The Nigerian Exchange witnessed a third consecutive week of pullbacks amid daily sessions of mixed sentiments and selloffs that signal correction underway even as more audited financial statements underway. These would expectedly trigger buying interests and flow of funds into equities again a situation that could reverse the trend, especially financial service sector earnings reports and corporate actions, being the most consistent sector in dividend payout. The dividend growth in this industry will have positive impact on the exchange and individual stocks as expected.
Market corrections can test even the most seasoned investors, but history suggests that patience may soon pay off.
The recent decline of the NGX was confirmed as pullbacks, after which recovery follows, but the good news here is that If this downturn follows historical patterns, reversal is underway to take away this fear, putting this pain behind us as we invest and trade intelligently by following the trend.
Based on century-old data, the typical correction bottoms out at a 13.6% decline and takes about four months to recover. If history holds, that would put the market’s low point at around mid-May, with a full rebound by September. Of course, there’s always the risk that this correction turns into a full-blown bear market. However, probabilities suggest otherwise, but 70% of corrections never cross the 20% loss threshold.
For investors, this presents both risks and opportunities. Staying disciplined and focusing on quality investments is key. In today’s Smart Money Move we highlight two large-cap stocks with strong fundamentals that could thrive even amid market turbulence—Aradel Holdings and Presco—while also flagging one company that may be struggling to keep up.
In the main topic, we take a deeper dive into what history tells us about corrections versus bear markets, and what investors should be looking out for next. And for a little relief from the numbers, The Lighter Side will feature an amusing take on market timing, because sometimes, you just have to laugh at the absurdity of it all.
When markets pull back, the strongest companies stand out. Investors looking for long-term winners should focus on businesses with solid growth, strong demand, and competitive advantages. Today, we’re looking at two large-cap stocks that fit the bill as mentioned above and one that might not which is MTN Nigeria that is till posting negative earnings. They say “timing the market” is a fool’s game. But let’s be honest—who hasn’t tried? Take Bob, for instance. Bob gets nervous every time the market drops and sells everything—right before a rebound. When stocks surge, he jumps back in—just in time for a pullback. Year after year, Bob manages to lose money in a rising market. Sound familiar?
A study once showed that the worst market timer in history—someone who only bought at peaks and sold at bottoms—still ended up making money over decades. Why? Because markets, over time, trend upward. The lesson? Even if your timing is terrible, staying invested beats sitting on the sidelines. So, if you are feeling anxious about this correction or selloffs, just remember, as long as you are not investing like Bob, you are probably doing fine.
The benchmark NGX All-Share index is now pulling back, down more than 3% from its February highs. But is this just a typical pullback, or the start of something worse? If the expected more corporate earnings fail to make positive impact.
Historically, on the NGX, 70% of corrections never turn into bear markets. And given the improving economic fundamentals, most analysts believe this will remain a pullback or correction rather than a prolonged downturn. For investors, the key takeaway is this while short-term volatility can be painful but good for smart traders that trade pullbacks of 5% to 15%, long-term trends remain favourable. As history has shown, staying the course typically leads to better results than panic-selling.
The latest market pullbacks or correction has rattled nerves, but history suggests it may be running its course. If the past century is any guide, the benchmark indicator- the NGX All-Share index (ASI) should bottom in the next two weeks and recover by early fall. While there’s always the risk of a deeper decline, most corrections don’t turn into full-fledged bear markets.
For investors, this is a reminder that sticking to a disciplined strategy is more important than reacting to short-term swings. Today, we are highlighting Nahco and United Capital as stocks with strong fundamentals that could outperform in the long run, while cautioning against Union Dicon, which faces ongoing challenges.
As we look ahead, keep an eye on key economic data, earnings reports, and market sentiment. If history holds, patience will be rewarded as we effectively combine fundamental and technical analyses while taking trading and investment decision. Watch The Charts and Price Actions Below:
Aradel Holdings Weekly Chart
Presco Weekly Chart
Livestock Feeds Weekly Chart
Union Dicon Weekly Chart
