Critics of the Nigerian Stock Exchange maintained that the market had not been tested to capacity even with the recapitalization of banks. They claimed that the depth of the stock market was not one where a lot of people would invest in billion dollar offers. The reasons varied, one was the capitalization level of existing banks and other reasons were the assumed amount of investment capital the Nigerian public was willing to invest in the Nigerian Stock Market. Dangote Sugar owned by Nigerian billionaire Aliko Dangote was one of many companies that were influenced by the opinion that the stock market would not be able to subscribe to the wealth of a public offer that ran into billions of dollars. Previously, Dangote Sugar was a privately owned company not quoted on the Nigerian Stock Exchange.
Following the gains from the recapitalization exercise in the banking sector, a huge number of banking establishments recorded over-subscriptions of various public offers running into billions of dollars. Institutions such as Zenith Bank and First Bank recorded over-subscription levels of more than 400% in their various public offers. Following such gains the management of Dangote Sugar reversed its opinion as to the depth of the Nigerian Stock Market and the possibilities available when it came to the funds that could be raised from the market. The company decided to apply for listing by way of an initial public offer and the application was granted.
Dangote Sugar is a company which primarily deals with the importation and sale of sugar and other than the Honeywell Group, had no major competitor as far as the whole of Nigeria was concerned. With a population of over a 150 million people, all of whom are potential consumers of sugar, Dangote had a strong foothold in the Nigerian market. At its conclusion of a $420 million dollar initial public offer, Dangote Sugar reported an over subscription in excess of 40% only to become Nigeria's most capitalized company 19 days later with a capitalization of 404 billion naira up from 108 billion naira and representing a gain of more than 125% in share price within 19 days of trading.I
nvestors who had bought into the share price at 18 Naira were taking gains at 40 Naira and above within weeks. Meaning an individual who had bought into the company as it listed freshly on the stock exchange with about 1.8 million naira would be worth 4.0 million naira only two or three weeks later. The myth had been shattered about the depth and profitability of the Nigerian Stock Market and a lot more followed in terms of success on the market.
That is indeed a proof that every segment of Nigeria economy can be profit pulling if decisions were made wisely.
Counter
Saturday, February 14, 2009
Market Penetration Pricing - A Quick Market Entry Pricing Strategy
Market penetration pricing is a quick-entry price strategy that assumes low price will gain high sales volume which, in turn, will result in lowering costs. This strategy is used in price sensitive markets. For example, consider the market for DVD players; it is a high volume market, it has a high number of competitors, the costs to produce DVD players have fallen, and new and/or changing technology allow businesses to rapidly introduce new features and benefits on new models. The businesses that introduce DVD players quickly, sell high volume at low or reasonable prices, are following a market penetration strategy.
Businesses using market penetration pricing are usually trying to penetrate the market by growing their share of the market. They assume that the lowest price will win market share. Make sure that if you use this pricing strategy that you test your market, your price sensitivity and your price elasticity or in-elasticity first. Also be sure to do your market research to gain an understanding of how your competitors will react to this penetration pricing strategy. For example, your low price may cause your competition to lower price, then you will lower your price again, and so on - no one wins with a strategy like this.
But your market penetration pricing strategy can also be a deterrent for new competitors who are considering entering the market. When they see how low your pricing is and realize that their margins will be low and the risk of gaining market share for new entrants is high, they might choose not to enter the market. For your business to be successful with this strategy, it must have the capability to enjoy the economies of scale that high volume will bring and be the low cost provider in the market.
If you are an existing business and your competitor is following a market penetration strategy, do a thorough market research assessment of your capabilities:
Can you drive your costs down?
Can you produce high volume?
Do you want to sell your product at a low price (and hope volume sales will get you both the market share and the profitability you want)?
If you answer no to any of these questions, don't follow this penetration strategy (or at least, consider this strategy very carefully). However, if you are a new business considering this strategy in a new, or scarcely populated, market, focus on how to drive your costs down and your efficiencies up.
Whatever pricing strategy you use, make sure that you specify it in your marketing mix plan and write down the reasons you chose that strategy. Then, at least on an annual basis at the time of your business plan update, review your chosen marketing strategy (including your pricing strategy) and ensure it is the right strategy for the product life cycle, for the market conditions, for your buyers, and for the competitive environment at that time.
Businesses using market penetration pricing are usually trying to penetrate the market by growing their share of the market. They assume that the lowest price will win market share. Make sure that if you use this pricing strategy that you test your market, your price sensitivity and your price elasticity or in-elasticity first. Also be sure to do your market research to gain an understanding of how your competitors will react to this penetration pricing strategy. For example, your low price may cause your competition to lower price, then you will lower your price again, and so on - no one wins with a strategy like this.
