Continue reading »]]> Thank God! It’s the month of love and I am giving away my new book free of charge (FOC). Did you read right or are you sleep-reading? Take a pin and pinch yourself because it’s real. I am giving away my new book to promote knowledge and thus improve the thought-life of my fellow Africans. A man (woman included) they say cannot advance more than his quality and quantity of thoughts –Think and Grow Rich, Science of Getting Rich, etc.

 

Ok, I am sure you are getting into the flow of things by now and the initial shock is waning. There is this common saying that if you want to hide something from Africans, just simply put it in a book (Africans don’t read) and this saying can easily be justified by looking at the state of Africa – corrupt leadership, highly poverty-populated, poor legal structure, increase-genocide, law enforcers become premier law abusers and the list of formal illiteracy symptoms goes on.  

 

The great Indian economist and the first Nobel Laureate – Amartya Sen – demonstrated that famine is not caused by the availability of food supply but the inability to acquire or entitle oneself to food through the market. You don’t really need to look too far for an example, just look at the South-South part of Nigeria, they have one of the most highly demanded resources in the world – CRUDE OIL – in their land and they live in abject poverty.

 

On a personal level, you could be very wealthy (resources, talents, etc) and be the poorest person in the world because you cannot maximize your wealth through the market. Maximizing your wealth starts from educating and exposing your mind to fully understand the best way to get this done. In 2007, the first Ethiopian Commodity Exchange was born to alleviate poverty in Ethiopia; Ethiopia has previously suffered the death of a million citizens through starvation because there was lack of access to abundant food. Please, click HERE to watch video.

 

There is definitely no substitute to education and this is why I am giving you my new book without money-cost but there is definitely a cost. Before, I tell you what that cost is, I will like you to understand the value of what you are getting for free. It took me more than Five Hundred and Fifty Thousand Naira (about 3, 700 USD) to gain this knowledge from a leading professional and ethical exchange trainer in the world – Dubai Gold Commodity Exchange.

 

 

This book has been simplified for your understanding of the commodity market. People find it difficult to pass the professional exam at their first sitting but I have made this book so simple that you could easily understand other books if you choose to go deep into it. This book is definitely a beginner’s guide to commodity trading. I would also like to give you some advantages of investing in commodity trading that you may not be aware of;

 

 

 

 

Hedging: Commodity Exchange can be used to manage risk by establishing a futures position that is equal and opposite to the position held in the physical segment. If you buy a 50 million naira worth of physical crude oil at 50 Naira and hoping the price would rise to 100 Naira but it fell to 40 Naira at the point of sale, you have lost 10 million naira with 40 naira price. If immediately you buy it 50 Naira, you sell it in NYMEX (one of the oil commodity market) at N60. Even if the price goes down, you have hedged your risk.

 

Leverage: Commodity futures operate on margin; this means that only a fraction of the total value you need to invest needs to be available in cash in the trading account. Example: If you need to invest fifty thousand naira (N50, 000) on any of the commodities like gold, silver, crude oil, stocks, etc, you may only need to provide two thousand naira (N2, 000) only to reap the profit of what fifty thousand naira would give you. You cannot do this for any normal investment like the stock exchange, real estate or term deposits where you have to provide the full fifty thousand naira to reap the full profit.

 

Commission Costs: The commission cost when dealing with commodity futures is very small compared to other investment like shares and also very small in dealing with the underlying product. Imagine the cost it would take to buy physical barrels of crude oil – logistics, warehousing, man power and skilled workers compared to electronic commission where you just pay a little fraction of the capital invested once unlike the stock market where you pay commission every time you buy and sell your stocks.

 

Liquidity: Speculators are allowed in the commodity exchange hence the liquidity but how liquid a commodity is depended on the contract you take. For gold, crude oil, stocks are readily liquid but for agricultural products like maize, coffee, etc especially when they are in season are not easily liquefied.

 

Use of Profit: This is the only investment I know where you can use your profit without actually selling off your capital. In real estate, you must sell the properties in order to make use of the profit; in bank investment, you must wait till the end of the investment period (30 days, etc) before your profit can be sent to you account; in the stock exchange, you must sell off the shares to get the profit on capital gained but in commodity exchange, you can use your profit without offsetting your position.

