Economy
Are Stop Losses for Wimps?
By Steve Brice
When I started out in banking, I was based in a dealing room advising traders on potential positions to take. The positions were focused and generally very short-term in nature. Therefore, risk management was not a ‘nice-to-have’, it was vital to job security. When entering a trade, a stop-loss – a level at which the position taken would be unwound if it was losing money – was a must.
It was against this backdrop that a former colleague quipped that ‘stop-losses are for wimps’. He was of course referring to certain stocks in his portfolio which had fallen dramatically – he was probably justifying to himself why he should keep it! However, it raises an interesting question: Should we employ stop-losses when we invest?
While many people will be very passionate about this topic, as with most things in life, context is key. If you think about it, the existence of the stop-loss is a hedge against the fact that nobody knows what is going to happen and therefore you need to build in a circuit-breaker to avoid the behavioural biases that come with a loss-making position – the ostrich, or ‘head in the sand’, syndrome.
So, how does this translate for an average investor? I would argue that there are two dimensions to consider: the nature of investments being discussed and your time horizon. Let’s take each in turn.
I have a much greater conviction level that a diversified ‘foundation’ allocation (which includes exposure to different asset classes such as stocks, bonds, gold and private assets), or even a diversified equity portfolio, is more likely to rise over a given period of time than any individual stock.
The reason is simple. Different asset classes have different drivers and hence are usually uncorrelated in their moves. Therefore, just combining them into a portfolio smooths out the bumps and increases the probability of positive returns for the portfolio as a whole.
When it comes to the stock market, there are also different drivers that determine equity market or individual stock returns, but let’s simplify them into broad market drivers and idiosyncratic drivers. If the economy enters a recession, then most stocks will fall sharply in value. However, a company’s failed product launch will largely hit one stock, and those of a few of its suppliers. Its impact on the overall market will be much less severe.
This brings me to Principle Number 1: The broader the investment, the less likely a stop-loss is warranted and that a buy on dips approach makes sense.
A very good friend of mine recently questioned how applicable this ‘buy on dips’ approach was to stock markets outside of the US. So, we ran the numbers for some major global and Asian markets in terms of probability of positive returns over different time horizons and the potential size of returns for investors. The results are pretty interesting.
First, the historical probability of positive equity market returns across any given 12-month period, at around a two-thirds probability, is generally similar across major global or Asian indices – China is an outlier at just 55%. If you extend your time horizon to 5 years, this probability generally increases to around 80% – the outliers are Japan’s TOPIX (66%) and India’s Sensex (92%).
Second, we looked at what has happened after a 10% or 15% market pullback. Focusing on the 1-year time horizon, we can break the countries into 3 groups:
1) either the probability of positive returns or size of average return or both have increased significantly after a market sell-off. Markets that fall into this group include the US, Germany, UK, India.
2) there is no material change in either variable. This includes Hong Kong, Malaysia and Korea. Once you lengthen your time horizon to 5 years though, they all move into the first group.
3) the probability of positive returns or their average quantum actually declines after a sell-off. Japan and onshore China markets fit into this group. On a 5-year time horizon, China also moves into the first group but, interestingly, Japan stays firmly in group 3.
Hence the conclusion is: outside of Japan, the ‘buy on dips’ mantra has made sense, especially when held by long-term investors.
The above analysis highlights the importance of the last factor: time horizon. The dealing room environment generally takes narrow exposures over a very short time horizon. Thus, stop-losses are crucial. However, I believe the message for the average investor is the reverse as long as they are focused on a diversified foundation allocation with a long-term focus.
Structural thematic investments also potentially fall into this category. The longer your time horizon, the more likely your investment is to generate positive returns as long as the structural fundamentals remain supportive. Here, again, instead of a stop-loss being appropriate, market declines offer an opportunity to add to longer-term thematic positions given the likelihood that declines will prove temporary.
Principle number 2: The longer your time horizon, the less desirable a stop-loss is, especially for diversified allocations or long-term structural themes.
Thus, for investors who are trying to trade the market and pick stocks, we believe a strict risk management framework including the use of stop-losses is absolutely critical to returns. However, we believe the majority of investors would be much better served by building a foundation allocation with a ‘buy on dips’ approach. Investors can systematise this ‘buy on dips’ approach through regular portfolio rebalancing – say at least once or twice a year and especially after major market dislocations to bring their allocations back to their desired risk tolerance. Such rebalancing is akin to an investor systematically “buying low and selling high” – a win-win proposition. For these investors, stop-losses are likely to get in the way of wealth accumulation.
