MTN Group reported on Tuesday that it is likely to report an annual profit of about $955 million from its Nigerian operations.
MTN is currently in a legal tussle with the Nigerian Government over fines imposed on it for Sim Card registration failures.
According to Reuters, MTN makes about 37% of its revenue from Nigeria, and its shares were up 0.8% at 121.50 rand by 1006 GMT, lagging a 1.4 percent rise in the JSE Top-40 index
CLICK ON THE LINK BELOW TO VIEW PWC’S ANALYSIS OF THE NIGERIAN 2016 BUDGET AND MTEF.
Renowned global audit firm, Pricewaterhousecooper in its recent forecast on the performance of the Nigerian economy in 2016, said with a lot of uncertainty surrounding the economy, it will struggle to grow at 4.0 per cent of Gross Domestic Product (GDP). “Our economists have developed three economic scenarios to help public and private sector organisations prepare for an uncertain environment in 2016.
In these scenarios, we explored two types of shocks: an oil price shock and a political shock. “We expect that even under a benign economic scenario, the Nigerian economy will struggle to realise any growth much higher than 4.0 per cent.
Nigeria’s economy has tended to suffer following an oil price crash, although its resilience has improved in more recent times. Getting the policy response right matters as falling economic growth imposes a real ‘human’ cost on the population,” PWC said in its recent 2015/2016 World Economic Outlook.
This is coming as the International Monetary Fund (IMF) recently cut Nigeria’s GDP growth forecast for 2016, to 4.0 per cent growth rate as the country continues to contend with the challenge of declining income from the drop in crude oil prices.
The latest growth forecast by the fund is 2.25 percentage points lower than its last year’s projection for Nigeria. The multilateral donor agency stated this in its 208-page World Economic Outlook (WEO) titled: “Adjusting to Lower Commodity Prices”, released in Washington DC, recently.
Continuing, the IMF stated that it anticipated growth in sub-Saharan Africa to also slow this year to 3.8 per cent, from 5 per cent in 2014. Similarly, it forecast that growth in lowincome developing countries would also fall to 4.8 per cent this year, more than one percentage point weaker than in 2014, before picking up to 5.8 per cent in 2016. But the IMF pointed out that its projections for the low-income countries would be shaped by the outlook for sub-Saharan economies, “in particular Nigeria; the resilient growth in low-income developing countries in Asia, particularly Bangladesh and Vietnam.”
Taking a cue from the IMF, FocusEconomic panellists, say although Nigeria continues to suffer from low oil prices and internal security threats, a more stable political environment and increased government spending on social welfare and infrastructure are expected to support growth in 2016. FocusEconomics panellists expect the country to grow 4.1 per cent in 2016, which is down 0.3 percentage points from last month’s forecast. For 2017, the panel expects the Nigerian economy to accelerate and expand 4.5 per cent.
In November, consumer prices increased 0.7 per cent over the previous month, which was above October’s 0.4 per cent increase. According to the National Bureau of Statistics, the month-on-month increase in prices accelerated in November across all the sub-components of the index, with education being the only exception. It will be recalled that Nigeria’s inflationary rate rose from 9.3 per cent in October to 9.4 per cent in November, which marked the highest rate since February 2013. As a result, annual average inflation inched up from October’s 8.8 per cent to 8.9 per cent in November, thereby reaching a 25-month high.
Core consumer prices, which exclude farm produce and energy prices, rose 0.6 per cent in November over the previous month, overshooting October’s 0.4 per cent increase. Core inflation inched down from October’s 8.6 per cent to 8.5 per cent in November.
FocusEconomics Consensus Forecast panellists expect inflation to average 9.5 per cent in 2016, which is unchanged from last month’s forecast. For 2017, the panellists forecast an inflation rate of 8.5 per cent. In November, the Business Sentiment Indicator (BSI) developed by MNI Indicators and Standard Chartered Bank fell from October’s 65.3 to 62.6. October’s print had marked the highest reading so far this year. Despite the decline, the indicator continues to rest comfortably above the 50-threshold that separates contraction from expansion in business conditions. November’s drop mainly reflects declines in production and new orders. On the other hand, the order backlogs, employment and supplier delivery times’ categories recorded an improvement. Regarding foreign exchange developments, the BSI survey reported that: “Given the Central Bank of Nigeria’s (CBN’s) monetary policy easing at its meeting on November 24, 2015, which suggests no imminent change to the current FX regime, the ‘effect of the naira exchange rate reading’ will likely continue to be a concern for Nigerian businesses in the coming months.”