 

Zero Value: The price of commodities can never and has never gone to a zero value unlike the case of the stock value of Enron which went from $95 to less than $1 when the company filed for bankruptcy. Another beauty of the commodity market is that all commodities do not rise and fall in unison like stocks; in the bearish phase of stock exchange, all stocks fall in unison but for the commodity market, a bearish tendency in the metals does not mean a fall in the agricultural products.

 

I hope I have not lost you with the vocabulary associated with this market but you will get to learn them by reviewing this book and note that there is really no Nigerian Naira in the commodity market, it’s just simply me dreaming of the day we would have a Lagos Mercantile Exchange or a Port Harcourt Oil Commodity Exchange. All in all, we can start now by educating ourselves for the future challenges. You may watch the video of how an ambitious lady in Ethiopia built their first commodity exchange; please, click HERE

 

 

I am giving out the book FREE but you could choose to buy it if you are outside Nigeria by clicking HERE or you can choose buy it in Nigeria by contacting me; click HERE.

 

 

 

If you want it FREE, these are the steps that must be taken;

1.      Download a preview of the book and read (It is only 5 pages) by clicking HERE

2.      You would recommend the book (Commodity Trading for Start-Ups: A DGCX perspective) to 25 people by sending a mail to twenty five (25) unique e-mail addresses and copying my e-mail address – dipotepede[at]poetsolvers.com  

3.      Your recommendation must show an understanding of the preview you downloaded and some of the things mentioned in this blog post.

4.      You must refer this post in the mail; the url is http://www.dipotepede.org/2009/01/31/my-new-book-give-away/

5.       All mails must be sent before 11.59 p.m. (GMT +1), 14^th of February, 2009

6.      When you are done with 1-5, you will receive a mail from me on the 15^th of February to download your FREE copy

 

 

Thank you for taking time to read this article to the end! Whichever route you choose in obtaining this book (buy or get it FREE), the sole aim of this post is for you to read the book. Remember, the words of Albert Einstein’s definition of insanity: “doing the same thing over and over again and expecting different results”. If you need a different result this year, you need to embrace a different knowledge even if you choose not to instantly apply the knowledge, your insight into commodity trading may raise your sight in your life’s pursuit.

 

 

           

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Continue reading »]]> Once there were two company presidents who competed in the same industry. These two presidents decided to go on a camping trip to discuss a possible merger. They hiked deep in the woods. Suddenly, they came upon a grizzly bear that rose up on its hind legs and snarled. Instantly, the first president took off his snap sack and got out a pair of jogging shoes. The second president said, “Hey, you can’t outrun that bear.” The first president responded, “Maybe I can’t outrun that bear, but I surely can outrun you!” This story captures the notion of strategy and the ability to inculcate it in our personal lives.

 

 

 

When I first read this story, it really made me laugh but when I continued thinking about it, I realized the importance of integrating capitalism approach to life and business. The first president survival was based on the death of the second president. I am sure most of you will say in your heart; “that’s a cruel way of reasoning” but let’s look at this scenario again; the first president had no gun or weapon and the two of them combined could not take on the bear. The bear is so powerful that it can kill about 4 human beings at the same time; the two presidents were aware of the potential danger but it was the first president that instinctively and intuitively knew what to do.

 

 

 

I have heard this sentence many times that “life is not fair”. This may be true on an emotional level especially when you have to read the story above where a man sacrificed his own brother for his own survival but this is a false premise to life. The first president did not just get lucky for having such thoughts; he has developed this way of thinking over time. He may not have ever thought of facing bear and delaying the bear with another human being’s life but he definitely must have thought of the best way to survive impossible situation. The fact that he collaborated on the merger possibility was simply out of survival.

 

 

 

Survival is thus the first primal instinct of man; it is first food, shelter, and then clothing. In a world filled with competition and unpredictability, survival is the only language that suffices. If Mrs. A opens a shop in an estate selling bread at 100 bucks and Mrs. B opens another shop 1 year besides Mrs. A, selling the same bread at 80 bucks in order gain entrance into the market as customers are familiar with Mrs. A. If the landing cost of the bread is 75 bucks, Mrs. B has threatened the survival of Mrs. A by forcing her to bring down her price to 80 bucks. If Mrs. C joins the two of them 3 years later and reduces the price to 60 bucks because she owns her own bakery and sells the same bread knowing she makes profit from selling at 60 bucks.

 

 

I want you to look at the above scenario very carefully and think about your position in the work place or anywhere you feel you are deriving your economic power. Do you really think you years of experience matters? It’s just a matter of time for Mrs. A and Mrs. B to realize that their cheese is gone; the means of taking care of their home, their children was just taken from under their nose by another human being. This scenario is not different from the bear scenario; there is absolutely no difference; Mrs. C just sucks the life out of Mrs. A and Mrs. B.

