Classic Approach to Equity Investing in Good and Bad Times

Hello, welcome to another week at the market arena and on this column. I’m sure this week shall be exciting again as usual in the market with equities gaining and losing values. Success they say is a choice just like failure. Wealth is a choice just as poverty is a choice. This week, make up your mind to remain with winning stocks. Let’s take off from here as we consider understanding Market times and seasons.

This might not be a bible class, but permit me to refer to this scripture as it readily comes to mind here. It is Genesis 8:22. It reads, ‘while the earth remains, seed time and harvest and cold and heat and summer and winter and day and night shall not cease’. This statement credited to God implies that:

  1. The earth is not mono-seasonal in existence. Besides, seasonality is a natural occurrence designed to occur as nature deems fit. The over six thousand years of the earth’s existence has added credence to this fact hence, it infers that seasonality, being a must had always and will always be irrespective of the desires of men. The cold weather doesn’t and won’t need to ask for permission from men to rule the atmosphere; neither will the winter make a request to take over from the summer while men are still very much enjoying the sunshine. Seasonality is a superimposition on men to effect constant changes for continuity.


There are principally two seasons in the stock market. The period when there is a general increase in the prices of stocks is referred to as the BULL, the bull being an aggressive and restless animal. The flip side is the period when there is a general decline in prices of stocks otherwise referred to as the BEAR. These seasons to my mind are bound to occur in the market, no matter what economic model, strategies and policies adopted by the regulators. Please note, just as in the earth’s seasonality, the BEAR would not seek for permission from investors to take over from the BEAR.

I strongly believe that seasonality in the stock market is a natural phenomenon because it has being repeated occurrences in virtually all markets across the globe without any known or proven human antidote or prevention. In other words, past experiences of bad-BEAR markets had always failed in guiding against a recurrence of the negative season either from the end of the regulators or the investors and market operators alike. Each bad-BEAR markets had often left behind bitter experiences and the reasons why the bear occurred, with every parties seeing clearly what was left undone and all manners of reasoning and in some cases, shifting of blames and all sorts- why I shouldn’t have invested in so and so stocks, I should have sold earlier, I entered in at the wrong time and et cetera. Why must all these complaints and such comments prevail after a crash? I have often wondered why experiences of the past had failed in guiding against subsequent experiences of bad markets so far hence, I make bold to infer that occurrences of bad-BEAR market is beyond human prevention. To me, it is a natural occurrence that will occur when it will, irrespective of human attempts against its emergence. My postulation further stems from the fact that same set of individuals that lost hugely in the Nigerian market crash between 1997 and 2000 in fact lost more in the market crash of 2008. The reason is not farfetched. Market ups often create high level optimism which is a major prerequisite for high level returns in the bull. This same high level optimism whose end result is high level frivolities is also the force that often invites and presents bad-BEAR markets as subtle changer such that even the very elect, knowing that the market is at the verge of major changes or collapse will fail to act to precision until it has become too late. My definition of natural phenomenon is the knowledge of certain realities without commensurate change of attitudes. I await your comments. Let’s go further.

2. In the case of the earth, the length of subsistence of a season is a superimposition on men. We have seen in our days and times, such extensions in seasons contrary to the norm. In other words, seasons do remain in session beyond what previous operations and experiences had being. Men absolutely have no contribution in the determination of the length of a season. We are bound by nature.


Taking a cue from the earth with experiences of market crashes across the globe, it is apparent that human efforts at curtailing bear markets had often failed. This stems from wrong prognosis and application of corrective measures thus leading to further crash. At the beginning of major market crash for example, it is often referred to as mere and temporary market corrections to soon reverse hence, the common admonition is to stay in the market and even invest more with the emerging opportunities of the short term corrections. That is when all manners of nomenclatures come into force such as civil/temporal bear, market pull back, short term adjustment and all sorts. To me, it seems very much that a bad market, when it sets in motion would ultimately gets to the bottom irrespective of assistive measures taken to combat it, until it chooses to reverse self. All manners of analyses, projections and indicators aimed at timing or depicting the end of the BEAR often come into naught. Every Analyst becomes a liar and Market Oracles dimwits in a prolonged BEAR markets because their projections rarely come true. It therefore suggests that like the earth, the market is bound by nature. I stand to be corrected.

3. The intensity of a season is a natural phenomenon too. In other words, there had been periods when we expected heavy cold and it comes very mildly. There had also been years when mild heat was expected and the heat was so unbearable and beyond measures.


If you can’t predict the duration of a market session to precision, attempts at predicting weight or intensity to precision will end in futility. Experiences had shown that just as it has been pretty difficult to predict the duration of a BEAR or even BULL markets in history, so it is to predicting the intensity of either the BEAR or BULL until the session is over. Summarily, the weight of a market season is only measurable at the end and not at the commencement of the session. This reflects in market’s undulating movements depicting the fact that markets aren’t mono-directional in movement. The tool of accurately predicting the weight of a session is yet to be devised. When you see one in use, please let me know. Common practise that had ruined many investors and market operators particularly in BEAR markets is the application of the theoretical cost average concept. The losses arising from this is also attributable to the inaccurate prediction of season’s intensity particularly in a BEAR session. You had invested in a stock at about the price’s highest level for example, seeing same stock selling at half the price makes it attractive, but investing without a clear outlook of further movement makes the action incorrect. Ideally, further investment in a market and specific stocks after major decline shouldn’t have been wrong since it is intended at diluting volume and reducing average cost but how well have you been able to measure further movement of the stock? My big Uncle-name withheld invested heavily in the then Bank PHB at around N40 per share and held till the price fell to about N4 or so. Reasoning as a first class Professional and market guru that he is, had taken loan to invest more into Bank PHB less than two weeks before the hammer of the regulator fell on the financial institution under the then Central Bank boss. It would take the grace of God and not just wit to survive at such times. Was Uncle wrong? I might not say but it is apparent now that my dearest Uncle never knew that the wicked BEAR wasn’t over before he applied an ordinarily fantastic strategy. Will he ever recover from that particular investment? Only time can tell.