The FocusEconomics Consensus Forecast panellists, who also expected gross fixed investment growth to reach 6.1 per cent in 2015, forecasting an expansion of 5.0 per cent in 2016. Sunday Telegraph recalls that the Central Bank Governor, Godwin Emefiele had at the end of its Monetary Policy Committee meeting in July warned that the economy could slip into recession in 2016, saying the liquidity withdrawals following the implementation of the Treasury Single Account (TSA), elongation of the tenure of state governments’ loans as well as loans to the oil and gas sectors could aggravate liquidity conditions in banks and impair their financial intermediation role, thus affecting economic growth, “unless some actions were immediately taken to ease liquidity conditions in the markets.”
For an economist lecturer at the Bayero University, Kano, Stanley Oronsaye, the plan to source over 40 per cent of “our borrowings from abroad may be overly optimistic considering our current forex regime which is not so palatable to foreign investors. “I foresee a major challenge to be its welfare thrust; paying N5000 to the vulnerable, a meal a day to school children and the plan to recruit 500,000 teachers. At minimum wage, the new teachers will gulp about N1.1 trillion (that is at N18, 000 monthly).”
But the Lagos Chamber of Commerce and Industry (LCCI), has painted an admixture of a cautious optimism for the economy on the one hand, and a bleak outlook on the other for 2016. LCCI Director General, Alhaji Muda Yusuf, said while it posits that the N300 billion projected funding of the Small and Medium Scale Enterprises (MSMEs) by the commercial banks would boost lending to the sector, grow agriculture and create employment as well as increase the chances of Nigeria’s foreign exchange earnings in non oil export, its thoughts on declining global oil prices and its consequence on government’s revenue, as well as firms honouring contractual obligations to their financiers, were bleak, suggesting that the economy may yet tread a turbulent trajectory in 2016. In his recent statement, entitled: ‘Economic and Business Review in 2015 and Perspective for 2016’, Alhaji Yusuf said:
“The targeted N300 billion by the Nigerian banks to boost lending to Small and Medium Scale Enterprises (SMEs) and the agriculture sector in 2016 will boost SMEs development and employment.” But nonetheless he observed that the declining international spot oil price and its fallout will create unease for the economy in the coming year.
The need for diversification of the nation’s economy has never been more imperative than now, especially with the dwindling oil prices in the international market. Unless urgent steps are taken to diversify the nation’s economy, there is a great economic danger ahead of us.
Just about few months ago, many state governors were unable to pay workers’ salaries and meet other recurrent expenditure due to a sharp fall in oil revenue. A situation where states had to borrow to pay salaries is the worst case scenario of how bad an economy can be.
As a way of preventing the re-occurrence of the embarrassing situation above, I propose the following ways through which the country’s economy can be diversified.
Among these various ways is agriculture. Agriculture is one of the ways or means by which the government of any country that is serious about feeding its populace and raking in foreign exchange can use to improve the living standard of its people, as well as generate revenue for infrastructural development. Nigeria can improve her economy by showing interest in agriculture through formulation and implementation of good agricultural policies, thereby turning around the economy.
Agriculture, if given the needed attention, is capable of creating about 70 per cent of jobs for the unemployed youth. Unemployment today is one of the greatest challenges of this country, and the Muhammadu Buhari led administration can tap into it to reduce the high youth unemployment rate. Therefore, agriculture, being a sector that requires a large labour force, can help create employment for the large unemployed able-bodied men and women in the country.
Government partnership with private investors in agriculture, which stands at about N1.23 billion now, can grow in four-fold to N4.9 billion between this year and 2019 if this administration’s agricultural policies do not threaten the investments already in the sector. With this, many foreign and local investors will invest more in this sector of the economy if the policies are right.
The entertainment sector is also a very viable sector for the diversification of our mono-economy. The Nollywood, for instance, employs a large chunk of unemployed Nigerians and also generates significant revenue for government. The music industry as a component of the entertainment industry is also not left out of this, as the industry players have been portraying the nation’s image in positive light both within and outside the country. Therefore, to fully utilise the potentials of this sector, there is need for government support through creation of the necessary enabling environment for the industry and stakeholders in the industry to thrive. The government must make and enforce laws to eradicate, or reduce high level of piracy in this sector. This will help maximise the benefits in this sector to the country vis-à-vis our Gross Domestic Product (GDP).
