You Might Have Dogged a Bullet
We are in the month of September, which marks the beginning of the so called “ember” months. This sometimes come with its own pressure, especially when we feel we are bit behind in the goals we have initially set for the year.
The unique thing about this year’s September is that you may have just dogged a bullet ,if you have not been active in the financial markets since the beginning of the year. Going, by the fact that most asset classes have recorded huge losses since beginning of year: stocks, bonds, cryptos etc. Of course, commodities and real estate will always be among the few exceptions, whenever an economy is facing strong inflationary pressure.
Investors were already getting greedy again before the Jackson Hole Symposium of August 26, 2022 where the Chairman of the Federal Reserve, Jerome Powell confirmed that the Fed will continue to raise interest rate until Inflation is put under control. Consequently, the US stock market lost $1.35trillion on that day alone as investors scamper for safety and the loss making spree continued throughout the current week. Cryptos followed the stock market as usual with Bitcoins currently trading below $20,000.00
Coming back home, our Central Bank often follow the signal from abroad, so it is safe to assume that they will also raise the Monetary Policy Rate from the current 14%. We are already seeing an uptick in interest rates on various assets like the latest Treasury Bills that was auctioned at 8.5%, the highest rate since July 2021.
The growing interest rates on local assets is the reason why the stock market has been on a decline in recent weeks. GT Bank closed the week below N20 , other banking stocks also shed some weight in prices. The irony is that Banks make more money when interest rate rises since they earn more. But the market prices them lower through stock trading activities.
We can not say the market is at the bottom yet until we get the signal that central banks will stop raising interest rates. However, we can identify a number of stocks that are already in the buy zone.
Of course, it is not all about financial assets, the rest of the year is still enough to launch that product or publish that book. The rule is to do whatever we can do with whatever we have at wherever we are at the moment. Just take that first step.