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Don’t accept unnecessary risk

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By Michael O’Connor, theislandinvestor.com

I always advocate for long-term investing, but this buy-and-hold narrative can be misinterpreted as 'do absolutely nothing'.

I disagree with this take, and if your financial advisor has made no changes to your portfolio over the last few years, you should probably go shopping for a new one.

We had the most predictable and forecast interest rate hiking cycle over the last 18 months. If your portfolio was left sitting in bonds when negative asymmetric returns were clearly on the table (only downside), then you need to be asking some questions.

There is a difference between patience and incompetence. Unfortunately, over the short term, the two are indistinguishable.

If your financial advisor hasn't made any changes to your portfolio because they believe that 'time in the market' is all that matters, that's perfectly fine. That is an investment approach that has been successful for so many. But why are you paying them to sit on your money when you can just invest that money directly yourself on any online brokerage? If the middle-man isn't adding value, remove them.

Check your exposure

Just because you're a long-term investor doesn't mean you need to blindly reach for returns. Tactically adjusting your portfolio to mitigate against obvious risks on the table is an important part of the investment process.

With that said, growing expectations around a recession should not be seen as a 'sell everything' event. You simply need to reassess where your exposure lies.

Ensure you are invested in companies with;

Strong 'Net Margins': Improving revenue is great, but it needs to make the business more profitable. Far too many companies are spending more than they are making, all in the name of customer acquisition. This 'growth at any cost' tactic was rewarded when money was free, but with credit standards tightening and interest rates jumping higher, the endless growth narrative is about to catch up on many of these 'high growth' names.

High 'Free Cash Flow' Margins: In its simplest terms, free cash flow is just the cash that can be taken from a business without disrupting the operations of the business. Importantly, this number factors in the cost of growth. So, if a business is growing and has a good FCF margin, it should pique your interest.

Stable Return on Invested Capital (ROIC): ROIC is just the profits a business makes on the money invested into it. The premise is pretty straightforward. You want to invest in companies with a history of using their equity to generate more profits. Looking at companies with sky-high ROIC can be compelling, but what you want to see is a consistent history of stable ROIC over time. Ignore the once-off data; always analyse the trend.

You can find all this info on any company by simply typing the company's name into sites like stratosphere.io.

Be selective in the risks you take.

My portfolio

I have moved to underweight equities with a focus on quality and energy.

The remainder of my holdings have been moved into short-term treasuries, with a very small portion in long-term treasuries with zero corporate bond exposure.

I also hold roughly 20% in a short-term tactical portfolio mostly made up of distressed financials, tech and mining, but I would categorise these as bets more than investments and not something I necessarily recommend doing.

If you have any questions, please don't hesitate to reach out.

To get my latest 10 stock recommendations, sign up for my newsletter by scanning the QR code or go to www.theislandinvestor.com.

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Local crews prepare for Assess Ireland Rally of the Lakes

Killarney and District Motor Club members are out in force for this weekend’s Assess Ireland Rally of the Lakes, with several local names expected to challenge for top honours across […]

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Killarney and District Motor Club members are out in force for this weekend’s Assess Ireland Rally of the Lakes, with several local names expected to challenge for top honours across all categories.

At the head of the field, Muckross co-driver Noel O’Sullivan and driver Callum Devine are chasing an unprecedented fifth consecutive win in Killarney. The Skoda Fabia RS Rally2 crew leads the entry list and aims to reclaim the championship lead. Other local interest in the top ten includes Rockfield co-driver Shane Buckley, navigating for David Kelly, and Milltown co-driver Ger Conway, who joins Daniel Cronin in the hunt for a podium finish.
The modified section features a heavy local presence. Robert Duggan returns in his Ford Escort Mk2 for his first outing since October, setting up a highly anticipated battle with the returning Conor Murphy. Further down the order, Glenflesk-based crews Denis Hickey and Eoin O’Leary, along with Dave Slattery and Denis Coffey, return to their home international event.
Family ties remain central to the local entry list. Charlie Hickey is joined by his son Cathal, who makes his debut as a co-driver, while John and Michelle Hickey form a father-daughter team in their Mitsubishi E9. Pat and Tara Looney are also competing as a father-daughter duo in their Ford Escort.
Experience and new machinery are both on display this weekend. Noel O’Sullivan and Nicholas Burke represent the longest-serving crew with over 30 starts each. Meanwhile, Tadhg O’Sullivan and Kevin O’Donoghue bring high-powered machinery to Class 14.
David Randles will also be fighting for class honours in a Peugeot 208 R4.
In the Historic category, Fergus O’Meara faces a race against time to have his BMW M3 ready following an engine rebuild. He will compete against former winner Mark Falvey in a Ford Escort RS1600 and Paul Ahern in another BMW M3. The Junior rally features two Kerry crews, with Jaden Leane and Padraig Devane leading the charge in a Honda Civic, while Conor Horgan and Aaron O’Halloran compete in their second-ever rally

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Kerry tourism facing ‘uncertainty’ as global aviation crisis threatens visitor numbers

A Kerry TD has warned that the county’s economy is under threat as international aviation challenges and rising fuel costs begin to impact overseas visitor numbers. Speaking in the Dáil […]

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A Kerry TD has warned that the county’s economy is under threat as international aviation challenges and rising fuel costs begin to impact overseas visitor numbers.

Speaking in the Dáil this week, Deputy Michael Cahill (FF) told the Minister for Enterprise, Trade and Employment that “nervousness” is growing across the sector. He warned that global instability, particularly in the Middle East, is driving flight cuts and surcharges that could leave peripheral regions like Kerry “exposed.”

“Tourism in Kerry is the lifeblood of our local economy,” Deputy Cahill said. “From Killarney to Dingle, thousands of jobs depend on a stable flow of overseas visitors. That stability is now under threat.”

The Deputy highlighted that the Irish Tourism Industry Confederation (ITIC) has already signalled that earlier growth projections of 5% to 7% for this year are unlikely to be met. He noted that Lufthansa has already announced 20,000 flight cuts globally, while Aer Lingus has seen reductions.

Regional Vulnerability
Minister Peter Burke (FG) acknowledged the challenges, noting that 90% of Ireland’s inbound connectivity depends on air access. However, he pointed to a new tourism policy, A New Era for Irish Tourism, and a €400 million capital plan over the next five years designed to enhance the “value proposition” for visitors.

“We have had strong growth this year,” Minister Burke said, “but we recognise that geopolitical instability can have implications. We are working with airlines to ensure they don’t just consolidate routes.”

Calls for Kerry Airport expansion
Deputy Cahill argued that a “one-size-fits-all” approach would not work for the South West, noting that international visitors to Killarney and Kenmare cannot be fully replaced by domestic tourism.

He specifically urged the Minister to prioritise regional air access and called for the introduction of new flight routes to Kerry Airport from Belfast, Barcelona, and Amsterdam to offset potential losses from other markets.

“Kerry is a premium destination but also a peripheral one,” Cahill said. “If flights become more expensive, visitors often choose alternative destinations entirely. We need proactive measures to protect our regional airports.”

Minister Burke confirmed that new viability mechanisms and VAT supports will kick in on July 1, alongside “strategic air activation schemes” to market new flights as they become available. He committed to working with Kerry representatives to ensure the “Kingdom” benefits from the €400 million investment fund.

Michael Cahill TD with former Kerry Airport CEO John Mulhern

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