But your market penetration pricing strategy can also be a deterrent for new competitors who are considering entering the market. When they see how low your pricing is and realize that their margins will be low and the risk of gaining market share for new entrants is high, they might choose not to enter the market. For your business to be successful with this strategy, it must have the capability to enjoy the economies of scale that high volume will bring and be the low cost provider in the market.
If you are an existing business and your competitor is following a market penetration strategy, do a thorough market research assessment of your capabilities:
Can you drive your costs down?
Can you produce high volume?
Do you want to sell your product at a low price (and hope volume sales will get you both the market share and the profitability you want)?
If you answer no to any of these questions, don't follow this penetration strategy (or at least, consider this strategy very carefully). However, if you are a new business considering this strategy in a new, or scarcely populated, market, focus on how to drive your costs down and your efficiencies up.
Whatever pricing strategy you use, make sure that you specify it in your marketing mix plan and write down the reasons you chose that strategy. Then, at least on an annual basis at the time of your business plan update, review your chosen marketing strategy (including your pricing strategy) and ensure it is the right strategy for the product life cycle, for the market conditions, for your buyers, and for the competitive environment at that time.
Hollywood Stock Exchange - The First And Biggest Stock Simulator Is Looking Pretty Shabby
Back in 1993 on a movie tracking newsgroup, a group of guys started a predicting game. They set up a system where they could bid on upcoming films, and then figured out math formulas based on the buzz and the activity of those films in regards to the newsgroup to see if the price would rise or fall. It soon began to expand enough to become a website with an actual program running on it and thus the HSX or Hollywood Stock Exchange was born.
The HSX has gone through a lot of changes since those early beginnings, back in the dot.com boom of 2001, HSX went public and raised a good chunk of capital that it used to finance a TV channel, radio spots, and a whole slew of other market ideas, almost all of which have fallen through now.
Hollywood Stock Exchange is protected by US patents due to the specific formulas and processes they use and they have successfully protected themselves against software pirates who have attempted to nab the code for their own use. The HSX runs on a java platform with active server pages helping to keep the actual process hidden behind a shielded server wall.
When somebody decides to play the Movie market, they open a free account with HSX and are given 2 million Hollywood Dollars or H$. This is the online currency of the market, and is the only way to play the game. Players then buy and sell shares in the market and if they pick the right shares at the right time, their funds increase. I have been playing the HSX for about 18 months and have achieved more than H$43 million so far, which is not too bad.
Some of the biggest gains can come from predicting how much cash a movie will take on it's opening weekend. Because that is applied with a multiplier to the actual stock price, and if it is higher, then the stock price can jump up or down significantly. A big gain I managed to do was put some H$ onto Spiderman 3 before it released to theatres. That stock jumped more than H$43 on the strength of the box office, meaning every share held increased by that amount.
The HSX is a very good example of a prediction market, and the software that runs it is always being adjusted and tweaked by the operators to keep the system running at it's best performance. Thus we come to the big problem with HSX, downtime.
In the 18 months that this site has been monitored, not a week goes by that the site is not down for at least a couple of hours, or sometimes a full day. Quite often it will simply go down and nobody will say anything, then it recovers and people keep playing. Other times, the server will error or the database will fail, or any number of other excuses may occur that will cause the system to stop working, leaving the game's 10,000+ active players out of luck until the game is reset.
Now, even though the site is currently owned by an investment capital firm, I would imagine they would make it a priority to ensure their game, which is known around the world for what it is, would be kept up and stable. But it appears that they don't want to put too much into it. Even though HSX is ranked at 14,731 on Alexa's top 100,000 websites, which means it gets well over 10,000 hits a day if not more. HSX is also associated with the movie speculation site the numbers.com as they share information daily and have cross-links.
I find that quite sad as this type of site has a strong potential and it seems to be being squandered by the owners who seem to have no idea what to do with a concept like this, other than to let it sit without much improvement and let it die a slow death through neglect.
The HSX has gone through a lot of changes since those early beginnings, back in the dot.com boom of 2001, HSX went public and raised a good chunk of capital that it used to finance a TV channel, radio spots, and a whole slew of other market ideas, almost all of which have fallen through now.
Hollywood Stock Exchange is protected by US patents due to the specific formulas and processes they use and they have successfully protected themselves against software pirates who have attempted to nab the code for their own use. The HSX runs on a java platform with active server pages helping to keep the actual process hidden behind a shielded server wall.