4. Seasonality is relative to geographical locations. For example, cold tends to be more intense in hilly locations or places surrounded by mountains and heat in the desert. These are also natural occurrences.


Relating the stock market to our earth, history of market movements had shown that the rate and pattern of crashes and recoveries are not exactly same across the globe. These are also primarily proportional to the populace within the ecosystem where the market operates.

In the case of the earth, challenges imposed by atmospheric conditions as natural occurrences are not determined by just the extent of the occurrence but the attitudinal response or psychological structure of the populace within the environment. For example, densely congested or populated areas feel less of harmattan than isolated or dispersed settlements during the dry season. This is so, not necessarily because the harmattan wasn’t heavy in densely populated areas but the fact that the environmental structure will always act to impede natural impacts of such. In the same vein, a man born and bred in the United Kingdom will react better to winter than a first time visitor in the country. So it is in the stock market. It infers therefore that, the rate and pattern of response or reaction of the populace within the ecosystem where the market operates to certain changes in market directions will always impact the market either ways-positive or negative irrespective of sessions. This is what I refer to as psychological effects of the population to changes in market movements. For example, Americans understand so well that markets will always rise and fall and so are mostly prepared before investing in the market. They have also learnt not to call the market strange names in times of crashes but to rather stay around to salvage hence, the records of faster recoveries in any matured economies of the world. Governments across the globe are also very apt in bailing out ailing markets to secure the confidence of the people. Alas, these are not so in Nigeria where investors ran away totally from the market with promises never to get near the market again forever. Our governments also, either out of ill advises, indifference or ignorance failed to act to time. In a nutshell, our market will recover fully when we all recover in our minds, from all the perceived offences of the market against us.

5. Seasonality is reasonably predictable by men. May be by the use of certain apparatus or certain natural signs but never to precision. On the other hand, impacts had been and will always be measured accurately.


Earth’s seasonality is reasonably predictable in the sense that for example, everybody knows in a rainy season that the torrents will not last forever and in harmattan, that the dryness will always come and go. Best of returns are only obtainable in the stock market when a mindset establishing the fact that market seasons and times will not last forever is imbibed. And really, i don’t see why this is impossible. We all drive on Nigerian roads for goodness sake but why aren’t we all the time involved in accidents seeing that the roads are bad and almost impassable? Very simple, even when the terrain is not so much understood, we do take precautions by driving not just slowly but carefully and in the process, avoid bad spots. Why not apply same principle in equity investment by playing on the side of caution than frivolities? You might not have power over the market but you sure have power over your funds. Apply this power by the appropriation of strategies by understanding seasonality as applicable to the stock market.     

6. Every season had and will always come with its peculiar features, advantages and disadvantages.


Seasonality in our earth brings about planting and harvest, cold for contraction and heat to stretch. BULL session in the stock market exists to bring about measurable amplification which becomes senseless and makes the market logical and easily predictable in orientation if it persists for too long. Experiences had revealed that the stock market exists for the best returns via certain unpredictable variable factors. This is what I refer to as dynamism though some might want that referred to as risks. Have you observed that risky events in life are the best? Air travelling is very risky but the fastest means of transportation; Malaysia Air readily comes to mind depicting air travel as being risky but, may be, some day, many in our world will choose to trek to the Asian countries for fear of plane crash. BEAR markets to my mind exists to create the opportunities to invest in stocks that went way out of reach while the market  is bullish at good prices though with a caveat- if specific companies still present vibrant and attractive features.

In our discussion on this column, I cited examples of my investment in Guinea Insurance where I made good returns though purchased without any attractive features, such frivolities can and only should be restricted to extremely BULL session and not in a sideway, recovering or BEAR markets for no reason under the heaven except you intend to take the company over. BULL markets offer bad stocks the opportunities to gain a measure of recognition and become honoured for being a part of the stock market population while BEAR markets separate the bad and the ugly from the good and excellent. Summarily, choose to stay with the good and excellent of stocks in a bad market. In the BULL, you may consider bad stocks but with due considerations.


  • When the market is BULLISH, all stocks become good.
  • Don’t invest beyond what you are willing to lose should the market stages an impromptu reversal. Many in the last BULL market sold houses and cars to invest in stocks that weren’t proven. We all know the results today.
  • Make your stay quick by taking your profit knowing full well that in the stock market, anything can happen at any time. The prices of bad stocks uncontrollably come to zero level and might remain there for long
  • Sell off as soon as your targets aren’t met after the entry into any unproven stock in a good market-when you can still see buyers. It is better to cut your losses and take a walk instead of staying forever. Please note that price appreciation in a stock without commensurate fundamentals is an abnormality. Abnormal profit will never last forever.
  • BULL markets often generate bad companies with good stocks. Therefore, buy stocks in good times, Invest in bad times. This suggests that good time is most suitable for short term trading even in good stocks.

Do you want to know more? Let’s meet next week on this column but before I quit, just take this in.

7. When seasonality occurs, no one is immune as it affects all within the geographical location.


  • Every stocks become good when the market is BULLISH. BULL markets do generate bad companies and good stocks, good companies with good stocks and in some extreme cases, good companies with bad stocks.
  • Every stocks are bad when the market becomes bad until equilibrium is reached to begin the process of separation and classifications. To this effect, BEAR markets do generate bad companies and worst stocks, good companies and very good stocks and in some extreme cases, very good companies and bad stocks.

Till we meet again next week. Be Bullish. Your opinion counts at


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