Steve Brice is Chief Investment Officer at Standard Chartered Bank’s Wealth Management division
By Adedapo Adesanya
The chief executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Mr Saidu Mohammed, has revealed that bold economic reforms by President Bola Tinubu’s administration saved the country over N6 trillion on petroleum product imports in just the first nine months of 2025.
Mr Mohammed disclosed this while speaking at the Nigeria International Energy Summit (NIES) in Abuja, said the savings were the result of full downstream deregulation, harmonisation of the forex market, and the trading of crude and petroleum products in Naira.
He added that these bold moves have created stability in the downstream petroleum market, encouraged investment, and ensured a sufficient supply of petroleum products across the country.
The NMDPRA boss also revealed that the nation’s refining capacity is expected to surpass 1 million barrels per stream day (bpsd) in the medium term.
He said the surge in domestic refining capacity is being driven by a combination of new refinery investments, the rehabilitation of existing Nigerian National Petroleum Company (NNPC) Limited refineries, and strategic private-sector participation.
According to him, the planned investments in other refineries, along with issued Licences to Establish (LTEs) for new facilities, will continue to expand Nigeria’s refining footprint, reducing dependence on imported products and stabilising domestic supply.
He said: “For decades, our downstream value chain has been associated with negative sectoral performance indicators such as infrastructural deficit, weak market structures, sub-optimal supply chain efficiency, inadequate investment, poor regulatory compliance, and unacceptable operational safety and environmental indices.
“Today, I am pleased to affirm that this narrative is rapidly changing and that the sector is truly witnessing the early but irreversible signs of a renaissance-type transformation that is driven by bold reform; enabled by investment; and sustained by effective market and operational regulatory enablement.
“In the few years of the operationalisation of the new legal framework of the Oil and Gas sector in Nigeria (PIA 2021), Nigeria’s downstream sector has evolved into a fully liberalised market and is no longer defined by scarcity and supply uncertainty.
Supply stability has consistently ensured sufficiency of all Petroleum products. The pricing structure of the downstream sector is becoming more driven by the fundamentals of the market and generally attaining the stability level required for encouraging investment in this expansive sector of the economy.
“The supply chain landscape of the sector, which depended significantly on import of nearly all Petroleum Products for a long time, is rapidly transforming with growing supply through the nation’s domestic refining capacity, expanding gas-based alternative fuels, improved logistics, and increased private-sector participation.
“At the heart of this transformation stands the Dangote Petroleum Refinery, the largest single-train refinery in the world with an installed capacity of 650,000 barrels per stream day (bpsd), which is currently contributing a significant portion and in some cases 100 per cent of our domestic requirement of Petroleum Products. The optimal operationalisation of the plant’s installed capacity and future upscaling of the plant is undoubtedly needed to fulfil the national aspirations of making Nigeria a regional and continental energy hub.
“The capacity for enhanced domestic supply of Petroleum product in Nigeria will continue to grow as the planned investments in our refinery sector mature. We are optimistic that the issued Licences to Establish (LTEs) refineries, which are being progressed through various levels of completion, coupled with the rehabilitation of the NNPCL refineries, will improve the overall installed refining capacity in Nigeria to well over 1 million bpsd in the medium term.
“The bold economic reforms of President Bola Tinubu have created the renaissance that the downstream sector is enjoying and would continue to leverage upon for sustained sectoral growth in the future. The cumulative impact of the full deregulation of the downstream sector, the harmonisation of the forex market, the incentivization and deepening the use of gas and the trading of crude and product in Naira has reduced the fiscal economic losses of importing Petroleum Product by over N6 trillion in the 1st nine months of 2025.”
By Adedapo Adesanya
The federal government says Nigeria is targeting gas production of 10 billion standard cubic feet per day (bscfd) by 2030, positioning natural gas as a cornerstone of national energy security and economic prosperity.
The Minister of State for Petroleum Resources (Gas), Mr Ekperikpe Ekpo, said this while delivering a ministerial address at the ninth Nigeria International Energy Summit (NIES) 2026 in Abuja.
The Minister said the government’s efforts were yielding tangible results, with Nigeria’s gas production maintaining an upward trajectory in 2025, averaging between 7.5 and 7.6bscfd.
He disclosed that domestic gas supply exceeded two bscfd for the first time, marking a historic milestone for power generation, industrial use and household consumption.
The Minister also said significant progress in environmental performance, with gas flaring reduced to some of the lowest levels recorded in recent years, in line with Nigeria’s commitment to end routine gas flaring by 2030.
