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A handful of winners

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By Michael O’Connor, theislandinvestor.com

There seems to be a narrative in the market suggesting that stocks typically go up over time, and therefore, with a little homework 'my stock picks' will go up even more - but it isn't that simple.

This isn't a 50/50-coin toss.

The concentration of winners is more severe than you think.

The Russell 3000 Index has returned an average annualised return of 13% since 1980, but the disparity of returns that generate these profits is rarely focused on.

The vast majority of the positive returns over time can be attributed to just 7% of stocks - the 'mega winners'.

In a similar report studying the historical performance of the S&P 500, only 22% of the stocks in the S&P 500 outperformed the index from 2000 to 2020. Over that measurement period, the S&P 500 gained 322%, while the median stock rose by just 63%.

Put simply, the probability of picking a winner is lower than you think, but all is not lost. A couple of big winners are all you need.

A few good decisions

Warren Buffett - arguably the most successful investor in history, recently attributed his success to just 'a dozen truly good decisions'.

"Over the years, I have made many mistakes - our satisfactory results have been the product of about a dozen truly good decisions — that would be about one every five years. "

That's right, the best investor in history made one good decision every five years.

So how can someone who claims this be heralded as an investment guru?

Asymmetry

A stock can only drop by 100%, but there's no technical limit to how high a stock can go, so when you invest in some truly great companies, the handful of winners can more than offset the graveyard of losses you accumulate along the way.

Let's take one of Buffet's most notorious investments as an example;

Over a period of seven years ending in 1994, Buffett accumulated 400 million shares of Coca-Cola at a total cost of $1.3 billion. As of the end of 2022, that position was worth $25 billion. And let's not forget the $704 million in annual dividends.

For me, stocks like TTD and Nvidia have more than offset some very questionable investment decisions. (24-year-old me has a lot to answer for, but you live and learn, I guess).

Obviously, the goal is only to pick winners, but on the off-chance you can't perfectly predict the future, here's a good place to start:

1. Stop trying to jump on every opportunity. Focus on making a few good decisions and give them time to work in your favour.

2. Don't be fooled into thinking every investment will be a winner. You won't stick it out very long if you expect to be in the green 24/7. There will be guaranteed losses along the way, but over time, a handful of big winners is all you need.

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

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Coolick National School to launch online lotto

A popular primary school in the Killarney area is launching a new fundraising initiative this week to support and improve the education experience of the children it serves. The Coolick […]

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A popular primary school in the Killarney area is launching a new fundraising initiative this week to support and improve the education experience of the children it serves.

The Coolick National School Lotto is now live; offering a weekly prize, a weekly jackpot and a range of valuable spot prizes at launch.

Coolick NS first opened its doors in 1870 making it one of the county’s oldest primary schools. The school and pre-school is home to over 130 children from the locality. This is an increase of 20% over the past 5 years taking enrolment to an all-time high.

Coolick NS School Lotto Chairperson and parent, Pádraig Leane says properly resourcing primary school services is crucial:

“The cost of providing education is rising and the school grants provided by the department, although valuable, only do so much. We want to overcome this challenge with our school lotto. The school has a range of immediate needs but also longer-term goals to expand our facilities, add more sports equipment, wellness programmes, student support programmes and increase extra-curricular trips,” he said.

First on the list is a new set of school jerseys, gymnastics mats, replacement of end-of-lfe iPads and further expansion of their Tír na nÓg play area for the younger pupils.
Coolick National School Principal Gearoid O’Sullivan remains focused on providing the best for the children of Coolick.

“As a school we are committed to providing the best equipment, teaching and learning resources, outdoor spaces and a school interior that helps nurture each child. This school lotto will help us with our commitment to provide the very best for the school and especially for the pupils in our care,” said the principal.

The staff and students of Coolick National School are appealing to families, friends, past pupils, members of the local community, stakeholders and supporters to get behind the weekly school lotto. It is hoped that the option of 1 line for €2.50, 2 lines for €4 or 3 lines for €5 will encourage everybody to contribute. A lotto draw will take place each week with a maximum jackpot of €2,000 to be won.

Signing up is easy; through the school’s website https://www.ourfundraiser.ie/org/coolickns

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Live TV audience date with Daniel O’Donnell at INEC

People of Killarney will have the opportunity to participate in a live television audience with Daniel O’Donnell. TG4 television’s highest rating country music series of concerts is coming to the […]

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People of Killarney will have the opportunity to participate in a live television audience with Daniel O’Donnell.

TG4 television’s highest rating country music series of concerts is coming to the Gleneagle INEC Arena for the first time from June 17 to 19.

Recorded before a live audience over three nights with two concerts per night, Opry le Daniel offers a different music theme each evening and a host of special guests will join the legendary presenter Daniel O’ Donnell on stage to perform all your favourite songs.

The recordings of the show will be split into two one-hour blocks, taking place throughout each evening.

Now in its 14th year, Ireland’s favourite country music artist O’ Donnell will be joined on stage by Declan Nerney, Cliona Hagan, Mike Denver, Chrissy Mac, Dana and the Donegal balladeers ‘Onóir’ to mention but a few.

Tickets from €30.20 are available from www.inec.ie and the Gleneagle INEC Arena box office on 064 6671555.

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