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A lesson in what not to do

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By Michael O’Connor

The S&P 500 ended last week down 14%, a bitter pill to swallow for many investors. Still, these losses pale in comparison to the earth-shattering declines that some of the more speculative sides of the market are currently experiencing.

Today's article – A lesson in what not to do.

The tech-led NASDAQ index is down 22% in 2022. ARKK, once the highest-flying tech fund on Wall Street, has come crashing down to earth, down over 70% from its highs and lastly, spare a thought for those taking maximum risk; NFT and Altcoin traders are getting their faces ripped off as we speak.

But didn't we all know this was going to happen?

Didn't the incessant and illogical rise of these speculative Crypto and Tech positions have to end in tears eventually?

The simple answer is yes.

But the 'when' and 'how' were always unknown.

When everyone is playing and winning, it's easy to convince yourself that you can play and win as well. It's hard to imagine the music stopping when it has been playing for so long.

People do crazy, illogical things all the time, even when they know better. This isn't the first time that greed pushed investors towards self-destruction, and it certainly won't be the last.

This article isn't intended as a snide rebuke of the investors who hold these positions. Many of those currently watching their trading accounts crater also made phenomenal gains in 2020 and 2021.

This is merely a cautionary tale highlighting that markets are cyclical, investment strategies come in and out of favour, and nothing lasts forever.

Most importantly, always know the difference between speculating and investing.

As humans, we are drawn to speculation. We buy lotto tickets not based on probability but on hope. You can ignore the statistical improbability of winning by uttering four naïve but equally alluring words: "ya, but what if".

After all, technically speaking, 'it could be you'.

In recent years, many people 'invested' in their stock position based on the same rationale. It wasn't based on the company's solid fundamentals or attractive free cash flows; it was determined purely on the basis of 'what if?'. What if it continues going up? What if it doubles again? Let's face it, for many; this argument can be far more enticing than any precise financial projections.

There is nothing technically wrong with this speculative approach, provided you realise you're doing it, and it is done in small doses. Still, you need to separate this from your investing portfolio. They're not the same thing.

90% of your assets should be positioned to generate returns over the long term. Your focus should not be on betting it all on a low probability outcome with the outside promise of winning it big.

This seems obvious, but many convince themselves they are investing based on probability and risk-adjusted returns when they are actually just closing their eyes, crossing their fingers and spinning the wheel.

Make sure you know the difference.

Investing 101

Create a balanced and diversified portfolio of equities, real estate, commodities and alternatives based on your view of the world in the future, your time horizon and your risk tolerance.

Invest in indexes you believe will be successful over the long run and then allow enough margin for error through diversification to protect when you are wrong.

And you will be wrong, but that's ok. You just need to be right more often than you are wrong.

If you would like to learn more about how to start investing, go to theislandinvestor.com.

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Killarney for Palestine film screening

Killarney for Palestine recently held a sold-out screening of the Oscar-winning documentary ‘No Other Land’ at the West End School of Arts, raising €2,100 for Camp Breakerz. The event, which […]

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Killarney for Palestine recently held a sold-out screening of the Oscar-winning documentary ‘No Other Land’ at the West End School of Arts, raising €2,100 for Camp Breakerz.

The event, which took place on July 3, included two screenings, both of which were fully booked. Guests enjoyed cheese and wine before the shows.
‘No Other Land’ depicts the ongoing destruction in Masafer Yatta, a cluster of villages in the Southern West Bank, and shows the experiences of Palestinians under Israeli occupation. The film won in the Best Documentary category at this year’s Academy Awards.
The screenings were organised in association with the West End School of Arts.
All proceeds from the €25 tickets benefited Camp Breakerz Crew, a children’s charity based in Gaza that provides creative outlets through dance and is involved in food distribution programs in Nuseirat Camp and Deir-Al-Balah due to food shortages.
Sally MacMonagle, who recently spent time in Aida Refugee Camp in Bethlehem, also spoke at one of the screenings.

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Bid to host European Presidency summit meetings gathers pace

Fianna Fáil Spokesperson on Tourism, Michael Cahill TD, has highlighted Killarney’s suitability to host summit meetings of international Government Ministers during Ireland’s six-month European Presidency tenure in 2026. Deputy Cahill […]

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Fianna Fáil Spokesperson on Tourism, Michael Cahill TD, has highlighted Killarney’s suitability to host summit meetings of international Government Ministers during Ireland’s six-month European Presidency tenure in 2026.

Deputy Cahill believes Kerry’s available accommodation, food, and conference facilities are “second to none,” with Killarney as the central location.
“Visitors from every corner of the earth have been coming to Kerry for centuries now, to experience its beauty and serenity and have returned on many occasions because of the fabulous time they have enjoyed during their stay here,” said Deputy Cahill. “Where else would you want to bring the senior Government Ministers of all of our EU counterpart states, to experience Ireland, its customs and heritage?”
The Rossbeigh TD outlined various attractions available for visitors during downtime: “During their downtime, they can visit the Blaskets and Slea Head, Sceilg Mhichíl and the Ring of Kerry, Killarney’s Lakes, Gap of Dunloe, National Park and Sliabh Luachra, all of our glorious beaches from Ballybunion to Rossbeigh, Kells to Ventry, Whitestrand to Inch, Ballinskelligs to Cromane, Waterville to Derrynane.” He also cited Kerry’s golf courses, Listowel Writers Week, the Rose of Tralee, and Puck Fair as potential experiences.
Deputy Cahill confirmed he has raised this matter with An Taoiseach, Micheál Martin; An Tánaiste and Minister for Foreign Affairs, Simon Harris; and Minister of State for European Affairs, Thomas Byrne.
“If Killarney’s bid is successful in bringing the Heads of State to our county for meetings, conferences and functions, it will be a massive boost to the local economy in Killarney and also throughout the county,” added Cahill.”Iwill continue to push in the coming months for Killarney and Kerry to be included as bases for the rounds of meetings that are to take place from July 1 to December 312026.”

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