He noted that investor confidence in the gas sector had been strengthened, citing Final Investment Decisions (FIDs) in key upstream gas projects supported by improved regulatory clarity under the Petroleum Industry Act (PIA).
“Across the midstream and downstream segments, pipeline infrastructure, processing facilities and gas-to-power projects have expanded, improving connectivity, boosting domestic utilisation and supporting cleaner cooking solutions, job creation and industrial stability.
“Under President Bola Tinubu’s Renewed Hope Agenda, government policy prioritises the expansion of domestic gas infrastructure while strengthening Nigeria’s presence in regional and global gas markets.
“This includes facilitating investments in gas processing, storage and distribution, as well as accelerating gas-to-power projects aimed at addressing energy poverty and enhancing industrial competitiveness,” he said.
The minister emphasised that Nigeria’s energy future was inseparable from peace, partnership and shared responsibility, calling on governments, investors, development partners, host communities and civil society to move from dialogue to decisive action.
“Our collective task is to build an energy system that powers prosperity, strengthens stability and supports regional integration,” he said.
He said Nigeria’s energy strategy is firmly aligned with global energy transition realities while responding to Africa’s unique development challenges, including widespread energy poverty, limited industrial capacity and inadequate access to reliable power.
“While the world moves towards lower-carbon systems, Africa must pursue a transition that is not only green, but also just, inclusive and development-driven.
“Nigeria is leveraging its abundant natural gas resources to balance climate responsibility with economic development, positioning gas as the backbone of industrial growth, job creation and expanded energy access,” he said.
By Aduragbemi Omiyale
The 2025 Made of Africa Awards, hosted by Nigerian Exchange (NGX) Group Plc, paraded an array of winners, including brokers, issuing houses, trustees, fund managers, listed companies, and other market participants.
The event was to reward excellence in value delivery, compliance, and market impact, with Transcorp, the Debt Management Office, CardinalStone, Chapel Hill Denham, and MTN Nigeria Communications as recipients.
Business Post reports that the other recipients were First Trustees Limited as the Best Trustees in Terms of Deal Value, Legend Internet as the Market Debut Excellence award winner.
Further, CardinalStone Securities emerged as Equity Trader of the Year and Broker of the Year, Capital Express Securities won ETPs Trader of the Year, and Stanbic IBTC Stockbrokers was named Fixed Income Trader of the Year. Chapel Hill Denham received awards for Fund Manager with the Largest Listed Fund Size and Market Operator with the Highest Value of Foreign Portfolio Investment Transactions.
Mainstreet Capital and APT Securities and Funds jointly won Issuing House with the Highest Number of Primary Market Equity Transactions, while Anchoria Advisory Services led in corporate bond issuances. Dangote Cement was named Best Issuer in Terms of Fixed Income Listings, BUA Cement received the award for Most Compliant Listed Company, and Transnational Corporation Plc was honoured for Capital Market Excellence in Equity. Network Capital was named the Most Compliant Trading License Holder, United Capital Securities won the Best Sponsoring Trading License Holder and Banwo and Ighodalo received recognition for legal advisory value in capital market transactions.
Special recognition went to the Debt Management Office for fixed income market development and to the Capital Markets Correspondence Association of Nigeria for capital market reporting, and Lambeth Capital/Bamboo Systems Technology were recognised for onboarding the highest number of new retail investor accounts.
The chairman of NGX Group, Mr Umaru Kwairanga, said the awards underscore the role of market stakeholders in strengthening investor confidence and improving market standards.
“Their achievements set a benchmark for performance, integrity and innovation across the capital market,” he said, adding that sustaining this level of discipline and transparency is essential to maintaining the trust of both domestic and international investors in Nigeria’s financial markets.
The chief executive of NGX Group, Mr Temi Popoola, said, “Operational efficiency and cooperation across the ecosystem are increasingly important as trading activity diversifies and investor expectations continue to rise.”
On his part, the Executive Commissioner for Operations at the Securities and Exchange Commission (SEC), Mr Bola Ajomale, said the awards underscore the value of compliance and transparency in market development.
“Recognition through the Made of Africa Awards reinforces the importance of adherence to market rules and standards. When operators demonstrate accountability and professionalism, it strengthens investor confidence, ensures market integrity, and supports sustainable growth across Nigeria’s financial markets,” he said.
The chief executive of NGX Limited, Mr Jude Chiemeka, said recognising strong performance across the ecosystem supports deeper market participation and long-term capital mobilisation.
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