When somebody decides to play the Movie market, they open a free account with HSX and are given 2 million Hollywood Dollars or H$. This is the online currency of the market, and is the only way to play the game. Players then buy and sell shares in the market and if they pick the right shares at the right time, their funds increase. I have been playing the HSX for about 18 months and have achieved more than H$43 million so far, which is not too bad.
Some of the biggest gains can come from predicting how much cash a movie will take on it's opening weekend. Because that is applied with a multiplier to the actual stock price, and if it is higher, then the stock price can jump up or down significantly. A big gain I managed to do was put some H$ onto Spiderman 3 before it released to theatres. That stock jumped more than H$43 on the strength of the box office, meaning every share held increased by that amount.
The HSX is a very good example of a prediction market, and the software that runs it is always being adjusted and tweaked by the operators to keep the system running at it's best performance. Thus we come to the big problem with HSX, downtime.
In the 18 months that this site has been monitored, not a week goes by that the site is not down for at least a couple of hours, or sometimes a full day. Quite often it will simply go down and nobody will say anything, then it recovers and people keep playing. Other times, the server will error or the database will fail, or any number of other excuses may occur that will cause the system to stop working, leaving the game's 10,000+ active players out of luck until the game is reset.
Now, even though the site is currently owned by an investment capital firm, I would imagine they would make it a priority to ensure their game, which is known around the world for what it is, would be kept up and stable. But it appears that they don't want to put too much into it. Even though HSX is ranked at 14,731 on Alexa's top 100,000 websites, which means it gets well over 10,000 hits a day if not more. HSX is also associated with the movie speculation site the numbers.com as they share information daily and have cross-links.
I find that quite sad as this type of site has a strong potential and it seems to be being squandered by the owners who seem to have no idea what to do with a concept like this, other than to let it sit without much improvement and let it die a slow death through neglect.
Find a Cheap Online Stock Broker - Compare Brokers First
It is important to take the time to do a good comparison when you are selecting your online stock broker. You should look at the category of discount brokers, which includes the cheap stock brokers who specialize in offering an online trading platform for individual traders. The big names in this category are also known for providing a quality service to their clients.
Beginning traders are often interested in finding an online broker with low trading costs. They want to pay low commissions and may not want to make a large initial deposit into their account. This is a good strategy for starting out for many reasons.
Whether you are a beginning or a more experienced trader, keeping your costs down is very important. Every dollar that you pay your stock broker in commissions and fees is one less dollar that you take home in profit. Unless you have proven to yourself that you can consistently turn out profitable trades, you may be cautious and want to start with a cheap online broker.
Using a cheap stock broker will give you the most flexibility in your trading. You can place smaller trades of just a few hundred dollars and your commission will cost you much less on a percentage basis. You can also trade more often, or cycle your trades quickly without having to worry about paying too much in commissions.
You may think that all online brokers are about the same when it comes to their commissions, but that is definitely not the case.
First, stock brokers have quite a variety of cost structures and you have to understand how each one will impact you for the kind of trading you are planning. Second, there is a definite cumulative effect that makes small differences in commissions per trade really add up.
For example, compare two cheap stock brokers. Broker A has a flat rate commission of $9.95 per trade. Broker B has a flat rate commission of $4.50. That is only a difference of $5.45 per trade, right? But remember when you buy a stock, you pay one commission and when you go to sell that stock you will pay a second commission. So now the difference is $10.90 per stock. Let's say that you actively trade over the course of a month and you buy and sell 15 stocks. You will pay $163.50 less in commissions for the cheap stock broker during the month. Over 3 months, that is $490.50 difference in commissions alone. That is nearly $500 in your profit over the course of one quarter that you are paying to your stock broker. So a little definitely adds up.
Beginning traders are often interested in finding an online broker with low trading costs. They want to pay low commissions and may not want to make a large initial deposit into their account. This is a good strategy for starting out for many reasons.
Whether you are a beginning or a more experienced trader, keeping your costs down is very important. Every dollar that you pay your stock broker in commissions and fees is one less dollar that you take home in profit. Unless you have proven to yourself that you can consistently turn out profitable trades, you may be cautious and want to start with a cheap online broker.
Using a cheap stock broker will give you the most flexibility in your trading. You can place smaller trades of just a few hundred dollars and your commission will cost you much less on a percentage basis. You can also trade more often, or cycle your trades quickly without having to worry about paying too much in commissions.