A manufacturing country stands the chance of benefitting from devaluation of currency as it reduces the prices of the exporting country, but a situation where you don’t export your goods to other countries, it can be very dangerous to the economy. The manufacturing sector is another very important sector that can rake in a lot of revenue for the government and provide jobs for the teeming unemployed youth. Instead of depending on oil, whose price is not determined by the country but the international market, it is better we look inward into the manufacturing sector to fully maximise the benefits of that sector of our economy. There are, however, several challenges confronting this important sector, ranging from multiple charges by government agencies, to sourcing for foreign exchange from the parallel market. This has, as a result, made raw materials more expensive and in turn, resulted in the increase in production cost.
Basically, the manufacturing sector is heavily dependent on energy. Power supply has been erratic and insufficient gas is bought with foreign exchange; this makes the prices of locally- made goods exhorbitant.
Granting tax holiday and waiver to infant industries and provision of good road network, electricity, healthcare facilities, among others, will help boost this sector and grow the nation’s economy.
The less we depend on oil, the better for us as a nation; a situation where about 90 per cent of the country’s revenue comes from the oil sector portends great economic danger for the economy and, therefore, the situation must not continue, hence diversification options offer a way out.
I stumbled upon a six-hour, four-part miniseries docudrama titled “The Men Who Built America”, and I must say that six hours later, I was more enlightened about how great men made giant strides to build the United States of America after the civil war and in turn revolutionize the modern society as a whole. And how the government made conscious efforts to shape the nation by making policies and laws that best suited the citizenry, even at a time when the proprietors of these business empires almost seemed bigger than the government.
I might have always been interested in socio-economic matters, but my interest in such matters quadrupled after I saw the docudrama. It became clear to me then more than ever before, that no nation becomes great by chance or by deceiving itself into greatness, neither can we simply rely on unrealistic developmental goals backed up by prayers to become a developed nation.
The immediate efforts being made by the present administration to ‘rejig’ the economy are welcomed. I for one think that the present restrictions on the use of foreign exchange for the importation of certain goods is aimed at reorienting Nigerian businesses to always consider options within the country first before looking outwards. If Nigerian businesses can weather the storm and channel the present hardship being faced into innovating ways to remain self-sufficient by sourcing for required goods and services inwards, then the restrictions would be considered a catalyst of some sort that triggered the desired change, a change from an import based economy to a self-sufficient producing nation and subsequently an export based economy.
The most important steps to be taken however are long term ones, foreign exchange restrictions alone cannot turn around the economy. The government must go back to the drawing board, and as it approaches the “drawing board” to formulate a development plan, it must do so with the mind-set of a nation that is starting from the scratch and intends to formulate a plan that would be initiated now, but would begin to blossom in about 5 to 7 years. Why that long you may ask, after all Nigerians are already screaming “where is the change sef” just seven months into the present administration’s tenure.
This is because the government needs to carefully select sectors and industries they intend to ‘rejig’, revamp and newly develop, and then initiate immediate plans to kick-start the selected sectors and industries for the present and then fully inculcate the core elements of these sectors into our educational system to ensure steady growth for the future.
Education
The simple truth is we must fine tune our educational sector to meet our economic needs. What I propose is a massive overhaul in the educational system, by consciously reviewing the curriculums to best suit our nation’s needs and an unprecedented funding of our educational sector. What is the effectiveness of an educational system that churns out learned youths only to become unemployed? Imagine an educational system that trains young Nigerians on how to solve our numerous challenges, and when they are released to the labour market, they hit the ground running by making their respective contributions in solving these challenges. This would not only have a positive effect on the GDP per capita, GNP and other figures that the lame man on the street does not care about, but would ultimately create jobs for the growing number of unemployed youths and in turn lead to revolutionary economic growth.
Mining
Take the mining sector for example; this is a sector that the government has not paid so much attention to, thereby largely ignoring the foreign exchange potential of the various mineral resources. I do believe that this sector would be revamped by the administration to make it a major revenue earner, but it must not stop there, the various Departments of Geology and Mining across our tertiary institutions should not be abandoned, in fact more should be set up across various institutions within the nation. I was made to understand that the full-fledged Departments of Geology and Mining in the country are those in tertiary institutions which are geographically located close to mining sites, if the government is serious about revamping and sustaining this sector, then more Departments of Mining should be established with adequate funding to conduct required research in this sector and impact the knowledge on the younger generation.
