Investing in Shares

I owned stocks in 1St Bank (Nigeria) Plc and Zenith Bank Plc. These are investments that could be termed as foreign stockholdings because they are not domicile here in the United States. They form part of my investment portfolio before I relocated to the U.S. in early 2008. My investments in banking stocks were informed by profitability peculiar to that industry, especially under Nigeria context. Between the year 2005 and 2006, Nigerian stock markets was seen as the fastest and most profitable in the whole world. Share value could be doubled or tripled within a period of six months. Most Wealthy American investors who invested in Nigerian blue chip companies had a great fortune during these periods. I bought 500 units of shares at Zenith Bank and had 250% share appreciation; 220% gains of 300 units at 1st Bank within a period of 9 months. It was an investment that fulfils a general purpose for investing in long-term investment portfolio.

My preference for investing in long-term stocks is capital appreciation. These two banks were my main target because of their history of low dividends. History shows that corporations that pays low dividends fares well in capital gains. Bodie, Kane, & Marcus (2009, pg. 37) collaborates this by affirming that shares in low dividend firms presumably offer greater prospects for capital gains, or investors would not be able to hold these stocks in their portfolio. Are stocks in Banks and Financial institutions the only most profitable? “No”. Would I want to expand my portfolio with risk free investments in order to balance my portfolio? Certainly “Yes”. At this point, I am interested in buying stocks in U.S firms. But I am leaning towards corporate and municipal bonds. This is in consideration to fixed income that is accruable to investors of these securities.

Bodie, Kane, & Marcus. (2009). Essentials of Investments (8th ed.). NY: Mc Graw Hill.