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How I am investing as a millennial this Covid-19 season


Written on : 2020-03-26 22:33:59

 

Corona who?

This was the response from a friend when I asked how he was coping with work and everything else going on this season.

Basically he was tired of speaking or listening to news about the spread of the virus and wanted us to speak about something else. 

I understood. I felt the same way. 

While I do not underplay the number of people who have been infected by the virus and number of deaths, there’s a huge out-pour of information online (most of it- fake news) causing a lot of fear and panic for most people. I had to deliberately tune off some social media channels to protect my mind space

Protecting my mind space is very important to me because I am aware of how easy it is to sink into wrong fearful thoughts based on what my mind takes in from media.

It might be a 1 second view of a headline and it will trigger some thoughts that affect my feelings and eventually my actions.

I hope you’re being deliberate about all the social media posts and broadcast messages this season. Stick with only really important information that counts
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There's no doubt, the world is on a lock down right now.

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Countries closing borders

Major cities Issuing stay-at-home instructions

Companies shutting down to work remotely

Travel bans

Disrupted supply chains due to the shutdown in China

Drop in crude oil prices

Fuel subsidy discarded overnight in Nigeria (Something we've been trying to achieve for years)

Fuel pump price reduced in Nigeria

Devaluation of the Naira
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It is an interesting mix of events, some events clearly have had adverse effects. The Nigerian government had to cut it’s budget by N1.1trn and place a new benchmark for crude oil prices this week.

While some events have had what I would call a surprising positive effect, e.g. the drop in crude oil prices leading to a drop in fuel pump price in Nigeria

As an investor, my mantra this season has been the Warren Buffet quote – Be fearful when others are greedy and be greedy when others are fearful

Based on this quote, here are 3 key ways I am investing right now

 

1. Buying up great companies on the Nigerian stock market at a discount

There are reports that Berkshire Hathaway, Warren Buffet’s investment company, has been sitting on and not spending a record level of cash estimated at $150bn for a few years.

All through the greatest bull run of the US market for the last 10 years, the company was stockpiling cash and waiting for the US stock market to crash.

The bull run in the US stock market finally crashed with the onset of the pandemic spread and I am sure the company swept in to buy up great companies in the stock market at a discount.

This is what intelligent investors do. They buy the market dip
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Thankfully, I had cash I could invest in long term investment opportunities (the stock market is a long-term investment in my books) this season, so I could sweep in to purchase some great companies on the Nigerian stock exchange at an incredible discount.

Some of these companies are trading at great discounts based on their historical track record and dividend pay-out history over the last 10 years. It was a no-brainer for me to buy up ownership interests in these companies.

 

 

And I’m not done yet. Based on the continued spread of the Corona Virus and the global drop in crude oil prices, I am patiently waiting for the stock prices of some additional great companies on the Nigerian stock exchange to bottom out so I can sweep in to buy up more ownership interests.

Now, I know there is a lot of hype about the stock market now because a lot of the stocks are trading at really low prices. I need to add here that you should not invest in what you do not understand. 

The stock market is a long term investment and a company's share price is not the only reason to invest in a company's stock. There are additional factors to consider such as the historical track record of the company, the corporate governance structure of that company, the company's position in it's industry and trends facing that industry. These are really important factors to consider if you are really investing long term and not just simply seeking to make a quick buck on your money. 

 

Take the time to get a financial education before you make financial decisions that will affect your life. 

 

2. Investing in companies taking advantage of the disrupted global supply chains

China is a major world player in global supply chains. Almost everything is made in China these days. So when China had to go on an economic lock-down due to the spread of the virus recently, the global supply chains took a major hit.

A lot of companies had to look for alternative companies who could meet global standards to import commodities from.

This opened up opportunities for some Agro-processing companies in Nigeria who produce or aggregate these commodities and meet the international standards for export.

Some commodities sold at 10 times the previous market price on the global market and guess who benefited from this price increase? Strategic agro-processing companies in Nigeria.

I gladly invested in some of these companies in the past week.

In fact, these companies reached out to us in the Green Investment club to raise funds for them ASAP. We gladly did! We actually raised funds in multiples of 9 figures over 5 days to support these companies and as investors, we look forward to earning good returns on our investment.

I strongly believe this can become a trend when African and specifically Nigerian companies are strategically positioned to meet the needs of the global agriculture food chain.

 

3. Building up a portion of my family's investment portfolio in a stable currency

We all know the Naira is not a safe haven right now. As much as I would love to switch my entire family portfolio in a stable currency, the fact is we still have expenses in Naira and we need to meet those expenses. 

So the solution is to keep a good portion of our portfolio in a stable currency for balance. 

The safest option for us was to invest in Euro-bonds. A Eurobond is a debt instrument that's denominated in a currency other than the home currency of the country or market in which it is issued. Most (if not all) Euro-bonds are denominated in dollars.

To get a guaranteed return on your dollar investment, the minimum requirement to invest is typically $100,000 - $200,000 in a typical financial institution in Nigeria. 

We focus on how to get our members in the Green Investment club the best access so we partnered with a financial  institution to allow members of the Green club invest a minimum of $5,000 or $20,000 at guaranteed rates. 

Thankfully, most members locked in a 7.5% annual return on the Euro-bond when they invested late last year. The rates have since dropped to about 7%. (We actually expect higher rates now due to the currency and market volatility affecting emerging countries like Nigeria and Angola)

Note that investing in Euro-bonds is a long term investment (5-10 years) in a stable currency and it works for our goals and our current portfolio plans.

There are trading platforms to invest in the US stock market as well if you want to try out some high risk options but I choose to go the safe route for my dollar investment due to my stage of life. 

 

These are just three ways I am taking advantage of investment opportunities this season.  I also took advantage of opportunities in additional sectors such as real estate for our investment portfolio. I am also grateful that I can contribute to the giving efforts for those in need in this season. 

Giving is a core principle  I live by and I am aware of the needs of those in my community who cant afford to sustain their livelihood this season. 

I am able to do all of this because I practice what I teach in the Green Investment club.

And also, because we build strategic relationships with our investment partners to ensure the members of the Green Investment club always get priority access to the best investment opportunities.

That said, I hope these 3 ways I am personally taking action help you take some decisive action in the next few weeks. Like I always say, I don't teach theory. I practice what I preach literally..

If you're low on cash to invest right now, there's no need to beat yourself up. Simply start making the right financial decisions to save more, earn additional streams of income and cut unnecessary spending.

Don't forget to build up your emergency funds too because so you don't get caught unawares with unforeseen circumstances this season.

and of course, stay safe, stay calm, take active measures as shared by the World Health Organization (WHO), self isolate, practice social distancing and we will beat the spread of virus!

 

Ps. Did this email resonate with you? Did you learn a tip or two? If you did please share a screenshot of this email and tag me @tomiebalogun in your Instagram stories or twitter. Let’s connect as the world continues to evolve into a virtual social space this season.

Until next week!

Warm regards
Tomie Balogun

 

 

 

We are always happy to take on new members in the Green Investment club, so feel free to join us asap if you want to take advantage of great opportunities this season. The Green club is now open to new members. Click here to join us!! It is time to make that decision!

 


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