 

 

Is the first president and Mrs. C such a bad person? Let’s see what the bible says about this. In Mathew 25, an allegory of the Kingdom of Heaven was emphasized with the stories of the 10 virgins waiting for their bridegroom. 5 of them were regarded as wise while the other 5 were regarded as foolish. The five foolish virgins were foolish because they did not anticipate a delay in the coming of the bridegroom. They all had oil in their lamps but they did not all anticipate a delay so the foolish virgins missed out on the wedding. The part that broke the veil in my eyes was when the 5 foolish virgins ask the 5 wise virgins for oil, they refused to give them. The reason for their capitalist thinking was simple; the resources would not be enough.

 

 

When people guard their resources because it would not be enough to take them to their destination, they are regarded as wise. This is the way the Kingdom of Heaven works. Mrs. C simply was guarding her resources; if Mrs. C was selling at the same amount that Mrs. A and B was selling, all her bread in the bakery will decay and she would make a huge loss because all the customers in the estate would have been loyal to either Mrs. A and B (remember she came in three years later). She could not sell to Mrs. A and B because the two of them buy from another bakery. The competition at the wholesale level was so hot that she had to go retail in order to recoup her capital.

 

 

I am sure you will agree with me that Mrs. C is not a bad person because she is just guarding her resources though at the expense of Mrs. A and B just like the wise virgins guarded their resources. Also note that Mrs. C has to give an account to her maker; she was given a specific amount of resources and she has to double it just like the parable of the talent in the same Mathew 25; the guy that was given 5 talents brought back 10 talents and the Master praised him and called him faithful servant. It did not matter that they had different talents given to the three of them; what matters is that they effectively doubled their talents. If the guy with the 5 talent said in his mind, let me consider the guy with two talent and not compete with him to double my talent; what do you think the master will say to the guy with the 5 talents if he returns with 5 talents out consideration for the guy with the two?

 

 

In the coming months, Mrs. A and Mrs. B realized that their cheese was gone so Mrs. A sold off her shop to Mrs. D who also has a bakery and competed with Mrs. C by reducing price to 55 bucks. Mrs. C and Mrs. D were in a price war that they no longer make significant profit in the business. Mrs. E did not have as much resources as Mrs. A, B, C and D but will introduce to us what God expects from us. Mrs. E met with Mrs. B to let her shop to her monthly. She made her bread from her kitchen oven and sold at the same price that Mrs. C and D were selling and was making substantial profit. Mrs. E’s bread was bromine free and tastier than Mrs. C and Mrs. D so sold faster and was always in demand.

 

 

The demand for Mrs. E’s price was so much that she increased the price to 200 bucks to reduce demand. Notwithstanding the price, Mrs. E’s bread was always out of stock. She did not really need Mrs. B’s shop again because people started queuing up in her house to buy her bread for 200 bucks. Hotels, companies and restaurants started ordering for her bread because her reputation grew and grew. Some smart investors saw the opportunity and built her a bakery factory and she kept her secret ingredients to herself. Mrs. E bread is no longer an estate thing but a national brand.

 

 

Mrs. E brand became so popular that people started collecting franchise from all over the world. There is nowhere in the world that you will not get Mrs. E’s bread. Mrs. E did not have enough resources when she started, she did not buy from a bakery to resell, and she started organically from her kitchen oven and thus was able to discover her secret ingredient. It was not easy for Mrs. E when she started because she must have had sleepless night and burnt fingers in order to manually make the bread demanded for. Mrs. E’s cheese can never go.

 

 

Just like the book; “who moved my cheese?” The rat that left the comfort of her location to seek for a new cheese was the hero we all thrive be like but not many of us can take the journey that the rat took. If we stick to our comfort zone, we would be like the bread that can easily be priced out of the market. When everybody is engaged in doing the same thing like staying in paid employment, you will simply be a commodity that is affected by price not brand. If you choose to be a brand, you must discover yourself and develop the talent God has given you. Remember the days of Noah, people did things the same way they have been doing it; when the storm comes and the storm will surely come like Mrs. B came, like Mrs. C came and Mrs. D came, it is only Mrs. E that will stand because of the ark she has built which accommodate Mrs. F to Mrs. Z.

 

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