How your investment is likened to beans scare

Remember the year in Nigeria when news made the rounds of beans being poisonous. The event resulted in decreased demand for the food item, which led to surplus beans in the market.

Economic strategist, Kalu Aja, has drawn an analogy of the beans scare event and how it relates to your investment.

OpporTechies gathered from his official X handle how the forces of demand and supply was brought to bear on the item.

He said: “

A long time ago in Lagos, a family ate beans, and sadly, everyone passed; in response, folks in Lagos stopped eating beans, and demand fell as supply stayed the same and the price of beans crashed.

Demand was so destroyed for beans that the then Governor of Lagos got traders to organise a beans party; I recall at the Ojota bus stop, there were pots of free beans, and you could come and get your fill for free.

The price of beans fell, but the value of beans did not, beans did not lose its protein value. Thus, beans, a high-value food, were priced lower by the market due to external forces.

Eventually, the killer beans scare disappeared and the price of beans rose to meet the intrinsic value of beans

Investors are seeking high-value assets that are priced below intrinsic value; imagine if a trader had bought up all the beans at the depressed prices and then sold them as prices recovered?

Price is emotional, and Value is more stable.”

Reacting, an X user, Ibrahim Memudu said:”Your incident stories paint the clearest picture of trading with its upside and downside….”

Another X user said: “If not for the security challenge we face in Nigeria, commodity trading would have been a better option for this high exchange rate.”