You may think that all online brokers are about the same when it comes to their commissions, but that is definitely not the case.
First, stock brokers have quite a variety of cost structures and you have to understand how each one will impact you for the kind of trading you are planning. Second, there is a definite cumulative effect that makes small differences in commissions per trade really add up.
For example, compare two cheap stock brokers. Broker A has a flat rate commission of $9.95 per trade. Broker B has a flat rate commission of $4.50. That is only a difference of $5.45 per trade, right? But remember when you buy a stock, you pay one commission and when you go to sell that stock you will pay a second commission. So now the difference is $10.90 per stock. Let's say that you actively trade over the course of a month and you buy and sell 15 stocks. You will pay $163.50 less in commissions for the cheap stock broker during the month. Over 3 months, that is $490.50 difference in commissions alone. That is nearly $500 in your profit over the course of one quarter that you are paying to your stock broker. So a little definitely adds up.
How To Find Potential Profitable Stocks
There first thing is knowing where to look. It is quite amazing sometimes where a tip or information will come from.Below is a list which will be a basic starting point. You will develop your own sources as your own experience grows.
1. Newspapers.Usually can be found in the business section, but can be found elsewhere particularly if they have done something out of the ordinary and the Media have got wind of it.
2. Specialist Magazines.The main ones in Australia can be found in any newsagency .The most popular being, “The Australian Financial Review” this comes out on a monthly basis.Another is “The Bulletin” which comes out on a weekly basis. Though not as informative as AFR it has an interesting page called “The Speculator.” The author has a reputation of having his finger “on the pulse” so to speak. Especially in the resources area.
3. The Internet.This is particularly an area where you will find a wealth of information, sometimes too much.I receive the vast majority of my information in the form of newsletters. This arrives by E- Mail on a daily basis. I then sift through it and keep the information I want and discard the rest.(A list of these newsletters can be found at the website on the bottom of this page.)
4. Other Media.Radio and television can be useful sources of information. Usually on the nightly 6 pm news and the various finance/ business programmes that abound on Foxtel and other finance channels.
5. Friends, relatives and casual acquaintances.I have found by personal experience that once it is known that you are interested in the share market; people will go out of their way to give you their latest tips and information.I never knock them back but I always do my own personal research first before I take it any further.6. Personal Experience.This is hard to define. I call it “Being tuned in.” As I can be looking for one thing and something else entirely different will turn up.As I have stated before you never know where that little bit of information is going to spring from.This only a basic guidelines as you will develop your own sources, as your experience grows and time progresses.
1. Newspapers.Usually can be found in the business section, but can be found elsewhere particularly if they have done something out of the ordinary and the Media have got wind of it.
2. Specialist Magazines.The main ones in Australia can be found in any newsagency .The most popular being, “The Australian Financial Review” this comes out on a monthly basis.Another is “The Bulletin” which comes out on a weekly basis. Though not as informative as AFR it has an interesting page called “The Speculator.” The author has a reputation of having his finger “on the pulse” so to speak. Especially in the resources area.
3. The Internet.This is particularly an area where you will find a wealth of information, sometimes too much.I receive the vast majority of my information in the form of newsletters. This arrives by E- Mail on a daily basis. I then sift through it and keep the information I want and discard the rest.(A list of these newsletters can be found at the website on the bottom of this page.)
4. Other Media.Radio and television can be useful sources of information. Usually on the nightly 6 pm news and the various finance/ business programmes that abound on Foxtel and other finance channels.
5. Friends, relatives and casual acquaintances.I have found by personal experience that once it is known that you are interested in the share market; people will go out of their way to give you their latest tips and information.I never knock them back but I always do my own personal research first before I take it any further.6. Personal Experience.This is hard to define. I call it “Being tuned in.” As I can be looking for one thing and something else entirely different will turn up.As I have stated before you never know where that little bit of information is going to spring from.This only a basic guidelines as you will develop your own sources, as your experience grows and time progresses.
Top 5 Rules of Stock Trading
This article is for those who had some experience in stock picking and who have been through the agony or the thrills of losing or gaining money.The very fact of stock trading is presence of emotions of losing money and risks associated with it.None of the high money making instruments can guarantee you no risks. High risk means high gains and high losses as well. But there are some rules of stock trading which should be followed as they come from experience of traders rather than just a walk down the Wall Street rule book Here are the rules:
1. First and foremost decide what trade you are playing for. Is it a Buy today sells tomorrow? Is it a Long term bet on economy? Is it the merger and acquisition 5 % gain that you are playing for? Is it pure momentum play?
