“If you establish a democracy, you must in due time reap the fruits of a democracy.”The British literary icon and politician, Benjamin Disraeli, who penned the above quotation in the 19th century has remained one of the world’s most visionary leaders.

His endorsement of democracy and its fruits have taken hold in Nigeria, nearly 200 years after he uttered the historic statement.

The struggle for the soul of Nigeria today is economics, wealth creation, and profit. The soldiers in this war are the millions of share holders, who turn private funds into the market in search of enhanced income.

The most successful democracies are also the most successful market economies. It is within these democracies and markets that some of humanities most enduring ideas and doctrines are nurtured and unleashed into the world.

Unquestionably, long term market participants in properly managed markets in due time do reap the fruits of the market. Even in markets that continue to struggle for proper regulatory regimes, early market participants in leading industries and corporations benefit from long term benefits of the market.

For the Nigerian economy, the stock market is one of the most accurate indicators of our financial health. It indicates the mood and confidence investors repose on our economy. In both short and long term basis, a vibrant and well regulated stock market will have positive impact on the Nigerian economy.

A well developed stock market provide the engine necessary for Nigerians and others who invest in our economy to navigate wealth creation within the economy, while providing a market driven source for capital accumulation for both private and public institutions.

Stock and equity investments are characterized by the ups and downs of the market. Traditionally, there will be periods when the market goes up. This is in turn followed by periods when the market goes down. For the long term investor, the primary focus should be on regulatory mechanisms in place to guide the conduct of market participants.

Cyclical movements in the market are necessary parts of the market equation. They do not trump the important maxim that stock and equity markets remain the most lucrative source of genuine wealth creation ever devised by man.
A ten year segmental review of the Dow Jones Industrial over the 100 years 1908 to 2008 provide a vivid conclusion.
The above 100 year gauge measures stock market returns in the United States. It shows superior returns on equities listed or that are part of the Dow Jones Industrial average. An indexed fund investment that tracks the average will mimic the above returns. Selective investment on the stocks on the averages will provide varying returns.
The implication for the Nigerian long term investor is straight forward. The United States equities market did not come under proper regulation until the second half of the 20th century. The lax market system during the first half of the 20th century did not damage investments in equities compared to other investment vehicles.

The above data is not a short term data either. It is clear information on the formidable nature of the stock market for serious long term participants.

In the 100 years above, the United States survived two world wars, nearly half a dozen small foreign wars, the great depression, multiple recessions, civil uprisings, oil shocks that included the 1970s oil embargo, terrorist attacks, etc.
The enduring value of the stock market converted all these events into the short term and whatever market disruptions that may have occurred, if viewed from a long term perspective, are short term market noises.

Short term engagement and involvement in the stock market is unpredictable and can be compared to gambling. It is characterized by chaotic volatility. It lacks a disciplined approach and if the investor adopts the notion that wealth creation is a war that must be won, short term engagement is a pre-requisite for losing that war.

The Warren Buffet Rule Unarguably the most successful stock investor of all time, Warren Buffet, the Oracle of Omaha, and the helmsman at Berkshire Hathaway has left a permanent foot print worthy of emulation by all serious long term investors.

Thousands of investors go on pilgrimage annually to his corporate headquarters in Omaha, Nebraska, to listen to him detail the investment philosophies of his company’s management team. (Berkshire Hathaway is publicly traded and share holders across the world come to their annual meeting to learn and understand the strategies that the company would adopt in its core businesses).

In the after math of the 2008 market collapse that began in the United States and cascaded into a global phenomena, Berkshire Hathaway lost nearly $25 billion in market capitalization in the market crisis. However, the Oracle was not amused. As global markets headed downhill, the animal instinct in him resurrected. He entered into the market, swooping in on deals.

He invested billions to acquire interests in General Electric, $6 billion in Goldman Sachs, acquisition of whole rail transport and shipping system – Burlington Northern, acquisition of an entire utility, etc.

He is driven by one fundamental investment principle, i.e. invest only in companies that you have thoroughly researched and you understand. For Buffet, the best quality an investor should possess is temperament, not intellect. Success in the market is not about being with or against the crowd. He argues that the market will go up and down, in both good and bad times. To be successful, you must remain focused on your long term goals. Do not change those goals, no matter what the market does.

Another important rule that a long term investor should remain focused on is (1) Do not lose money. And rule No. (2) Never forget rule No. 1.

A sensible investor should not engage the market as a gambler or with a cavalier attitude that says it is okay to lose money. If you do your home work, there are companies out there that have shown that they are in business to survive, irrespective of market conditions.

These businesses reward their investors with consistent returns on invested assets. Both the investors and these corporations are guardians or our democracy and the seeds of our of market system. There is no better time to engage them as a long term value investor than when their values have been discounted by market forces that are not of their making.