As more Papua New Guineans consider their options for protecting or growing their future wealth, there is increasing interest in investing in companies listed on PNGX. The more people that start investing in the market, the more types of companies will be attracted to the market for investing in.
Many potential investors are hesitant about how to start. To help hesitant first time investors, we asked someone who has been investing in PNG for several years how they started and what they have learned.
Samson Narokobi is an aircraft maintenance engineer who has been investing in PNG companies for over 20 years. Today he gives his experience on how he started investing to help more people get into the market.
Many people want to invest but aren’t confident to start. How did you get started investing in PNG companies?
The idea of investing came to me initially from the 1994 Forrest Gump movie, when Forrest said “we didn’t have to worry about money no more” after Lieutenant Dan invested in Apple shares for him.
In 2001 I had access to just over K10,000 and my father suggested I bought Treasury bills from the central Bank of PNG. I didn’t really understand the details but I had an idea of the concept of investing for a profit. So I trusted the advice and from what little I knew it seemed like the rational thing to do. The return was so low for me, around 1.8% for 6 months, that I was totally discouraged so I didn’t “roll it over” as I was told to at the time as I didn’t know the ‘power of compounding’.
In 2002 when BSP went public I was advised by a relative to invest as K1.00 per share seemed like a bargain. I started with 2000 shares and added about 690 more over 11 years. By 2013 my initial K2000 had increased 805% to K16,100 when BSP reached K8.05 in addition to the profits made on the other 690 shares. I had an average return of 10% annually.
There are some potential investors who want to learn more before they start investing. How did you learn about investing in the stock market?
Back in the early 2000s there were seminars on stock investing organised by POMSOX (now PNGX). I saw advertisements in the paper and attended two. I believe PNGX will restart holding seminars soon. I attended BSP and Oil Search annual general meetings and would briefly go through their annual reports. I never got a deep understanding until I started reading books like “Money: Master the Game” by Tony Robbins in 2015 and about great investors like Warren Buffett.
I also follow a range of podcasts and investing YouTubers. I met some of them in Omaha in the USA for Warren Buffett’s company, Berkshire Hathaway, shareholder’s meeting which was a huge learning adventure on its own.
Some investors buy shares to hold for long term growth to make a profit. Others buy and sell, trading regularly to make a profit. Do you buy to hold or do you buy and sell for profit? Or both? Why?
I do a mix of both now. Majority of investments are held long term in companies I have a high conviction in. “Time in the market” long term has been proven to work the best instead of trying to “time the market” short term. Having said that, a minority of investments are in short term trades, like 2 to 4 weeks. This is only when I see low risk and extremely great opportunities. It takes a bit of time to confidently buy and sell for short term profit. Because the negatives are the repeated high fees, high risk and it’s generally time consuming, it’s not recommended for beginners.
Most companies listed on PNGX pay dividends. Some offer dividend reinvestment schemes where you automatically buy new shares instead of receiving cash payments. Do you reinvest your dividends? Why?
I highly recommend dividend reinvestment schemes where possible. It’s all automated to compound returns faster for you. Reinvesting dividends is basically all I’ve done in recent years. Purely for the power of compounding to pick up speed and allow money eventually to do all the work for you. It’s slow initially but as the years go by your wealth picks up speed fast!
First time investors can be unsure about contacting a PNG stockbroker and what to ask them. What questions would you ask a stockbroker the first time you contacted them?
I used to ask for analysis reports on the major PNGX listed companies from my PNG broker with 12 month price targets and a brief history on performance and how they are trending. I would also ask the brokers for company annual reports and for their stock recommendations. If there’s a history of dividends I’d ask when the next one will be due and at what percentage. I’d also ask which companies are at their lowest and highest price for a year and for their current price. The best question is which companies are at their cheapest compared to their earnings, which is usually determined by the price to earnings (PE) ratio.
What suggestions would you give to people who want to start investing in PNG companies on PNGX?
Do not over think the process.
Invest as early as possible with what you can afford to live without for years. If it’s a struggle at first this could mean you have to commit to save about K200 per month for a year and start investing in a strong company on the PNGX with a great track record first.
Always continue to learn the process as you invest, compound your returns by reinvesting dividends and kina cost average periodically by buying small amounts of the same companies regularly.
Always invest for the long term to allow the compounding effect to make life changing amounts. The longer you invest, the more you allow money to work harder for you instead of you working harder for money.
Women’s business and digital literacy DEFINE SKILLS Program training registrations open
The 2022 DEFINE SKILLS Program (reported last week) supports women’s economic empowerment. Registrations are now open. With limited seats available, interested persons are encouraged to register early for this free training.
The complete program information pack is available at www.defineinitiative.org.
The DEFINE Initiative is delivering the 2022 DEFINE SKILLS Program because a healthy MSE sector with prospects for growth is an essential element of a robust economy for Papua New Guinea.
For further information on the 2022 DEFINE SKILLS Program, you can contact skills@defineinitiative.org or browse www.defineinitiative.org.
The information in this article is general in nature and you should take care to inform yourself about the specific characteristics of a particular investment before making a decision to invest in it. PNGX recommends discussing your investment objectives and needs with a stockbroker or qualified financial adviser. In PNG, you can either contact JMP Securities Limited (enquiries@jmpmarkets.com) or Kina Securities Limited (wealth@kinabank.com.pg).
By following these articles and reading more information available on the PNGX website (www.pngx.com.pg) you can build your wealth by investing in PNG.
