How not to miss out on stock market fortunes, teaches Brac EPL research head

When shares of the British American Tobacco Bangladesh Company were trading at the Tk100-150 range on the Dhaka Stock Exchange (DSE) back in 2007-08, a Dhaka University Finance student Salim Afzal Shawon made some bets there with his small savings and scholarship money.

Two times in a row, he made decent short-term profits, and realised them which led him to fall in love with the market of enormous financial opportunities.

And, that love of his is still intact as he built his career in the very market. Having obtained CFA Charter, which is a top global recognition for the world's investment professionals, he is now serving Brac EPL Stock Brokerage – a top-tier brokerage firm – as its research head.

Looking back, he learnt a great lesson on how to not miss out on fortunes in the stock market.

The British American Tobacco stocks, if he had not sold off for quick gains in his student life, could have been generating dividend income equal to his invested capital every year now, while the stock could have generated around 22 times capital gains.

Each share of the multinational was trading at around Tk150 back then, which is now at Tk518, despite the fact that one share turned into nine due to stock dividends.

"This should be the way of building fortune in the stock market, instead of booking quick profits," Salim Afzal Shawon said in a recent interview with TBS.

For that, fundamental analysis to forecast the future of a company is a must and excelling in it will bring similar opportunities, he believes.

Strong companies which are capable of creating value over years, have competitive advantage in respective industries, and practise good corporate governance are the ones he prefers for investment.

As the head of research, he keeps studying such companies and advises the clients so that they can make the best out of the market.

For instance, Square Pharmaceuticals, the pharmaceuticals market leader, is growing in business. But its shares have been depressed in the bourses for years to frustrate short-term profit lovers.

A patient investor can look into such stocks for fortune building, he said, adding that Marico Bangladesh, among a few others, is one of his favourites.

Of course, the success depends on who is investing as some are more comfortable with short-term investments, and some are not.

"Stock market is addictive to those who once made profits here," he said.

"Real investors barely leave the market, they just stay cautious on the sidelines during adversities and come back again," he observed.

Even the foreign portfolio investors, who have been selling more than buying Dhaka stocks for years, will come back at the right time, he believes.