Why I Sold Some of My Nigerian Stocks and Bought More American Stocks

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Trading the stock market has always been my favourite way to make and multiply money easily and during my trading journey, I have come to understand that the stock market isn’t partial; it rewards those who, through diligence and well-planned strategy, understand the perfect time to open positions and exit their trade but burns gamblers seeking a quick return.

I had a discussion with one of my blog visitors on the way forward after he read my guide on the 3 low risk fixed deposit options that will likely outperform stocks in the next 6 months. His portfolio is down by close to 20%, no thanks to Dangote Cement stock and Zenith Bank, these are stocks he anticipated would deliver impressive results this year but aren’t so.

As of this writing, all eyes are currently on Ekiti State governorship election, a lot of local and foreign investors are following the recent happenings to understand and gauge the effect of the upcoming election in 2019. For me, I am cutting down my exposure to the Nigerian stock market, the possible risk of further fall is very imminent. Let’s analyse the chart using some of my favourite indicators, this will help us understand what the next 6 months would be:

Using price action analysis on a weekly chart, the NSE all-share index broke the 50-day moving average which also doubled as a key support  and an old resistance level, the index pulled back for 2 weeks and kissed it goodbye: we have seen how the market had performed in the last 30 days with YTD performance now at -4.9%. This is a perfect reflection of the bearish sentiments which, fundamentally, isn’t unconnected to the factors earlier shared on this blog

Why are we bothered about the general market and not individual stocks, after all, there are some stocks with YTD return above 50%, you may ask? My dear, the truth is no matter how strong the fundamentals of a stock is, a larger percentage of share price move is still not disconnected to the investor’s sentiment on the economy. Take a look at Zenith bank, UBA stocks, despite their strong earnings and balance sheet size, they have barely delivered up to 10% return this year, why? the growth of bank stocks is tied to yield on fixed income securities as loan portfolio expansion is expected to be minimal.

I can go on to explain and give reasons I am not bullish on the NSE all-share index, at most 6 months from now but why did I opt for US stocks? To answer this question, I would like to share the chart of Dow 30, an index that tracks the performance of the top 30 most capitalised stocks in the US stock market.

While the NSE all share is set for another weekly fall, the Dow 30 index has just bounced from a key support level to the upside and as the 20-day sits above 50-day and 200-day moving averages, we can confidently say that the index is clearly bullish for stocks. As a smart stock market trader, I would rather be active in a market that is bullish, then allow my portfolio to lose value in a bearish market.

Another reason I would hold more US stocks to our local bourse is “availability of technical tools and data“, the US stock market is very open to international traders; you can access real-time market data on several financial platforms like Google Finance, Bloomberg, and MarketWatch from your personal PC while data on the Nigeria stock market trading is delayed, you can’t access the NSE trading terminal unless you are a premium subscriber or a registered stockbroker.

Lastly, the US stock market provides a larger pool of stocks to pick from. You have access to over 5,000 stocks, ETFs, mutual funds to invest in but I am only trading these selected stocks which are: Groupon, Apple, Cisco, Google, Amazon, Intel, Facebook, Microsoft, Tesla, Netflix, AT & T, Berkshire Hathaway, Bank of America, Boeing, Caterpillar, Chevron, Citigroup, Coca-Cola, Walt Disney, Exxon Mobil, General Electric, General Motors, Goldman Sach Group, Johnson & Johnson, JP Morgan Chase, McDonald, Pfizer, Procter & Gamble, Twitter, Alibaba, Visa, MasterCard, and SnapChat. These are the few stocks available on my broker’s platform for now but I still find these companies liquid, attractive and highly capitalized for new traders.

You don’t have to buy all the companies in the US stock market before you make money, just focus on few stocks with potential, master a trading strategy and trade your plan consistently, that is what successful stock market traders do, they trade like a sniper.

That’s all you should know about my decision to be more active in the US stocks.