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Back in a bear market

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By Michael O’Connor

Investors' wounds deepened last week as the S&P 500 fell nearly 3%, declining for the fourth week out of the past five.

The NASDAQ precipitous decline continued into Monday, putting the tech-based index into bear-market territory, as it fell more than 20.0% below a recent high set in November. While this drop may seem alarming, the NASDAQ has compounded at 21% a year for the last five years despite experiencing three bear markets in the past five years.

All is not lost.

To be blunt, the outlook remains very much uncertain. The degree and duration of the war are huge unknowns that can change rapidly and have enormous implications on economic growth, inflation, and interest rates.

With that said, my base case remains the same. The war can subside over the coming months allowing inflation to moderate and sentiment to revert. With strong consumer demand, robust US household balance sheets and money on the sidelines, earnings can remain elevated, and US economic growth can remain positive.

Valuations have also become more compelling at current levels, with the S&P 500’s forward P/E now below its pre-pandemic levels. Undoubtedly multiples can contract further in the short-term if the geopolitical tensions worsen, but I believe a reversal is likely by year-end as the current headwinds subside.

Winners

The dating App Bumble jumped 28.5% last week as the firm's revenue figures grew 25.7% year-over-year.

Despite Bumble experiencing its strongest trading day ever, it still sits 70% below its IPO price. The current inflation-induced growth stock distain will ensure that a quick reversal to previous highs remains unlikely despite last week's success.

Losers

It appears that investors previously boasting the endless potential of every high-growth SaaS company in existence are now cutting all ties and denying any involvement, quickly reclaiming Warren Buffet as their one true leader.

DocuSign tops the bill this week as the poster child of the discarded pandemic darling. Already down 70% from all-time highs, the stock plummeted another 20% following Thursday's less than inspiring earnings call.

In keeping with the theme of the quarter, the company reported solid Q4 results, but weaker guidance sent the stock plummeting. Lower than expected revenue guidance and a predicted annual growth of only 13% for a company that is still pre-earnings brought the growth narrative very much into question.

Outlook

Lower valuation multiples are appealing, but investors are acutely aware of the dangers that lie ahead over the short term. Inflation has surged to a 7.9% annual rate, a number that looks likely to remain elevated as commodity prices rise, while upcoming interest rate hikes represent the potential for a policy misstep by the Fed.

Volatility is likely to remain, but some sectors will absorb the impact better than others. Short duration, long value remains the order of the day with a tilt towards energy, consumer staples and real estate.

To learn how to start your investing journey, go to the islandinvestor.com.

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Matt Britton Flooring Now Open in Cork

Matt Britton a thriving, local, sustainable, family-run business that has evolved into the ultimate destination for Ireland’s finest hardwood flooring, luxury carpets and bespoke rugs is now open in Cork. […]

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Matt Britton a thriving, local, sustainable, family-run business that has evolved into the ultimate destination for Ireland’s finest hardwood flooring, luxury carpets and bespoke rugs is now open in Cork.

Established in 1997 by brothers Matt and Craig, both fitters by trade, Matt Britton has become a popular household name throughout Ireland, a favourite among Ireland’s top interior designers and has been featured in an array of celebrities’ homes, including Peter O’Mahony, Johnny Sexton, Conor Murray, Pippa O’Connor, Vogue Williams, Rosie Connolly, and Suzanne Jackson, among others.

Recent expansion plans included the opening of their fifth showroom, Matt Britton Cork, unveiled by Ireland, Munster and Lions rugby legend Peter O’Mahony.

“We are delighted to have launched our first Munster store as part of our expansion plans across Ireland. We have been overwhelmed with positive feedback from our customers who have previously travelled from Munster to visit us in Dublin and Wicklow and this has encouraged us to open a store closer to home for them. Moreover, we are pleased that the opening of this showroom has allowed us to create 10 new jobs in the local area,” said Managing Director Matt Britton .

Their showrooms are designed to offer customers a luxurious experience and showcase their extraordinary collection of hardwood flooring, opulent carpets, and bespoke rugs tailored to clients’ unique preferences.

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Quest Killarney named Ireland’s best fitness and wellness event

Quest Adventure Series organised by Kerry based Elite Event Management came out winners at the Gym+Coffee Make Life Richer Awards. Quest won Best Large Fitness and Wellness Event, beating other […]

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Quest Adventure Series organised by Kerry based Elite Event Management came out winners at the Gym+Coffee Make Life Richer Awards.

Quest won Best Large Fitness and Wellness Event, beating other well-known names in the fitness and event industry.

Irish gym clothing company Gym+Coffee established the Make Life Richer Awards as community-based awards that celebrate those who ‘Make Life Richer” to include people who have the same passion as they do and facilitate events and meet-ups that bring people together.

“The team at Quest are super-proud of this award and the achievement and would like to thank everyone who voted for them, and enjoys being part of the Quest community.,” said Elite Event Management’s Rebecca Kemp

Entries for Quest Killarney October 7 are now open at www.questadventureseries.com

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