2. There is an unsaid rule which all the best on the street know and it is cut your losses and get out rather than being emotional about your trade. It is a trade and your reputation is not at stake. You can't be right all the times. The market is supreme.
3. Whenever you are making money have a realistic goal. A 17 % earning on a per year basis is a fantastic bet and one should not be greedy to just hold on to it till it doubles. Always take the profits and let others also make profits on the stocks.
4. Always have money for your immediate requirements and only after you have allocated for the insurance and household savings, should you be betting in the stock market. Never try to bet with the money you had saved for Buying your House.
5. Always buy on negative news and sell on good news. Market always discounts the future. Never try to play on news since the market has already discounted the news and you could be surprised to be a late entrant.With this we come to an end of the article "The 5 most important rules of stock trading".
1. First and foremost decide what trade you are playing for. Is it a Buy today sells tomorrow? Is it a Long term bet on economy? Is it the merger and acquisition 5 % gain that you are playing for? Is it pure momentum play?
2. There is an unsaid rule which all the best on the street know and it is cut your losses and get out rather than being emotional about your trade. It is a trade and your reputation is not at stake. You can't be right all the times. The market is supreme.
3. Whenever you are making money have a realistic goal. A 17 % earning on a per year basis is a fantastic bet and one should not be greedy to just hold on to it till it doubles. Always take the profits and let others also make profits on the stocks.
4. Always have money for your immediate requirements and only after you have allocated for the insurance and household savings, should you be betting in the stock market. Never try to bet with the money you had saved for Buying your House.
5. Always buy on negative news and sell on good news. Market always discounts the future. Never try to play on news since the market has already discounted the news and you could be surprised to be a late entrant.With this we come to an end of the article "The 5 most important rules of stock trading".
The Stock Market Drop - How to Make Money in a Tough Economy
Imagine your friends laughing when you say you made a lot of money as the stock market dropped. Then imagine their faces when you show them your incredible gains. They won't laugh any more. They'll beg for help.Everybody loves it when the stock market goes up. Many people panic when it falls. But they don't need to. An American market exists that allows traders to make money regardless of whether stocks are going up or down.Professional investors know how to hedge their bet. They take precautions because they know the economy will move through various cycles. What goes up will eventually come down.The common man and woman are different. They assume investing is difficult so they don't take time to learn simple methods that might benefit their lifelong effort to get ahead. They throw their money into mutual funds or a 401-K account and hope for the best. This may work when things are going well in the financial markets. In a crisis, this method will be the cause of many a sleepless night.Every family could use some extra money each month. And it's not a pipe dream, if you are capable of taking simple direction and absorbing new information.Here's how you to make money when the stock market falls: hedge your bet by trading the mini-sized Dow Jones futures market. I know what you're thinking. Futures?! Isn't that a great way to lose money? My answer: Have you ever lost money in the stock market?Today's economic conditions should be a reminder that our money is always at risk. Yesterday's victories may be tomorrow's defeats. All the more reason to hedge - always - your most important investments.The mini-sized Dow Jones electronic market is global and stays open for business throughout the night and into the next day. It closes briefly at the end of each business day, all day Saturday, then opens again late Sunday afternoon. Plenty of time to access and manage your online account.One significant reason for learning this market is its simplicity. You can learn to trade the market up and down - and it's all legal. For people who have only traded stocks, it is sometimes difficult to understand how a futures trader can make money when a market drops. But it's true, it can be done, without breaking any laws.This is not true of some "short selling" that takes place in the stock market. Some rogue brokerages break Securities and Exchange Commission rules and in the process rob good, honest investors. That is not what I'm suggesting. But that illegal practice is precisely why you would be wise to learn how to hedge your stock portfolio with the mini-sized Dow Jones futures market.There are many tutorials to help you understand how to trade this market. Google "mini-sized Dow Jones" or "the mini-Dow" and you'll have plenty to choose from.But don't fall for offers that ask you to pay big bucks for software and platforms you won't need. I'm not suggesting you day trade - not at first anyway. So choose a guidebook that is modestly priced and then learn as much as you can from it before buying your next book.The Chicago Board of Trade and the CME Group Exchange websites offer good, free information to help you understand the basics of trading futures. Take full advantage.Finally, be a specialist. Master the one market that can do you the most good. The mini-sized Dow Jones stock index will be enormously beneficial if you have long-term or short-term stock investments. You'll soon realize that by concentrating on one market you don't have to be Warren Buffet to make smart moves.
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