is a result-generating business man. I read the annual reports of many listed companies but none is as interesting and less generic as Dangote Cement’s. I have learned some business strategies from reading the chairman’s report while other companies’ tend to have the usual soul-less talk about the macro economy and vague talk of their impressive performance (even when they make a loss). Reading last year’s and the intelligent analysis of the African cement market with the company’s detailed big strategy, it was like Dangote Cement is just getting started. He is the quintessential owner-manager who goes all length to make his business successful.
Zenith Bank: I bought it after I panicked and sold my First Bank shares when they were taking too long to publish their last year annual reports. Now I am planning to buy First Bank shares again and try not to panic anymore. But I don’t intend selling my Zenith shares either. Zenith Bank is doing impressively well, like GTBank but without the terrible customer experience GTBank is sharing. One almost sure way of ruining my day is having to do anything in a GTBank branch and if you ever need to get an issue resolved you can be sure that you’ll get more inhuman policies thrown at you than the feeling of having another human being helping you. They’ve got solid walls between the employees and customers. See how easily I veer into giving damaging remarks about GTBank. That’s how powerful the negative effect their lack of good customer relations leave on me. So I won’t touch their stocks even with free money.
- US Bonds: I sold off my S&P 500 ETF last year December and put half the fund into US Bonds. I believe the US stocks are close to experiencing a market correction.
- Vanguard Total International Bond Index Fund ETF: This is where I put the other half. It is a collection of non-U.S. dollar-denominated investment-grade bonds.
- Gold ETF: Two months ago I panicked and sold my Emerging Market Stocks ETF, putting the fund into Gold ETF. The Emerging Market Stocks were getting too positively correlated with the US equities market this year. So I decided to put it in the negatively correlated (to US equities) Gold ETF.
- Nigerian Bonds: Through Stanbic IBTC Bond mutual fund, I have some money invested in Nigerian bonds. I avoid the Money Market funds as I believe I will get better long term returns elsewhere.
And how is my strategy of not saving but investing working out? I think very well. At least, I am more prudent in managing my income and immune to binge spending. Also, I have made some good gains in the stock market.