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Opinions of Saturday, 30 April 2011

Columnist: Teye, Sophia Kafui

Track your investment

The importance of tracking your investment cannot and should not be under-scored by any serious investor. Tracking your investment helps you discover salient information that can help you take certain crucial decisions concerning your investment. You can track your investment by reading news papers, listening to international and local news, scrutinizing annual reports of the company you have invested in and checking trading results from reliable sources. Tracking your investment could be evaluating the performance of your investments in order to ascertain the need to continue with the investment or disinvest. It also involves checking all receipts of shares bought to ensure the number of shares you applied for has been allocated to you and if not find out from your broker or registrar what the cause could be.

Furthermore, shareholders who have already transferred their shares to the Securities Depository Company Ltd (GSD) can also check to see if the status of their shares is pending or available. If they see a pending status on their GSD statement, it means that particular stock has not been approved by the registrars as a result of a mistake from the broker such as uncertified client Identification, name difference, wrong number of shares quoted on the GSD form and signature difference of the shareholder. It could also be due to the fact that the broker has not posted your shares to the GSD. You should therefore contact your broker to ensure the shares are available. You only detect this anomaly by tracking your investment.

Why should you track your investment?

Money is hard to come by so if you put your money in any investment package you should cultivate the habit of continuously following up on your investment to see how it is doing. This will make you an informed investor. The information you will get from tracking your investment will help you decide whether or not to continue with the investment or cash out.

How do you do that?

There are so many ways to have up-to-date information on your investments. It is your right as a shareholder to be informed about your investment but you need to make a conscious effort to get it. Some other sources of information on your investment are not direct. The under-listed are some of the ways of having up- to -date information on your investment.

It is necessary to maintain a correct address at all times. Giving correct addresses when completing an investment application form is one of the ways of tracking your investment. This is because notices of annual general meetings and other relevant correspondence are communicated through this medium.

Websites: you can visit the official website of the Ghana Stock Exchange, www.gse.com.gh and click on market information to see a list of all listed stocks on the GSE, their price changes and the closing price for the day. If there is a negative price change, you should find out what the cause it is and decide whether to continue to hold your stock or sell it. You can also visit Bank of Ghana website www.bog.gov.gh or www.mofep.gov.gh information on macroeconomic indicators like inflation, interest rate, exchange rate and other salient information that can affect the performance of your investment. Business and financial times Ghana, Graphic business, www.myjoyonline.com/finance, www.ghanaweb.com/business,www.businessghana.com,www.modernghana.com, www.theghanaianjournal.com are among authentic sources of finance news. If you are investing across continents, you can try and visit, www.ft.com, www.bbc.com/business, www.proshare.ng, www.economist.com, www.reuter.com and so on. Also, almost all the brokerage firms in Ghana have websites that display information of all macroeconomic indicators and prices of their managed funds. You can try those ones too.

• Know the registrars of your shares: Registrars of shares keep an up-to-date record of all stocks bought, which includes names of individual shareholders, shareholdings, addresses and signatures amongst other salient pieces of information. If you know them, you can alert them to make changes to your address and other services they offer shareholders.

• Annual reports: When you get the annual report, make sure you read the Chairman’s report and the MD’s report. Carefully scrutinize the financial statement and if you do not understand the contents, please read the notes section. The note gives detail explanations of all line items in the financial statements.

• Attend annual general meetings and ask questions: If you attend annual general meetings, you will meet the board of Directors and other top management personnel and question them on anything you don’t understand or anything you are not happy with.

• You can get a broker to manage your portfolio of investments for you.

• You can visit the office of the issuers of the security and find out how your investment is doing.

• Audit review and reports: audit reports from external auditors can be a good source of information for your investment.

Determining the value of your investment

If you are investing in shares, it is the closing price of the share multiplied by the number of your shareholding to get the monetary value of your investment. For instance, if you are have 1000 GCB shares and the closing price of the stock for the day is GH¢ 2.53, the value of your shares is 1000*2.53. So the monetary value of your investment is GH¢2530.

What do I do when my investment is doing bad?

Talk to a broker about the way your investment is taking a downward trend. Try and find out what the causes are and ascertain whether it is a short term fluctuation in prices or it is something that would exist for long. If the broker convinces you with facts and figures that it is temporal or permanent, the decision is yours. It is always advisable to do informed investments not investment based on sentiments. In recent years, shareholders to TRANSOL, GOLDEN WEB, ABL, CFAO, ETI, CLYDESTONE and CPC have been complaining of losing a portion of their investment in the form of capital loses, yet, they still keep the stocks. Their action is not bad though what is important is the reason for them keeping the stock is it sentimental or factual? If their decision to hold on to their shares is purely research motivated and not sentimental, then that is a step in the right direction. It is also useful to find out through your own reading, research and enquiry from brokers if the stock is mispriced and whether there is a possibility for the market to correct itself. Your decision to disinvest should be based on what your investment objective is.

On the contrary, if your shares are doing well like Standard Chartered Bank shares, Ghana Commercial Bank shares, Ecobank Ghana shares and other well performing stocks what do you do? Should you continue to hold onto it or sell it and put the money in another investment? Well this is quite a dicey situation but if you are informed through research and other authentic information that the shares price will not fall and huge dividend will be declared, then you can keep them. But if you should find out through research the stock is mispriced and the market will correct itself soon and hence a price fall, you can go ahead and sell.

You can direct all comments, suggestions and additions to skafuiteye@gmail.com, skteye@gmail.com and www.skafuiteye.blogspot.com

©, Sophia Kafui Teye

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