Power
On power, I must commend the approval of off-grid generation, as we need all the Mega Watts we can get. We are a long way from the 40,000 MW we set to generate by 2020, and we must look for alternative ways to cure the cancer that has ravaged this sector for ages. But since we know that a large part of our country is underdeveloped and Nigeria with a population that according to the United Nations (UN), shall exceed 300 million in 2050, the truth is that for decades to come Nigeria would always seek to generate more power. The time to invest in research on the power sector is now; steps must be taken to adequately fund the various Universities of Technologies across the nation to establish and maintain Renewable Energy Departments.
Housing
Housing is yet another sector that requires prompt attention. Nigeria has a massive home deficit estimated at about 14 million by the Federal Mortgage Bank. It’s high time we thought of cost effective alternatives to building homes in Nigeria, most of the beautiful homes Nigerians stay in when they travel to the United States of America are built with wood. That is just one suggestion, every Architectural, Building, Quantity Surveying and Regional Planning Departments in all tertiary institutions across the country should devote a bulk of their research in searching for these cost effective alternatives that would suit our environment, and this studies should form a bulk of their curriculum. This seems like the only reasonable way to provide true low-cost housing for the teeming population.
PPP
Similar templates should be adopted in reviving the agricultural sector, ending gas flaring and building infrastructures to cover up our huge infrastructural deficit. The efforts of the Private sector cannot be ruled out in all of these, the bulk of the funding could be provided by the private sector through Public Private Partnerships (PPP) and a bit of it via Corporate Social Responsibility (CSR). Also the local and state governments must do their bit to implement such polices at the grassroots level, in the best and most effective ways they can.
These are simply the views of a trained lawyer and a self-acclaimed socio-economist, who cannot afford to bore his few readers up. I can only imagine the ingenious ideas that would come up at the National Economic Council Meetings chaired by the Vice President, Prof. Yemi Osinbajo, however one thing is certain, we cannot continue to dance around the same ideas and expect the desired change we so desire and need. Those that determine our economic policies must think out of the box at these crucial times, to make decisions that would be practicable now and can be sustained for the future.
By Damola Olatunji
Damola is a Legal Practitioner, Political & Socio- economic Commentator and a concerned citizen
If there are any hopes that the president could be mulling postponing his promise of social welfare programmes then that hope must surely be dashed. Premium Times is reporting that plans are already on the way to launch one of Buhari’s social programmes involving a credit facility of N60,000 to 1 million artisans.
According to Premium Times, the a senior federal government official confirmed that a provision to grant a one -time soft loan of about N60,000 each to one million market women, men and artisans is in the budget. This comes within the same day it was reported that the President has now officially sent in a new budget to the National Assembly.
The Buhari Government still has five other social programs (which Premium Times also listed) that it is hell-bent on starting this year. According to sources the president considers these programmes a priority of his government and must be implemented this year regardless of how it will be funded. Here are the rest of the programmes.
The Teach Nigeria Scheme: This scheme involves the government directly hiring about 500,000 graduates as teachers . They will also train and deploy the graduates to help raise the quality of teachers in public schools across the nation.
The Youth Employment Agency: This scheme involves taking between 300,000 to 500,000 non graduate youths through skill acquisition programmes and vocational training. They will also be paid stipends while being trained.
Conditional Cash Transfer (CCT): This is the most controversial of his social welfare policies and where the government will pay N5000 per month to one million ‘extremely poor’ Nigerians this year on the condition that they have children enrolled in school and are immunized.
Homegrown School Feeding: Here, the government will serve one meal a day to students of primary schools.
Free Education Scheme For Science, Technology, Engineering and Maths (STEM): The government will be expected to pay tuition to about 100,000 ‘STEM’ students in tertiary institutions in the country. This scheme is expected to cost about N5 billion.
The 2016 budget is thought to have about N500 billion in welfare programmes
How the president intends to fund his welfare programs is still a mystery to a lot of critics who believe that he has been woeful so far on his handling of the economy. They point to the fact that the president cannot be talking about welfare programs when oil price continues to drop and the demand for our oil is tapering. Apart from funding, it is also not clear how he intends to handle the logistics involved in implementing some of these socialist programmes.
Reports in the international media confirm Brent crude fell to $27.67 a barrel early on Monday, its lowest since 2003, before recovering to $28.56 by 0208 GMT. Asian markets are already open due to time difference.
