The speaker, Magnus Okeke, began the video, which was titled “Intro to Stock Investing,” by welcoming attendees.
The presentation covers six main questions:
- What stocks are.
- Why companies go public.
- Why people buy stocks.
- How to buy stocks.
- What to look out for.
- The platforms that can be used to buy stocks.
The speaker, Magnus Okeke, identified himself as a recruiter with a nine-to-five job who also invests in stocks on the side. He is “a huge, huge fan of privacy” and reassured the audience that he would not ask for their location or send DMs asking for money.
What Stocks Are and Why Companies Go Public
The speaker started investing in stocks during the pandemic after taking courses in various subjects, including customer support and product management, and attempting to learn forex trading in 2017.
Stock investing can be thought of as “buying a slice of a company”. Companies are typically publicly listed, and if you want to confirm if a company is worth investing in, you should check if it’s publicly listed. The speaker gave the analogy of a six-slice pizza, where a company may keep three slices for themselves and offer the other three to the public for investment or purchase.
Companies go public for several reasons, primarily to get investors’ money because they need to grow and are not thieves. When a company wants to go public, they usually conduct an Initial Public Offering (IPO). An IPO is when a company announces they are “no longer a private company” and will publicly declare their earnings and losses so investors can see their numbers. The most popular way to list a stock is through an IPO, although other methods exist.
The speaker explained that the founders and early owners of a company retain most of the shares, so when new people buy the stock, the price goes up, which benefits the original owners. Mark Zuckerberg, for example, owns the most Meta shares “by a significant margin”.
To successfully take a company public, a “very, very good team” is needed. The speaker used Canva as an example, mentioning they hired Kelly Steleberg, who had previously worked with Zoom and other companies, to review their numbers before their rumored IPO. Going public also opens doors for partnerships and allows the company to gain access to things a private company would not.
How to Buy Stocks and Platforms to Use
To buy shares, an investor needs to find a broker. While stockbrokers in suits still exist, modern investing often uses brokerage platforms. Investors no longer need to physically give money to an individual to buy stocks for them; they can now do it from home.
Examples of brokerage platforms mentioned include:
- Trove (for Nigeria).
- Weebull (for the US and Australia).
- Trading 212 (for the UK).
- Bamboo.
- Chaka.
A significant development in modern investing is the ability to buy fractional shares, meaning investors can buy a small fraction of a share for a lower amount, such as 5,000 or 10,000 Naira.
The stock market is open Monday to Friday. For the US market, it typically opens at 3:30 p.m. and closes around 10:00 p.m. Nigerian time. The Nigerian stock market opens at 9:30 a.m. and closes at 2:30 p.m..
Stock markets are governed by the Securities and Exchange Commission (SEC). The SEC makes the rules for how stocks are traded and invested. The Nigerian SEC website is sec.gov.ng.
What to Look Out For
The speaker recommends using Yahoo Finance to analyze stocks, mentioning he has used it every day for the past two years.
The key metrics to check when analyzing a stock are:
- Market Cap: Long-term investors should favor stocks with a “huge market cap” because it suggests dominance and stability. Small companies with low caps can be volatile.
- PE Ratio (Price to Earnings Ratio): This is calculated by dividing the price of the stock by the earnings per share (EPS). It gives an investor a sense of the premium they are paying for the stock. A high PE ratio is not good; a “lower PE ratio is always better”.
- Financials (Balance Sheet): Investors should examine a company’s balance sheet to see its numbers and debt. Excessive debt (e.g., 100 million or 200 million) is a red flag.
- Analysis (Earnings and Revenue): A company’s earnings should be consistently met (indicated by a green display on the chart). This section also shows how many analysts rate the stock as a “buy,” “hold,” or “sell”.
- Company Profile: This is public information and includes the CEO’s name, salary, birth year, the company’s sector, industry, and number of employees.
- SEC Filings: Public companies must file forms like the 10Q (periodic financial report) and 8K (corporate changes and voting matters) with the SEC, which is also publicly accessible.
The speaker also advised investors to “never invest in any company [they] don’t know what they do”.
Investment Advice
In the event of a financial crisis, the speaker advises investors to:
- Don’t overinvest: Only invest a comfortable percentage of your income (e.g., 10%, 20%, or 30%), never a huge chunk of your salary or allowance.
- Diversify: Invest across different sectors (e.g., tech, robotics, healthcare) so that a drop in one sector does not wipe out your entire portfolio.
Regarding debt, the speaker advised against any debt that an individual cannot pay back.
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