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A lesson in what not to do

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9 months ago

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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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Last chance to enter Spa GAA’s fundraising draw

By Sean Moriarty There is just less than one week left to enter Spa GAA’s fundraising raffle. The ‘Cairde Spa’ draw takes place on Thursday night (February 2) the Spa’s […]

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3 hours ago

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27 January 2023

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By Sean Moriarty

There is just less than one week left to enter Spa GAA’s fundraising raffle.

The ‘Cairde Spa’ draw takes place on Thursday night (February 2) the Spa’s clubhouse at 7pm.

Funds raised will go towards the upgrade and development works planned over the next few years.

Guest of honour on the night is national GAA president Larry McCarthy and the Sam Maguire Cup will make an appearance too.

“Apart from ongoing and essential maintenance work, the club has a number of development projects in the pipeline. The money is being raised towards improving our grounds to provide top class facilities that can be used year-round, including car parking, perimeter fencing for pitches, ladies and juveniles dressing rooms, outdoor skills wall, player dug outs for senior and juvenile pitches, safety enhancements and lighting on the walking track, landscaping, scoreboard, viewing gallery to the sports hall, alignment of entrance to the grounds and a remembrance garden,” said Michael Cronin, Club Chairman.

“We are calling on everyone to get behind the fundraiser. Our vision is to provide top class grounds and facilities where everyone is welcome to use and participate fully in our activities, games and culture. In order to achieve this vision, we are setting out exciting new developments and investments in our facilities – and we need your support.”

There are 10 prizes up for grabs: 1st Prize: €15,000, 2nd Prize: €3,000, 3rd Prize: €2,000, 4th Prize: €1,000, 5th Prize: Two nights dinner and B&B at the Killarney Park Hotel, 6th Prize: €500 Voucher for Killarney Carpets & Furniture, 7th Prize: €300 Voucher for O’Sullivan’s Cycles, 8th Prize: €250 Voucher for Killarney Oils, 9th Prize: €150 Voucher for Killarney Hardware and 10th Prize: A signed Kerry jersey.

Tickets are €100 each and can be collected/returned at the clubhouse this Saturday (10.30am-12noon), Monday (7-8pm) or Wednesday (7-8pm), and tickets are also available online on spagaa.com.

Any queries contact Andy (087 2236754), Michael (085 8213027), Assumpta (087 6779292) or Deirdre (085 1216359) or any Club Officers.

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Marian Players excited to get back on stage

By Michelle Crean With a cast of over 50 it’s no small undertaking – but that won’t deter one panto group who are only too happy to get back on […]

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5 hours ago

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27 January 2023

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By Michelle Crean

With a cast of over 50 it’s no small undertaking – but that won’t deter one panto group who are only too happy to get back on stage this weekend.

It’s been two years since they staged a show due to COVID but the Marian Players Rathmore are rearing to go tomorrow night (Saturday) with their hilarious show ‘Dame Annie Goes West’.

A medley of comedy and colour, combined with music and dance, locals from both sides of the border have been working together to make it a great production.

“We’re very excited, we can’t wait! It’s great to be back,” Mary Hickey told the Killarney Advertiser.

“They [the cast] got together in October and they’re at it since.”

Val Moynihan is the “genius behind it”, she added, and it’s produced by her son Brian Hickey, and co-written with Eilish Coakley.

She said that they have loads working in the background also doing the stage curtains, lighting and making costumes amongst other tasks.

“It’s a pantomime without the pantomime in the background! It’s a whole community effort both sides of the border.”

Evening shows start at 7.30pm tomorrow (Saturday) and again Sunday (January 29) at 3pm.

Mid-week shows continue on Wednesday next (February 1) at 7.30pm, Thursday (February 2) at 7.30pm and also Saturday (February 4) at 7.30pm and Sunday (February 5) at 3pm.

The booking office (085 2031730) will be open every day from 2pm to 6pm to reserve seats and collect tickets and is located adjacent to the community centre, next to Christy’s Take Away.

Seats may be reserved over the phone too and paid for using a bank card. All proceeds are going to Kerry Parents & Friends Association.

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