The sharp drop in price is seen as a reaction to the lifting if sanctions on Iran who are set to pump another 500,000 barrels a day in oil. Reports suggest Iran’s strategy will involve giving out discounts to who intending buyers.
The price of Brent Crude is now $10 lower than Nigeria’s budget benchmark price of $38. It is expected that the benchmark price will be reduced before the budget is approved by the National Assembly.
The federal government on Saturday solicited the understanding of Nigeria’s organised private sector against massive workers’ lay off at the moment, stating that the country’s economy is rather unstable and unable to take the likely shock from such exercise.
The government said in Abuja that the sack of any employee would have serious negative effect not just on the retrenched fellow, but on the country’s larger economy.
Minister of Labour and Employment, Dr. Chris Ngige who spoke at the investiture ceremony of Otis Anyaeji as the 30th President of the Nigerian Society of Engineers (NSE), explained that government would appreciate the understanding of the private sector on such request.
Ngige, who was represented by the Minister of State for Labour and Employment, Mr. James Ocholi, said the role of engineers in job creation could not be over-emphasised, adding that the provision of employment was one of the cardinal objectives of President Muhammadu Buhari.
He therefore urged the private sector operators at the event to continually seek for creative ways to manage their workforce without necessarily increasing the number of unemployed persons in Nigeria through sack or retrenchment.
He said, “I think it is important to state that we should not lay off staff at this critical stage, because if we do, we will be creating more problems. You should try to micro-manage and retain the staff that you have now. Because no matter how much we accommodate, government alone cannot be the largest employer of labour. The largest employer of labour is, of course, the private sector.”
Earlier in his address, the new NSE president said engineering was key to over 95 per cent of the activities in the public and private sectors of the economy.
Anyaeji said engineering infrastructure, industrial and agricultural economics were critical for adequate planning and management of any economy. He noted that the NSE under him would strive to create a national appreciation of engineering as key to Nigeria’s industrialisation.
(Posted From Business News)
The year 2016 is turning out to be a really bad one for the world economy.
This time, the world is suffering from shocks originating from two principal pressure points: oil firstly, and then China. Contrary to opinion, the victims of the oil price rout are not just oil producers like the OPEC nations and Russia. The sufferers of this price plunge actually span the entirety of global markets.
Lower oil prices may be good for consumers and importers alike, but it is a disaster to producers as well as stock and bond market investors – from New York, to London, Norway to Saudi, and Far East Asia. The only dry spots are the oil shorts and inverse ETF traders.
Despite the tumultuous start to the year, data and analysis suggests that the down trend is far from over. There is still ample room for the markets to keep sliding, hence, those that see current market prices as bargain opportunities will be wise to exercise caution and/or patience.
What is the link between plunging oil prices and stock/bond market routs?
The link is high-yield bonds (a.k.a Junk bonds), which also usually serves as bellwether for the stock market. And historically, sell-off activity in the junk bond market is usually followed by sell-off in the stock market.
Junk bond investors are usually part of the first few people to smell looming danger, because of the very nature of their asset class. The junk bond investors are creditors to seemingly riskier businesses, which tend to be among the first victims and signs of economic stress.
When the lenders (bond investors) to the companies start to show nervousness and initiate a sell off of the companies’ debt, the equity owners (stock market) tend to follow. Hence, activity in the high yield debt market kind of precedes the stock market.
According to some estimates, energy companies make up about 20% of the junk bond market.
As a starting point here is the link between the junk bond market (high yield bonds), as signified by the SPDR Barclays high yield bond index and the oil price:
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Oil price vs Junk bonds:
As we see in this chart, price activity in the oil market significantly affects the high yield bond market. Looking from the left hand side down to the right hand side of the chart, we see that the oil prices fall is significantly correlated with stress in the junk bond market.
Next, we look at the relationship between the junk bond market and the S&P 500, one of the most closely followed stock market indices in the world.
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Junk bonds vs S&P 500:
The chart shows that sell off in the high yield bond market correlates with a sell off in the stock market. There is also the theory that the junk bond market was going through a bubble as a result of the US Fed easing program. Following the hike in rates, a correction ensued.
Next we look at the relationship between junk bonds and the stock markets of emerging economies, starting with the mother of them all: China.
China:
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South Africa:
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Brazil:
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And then Nigeria:
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The chart above shows the Nigerian market falling steeply in reaction to the headwinds.
