Is December a good time to buy stocks for capital gain?

Posted by Felix Okoli on Tuesday December 24, 2013 at 9:0:38:

The holidays are already around the corner and what we see in the stock market as the year runs out is a steady fall in the prices of listed shares.

People do more spending in Nigeria before and during Christmas and so the question in on whether it is normally a good time to buy.

If you ask me, I prefer buying stocks around this time with the hope of selling them within 3 months just to gain on some capital appreciation.

Actually, I'd advise you start buying stocks around October, November and early December just to be able to lock in some profits by buying shares when they have dipped in price.

Stock prices tend to fall around this time since a lot of people would be selling off just to keep some cash for celebrating the year end. Some would also be selling their shares just to be able to meet some expenses as January approaches.

If you are an investor who is just looking for a smart way to make money from Nigeria's stock market in the short term, say Q1, I'd advise you look for stocks that have fallen a bit in price and are listed at attractive prices in the market.

On way you can find out stock prices in Nigeria is by looking through the CSCS website. There you'd see a list of the daily prices of shares of many companies.

You could look for a bank stock or manufacturing company stock that is at about N1 to N5 and buy some units there. You may spread your investment across certain sectors you understand and when stock prices jump a bit before April, you'd be in a better position to sell.

What I've noticed in Nigeria is that stock prices tend to start falling after Q3 and peak as Q1 ends. This time normally starts from October to March and it's mostly good to buy and sell during the start and end of this period.

Which stocks should you buy in December? Which would I buy?
Well, it depends on your capital basically. I would buy shares of companies like the following:

FCMB
Fidelity
HONEYWELL FLOUR MILL PLC
MAY & BAKER NIGERIA PLC
STERLING BANK PLC
UNITED BANK FOR AFRICA
UNITY BANK PLC
UTC NIGERIA PLC

Those are just some of my preferred stock picks If I were to buy at this time. I think they'd earn some good returns within 3 months.