We can say with a measure of assurance that further slides in the junk market will cause the downtrend in the stock markets to continue.
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But what do the charts say for the outlook for junk bonds themselves?
As the chart shows, junk bonds have a bearish outlook. Having already broken a support level as shown by the light blue line above, it seems they are headed back to 2008 levels, as investors continue dropping their holdings of high yield bonds.
They’re continuing to sell off because of the outlook for oil.
What then is the outlook for the oil market?
In 2015, oil at $20 sounded crazy. Fast forward to 2016, and it is no longer hard for the mind to accept.
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Iran is now re-entering the market as its sanctions are now lifted after it complied with agreements to curb its nuclear activities. It will be interesting to see how the oil market receives Iran (which says it can boost its exports by 500,000 barrels) this week.
(Posted From Nairametrics)
Investment advisors are a combination of money managers, financial educators, and counselors. It’s this last role of counselor that becomes important as market volatility ramps up. Learning to handle customer’s investing fears and anxieties makes the financial advisor a better advocate for their client.
To keep volatility at bay, the advisor can educate the client about market returns and history, the importance of asset diversification, and how to manage the expected anxieties that accompany market declines.
Set the stage early to cope with the inevitable market drops. The investment education and collaboration starts when the client walks through the door. Prepare the client by including a risk tolerance and risk capacity quiz and conversation. These tools inform the advisor about how a client might react to the normal ups and downs in asset values. The risk conversations smooth the way to create the client portfolio.
Next, the advisor can include a conversation about investment asset characteristics as part of their educator role. When the client understands historical market returns, they are better equipped to cope with volatility. (For more, see: How to Be a Top Financial Advisor.)
Finally, let clients understand that market volatility is expected and occurs periodically along with changes in the business cycle, global occurrences, and national economic events.
The knowledge of how each asset class has performed in the past is an important tool when setting up the initial portfolio. The proper setup helps clients deal with market volatility over the long term. The more risk-averse investor – such as a client at the tail end of their earning years – will weight bonds more heavily than stocks, for example. Whereas the aggressive individual – such as a saver closer to the beginning of their career – holds a larger percent in riskier equities.
Gus Sauter, senior consultant to Vanguard Group, Inc., told The Wall Street Journal that “one of the most common mistakes investors make is not thinking holistically about their portfolio.”
In other words, think of the big picture, not how each specific holding or account is performing. (For more, see: Financial Advisors Need to Seek Out this Group NOW.)
With a broadly diversified portfolio, when emerging market stocks fall, U.S. equities may remain stable while bonds advance. Less correlated investment assets lead to greater diversification which tempers portfolio volatility.
When stock funds are soaring, a diversified portfolio won’t go up as much, but conversely, neither will it fall as low during a market correction.
All the preparation won’t help if the investor panics at the first sign of market volatility. The advisor needs to be prepared for those phone calls after a big market drop to talk the client off the figurative ledge.
Many investors want to sell, after a big market decline and get out of the market altogether. The advisor must be prepared for some hand holding and refresher education. (For more, see: Money Habits of the Millennials.)
Research studies show that investors’ portfolios typically perform worse than the overall market due to mental money mistakes. If the investor jumps out of the market at the first sign of a decline, then he or she is selling at the bottom. The flip side of this behavior is when an investor gets swept up in market euphoria and buys back in as stocks trend toward their highs. This counterproductive trading activity causes the investor to buy at the highs and sells at the lows. The advisors job is to make sure this doesn’t happen by being available for hand holding and education.
DALBAR, Inc.’s 20th Annual Quantitative Analysis of Investor Behavior 2014 Advisor Edition not only confirms this, but reveals the gap to be especially wide. Over the past 30 years, the S&P 500 returned 11.11% per year while individual investors have averaged only 3.69%.
Trading too often yields subpar investment returns. Not only does buying and selling at inopportune times create lower returns, so does excessive trading which increases commissions and reduces profits.
An often overlooked benefit of market volatility is the opportunity to invest additional funds during market dips. By keeping some cash on the sidelines, when the inevitable market decline occurs, the advisor can invest the clients’ money at bargain prices. Similar to buying on sale. (For more, see: How to Help Clients Spooked by Volatility.)
The best advisors remain in touch with their clients during market ups and downs and shepherd them through the investing landscape with a combination of education and support. (For related reading, see: How Financial Advisors Can Adjust to Robo-Advisors.)
ELOKA FINANCE CONSULT 