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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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Top awards for innovative students

By Michelle Crean Killarney students proved that their projects can make a positive impact after being honoured at the Young Social Innovators of the Year Ireland (YSI) Awards. The five […]

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By Michelle Crean

Killarney students proved that their projects can make a positive impact after being honoured at the Young Social Innovators of the Year Ireland (YSI) Awards.

The five members of ‘Operation Red’ in St Brigid’s Secondary School were celebrating this week after receiving a national Bronze Award for their project which is raising awareness about the lack of knowledge surrounding menstrual disorders. Their goal is to encourage open discussion on these issues, so no woman ever feels alone. The team will receive a prize bursary of €750, which can be put towards developing their idea and increasing the impact of their innovation.

Young Social Innovators is a non-profit organisation that believes in the power of youth. Its vision is to empower, equip and inspire young people to change the world for good. The girls’ project was one of 34 shortlisted from over 400 YSI groups around Ireland.

“As part of our project we’re in the process of developing resources for the SPHE classes in our school,” Transition Year student Anna Cashman told the Killarney Advertiser.

“We’ll try it here as a pilot project and branch out to other schools.”

She added that plans so far include educating students by putting an information booklet together using HSE and NHS advice.

“It’s important to have the right information as it’s a very under researched issue. We have had a positive response to it.”

Cait Fitzgerald Healy from YSI arrived to the school as a surprise to the group and presented the girls with their trophy towards the end of the online ceremony. There was huge excitement all round! Teacher and mentor Catherine O’Donoghue also received the ‘Let them Shine’ award for her involvement with YSI over the last five years.

MAKE OUR WORLD SAFER AWARD

Picking up the ‘Make Our World Safer Award’, a team from St Brendan’s College was recognised for its ‘One Punch Can Kill’ project, which aims to combat toxic masculinity and raise awareness amongst young men of the seriousness of ‘one punch attacks’.

When researching the issue, the team found that many perpetrators rarely reoffend and the percentage of male-on-male violence in society is extremely high. The group examined the route cause of the issue, which stems from a variety of factors, and wanted to raise awareness that spontaneous and random ‘one punch attacks’ can have serious and life-changing consequences.

Amongst its many actions, the team embarked on media outreach, designed and delivered student workshops, created a poster campaign, held an Anti Violence Week and is currently working on a children’s book in an effort to promote the important message that ‘One Punch Can Kill’.

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Pres footballers are in seventh heaven

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The St Brigid’s Presentation Second Year footballers were crowned County Junior B champions on Friday last following a superb seven-goal victory over Mercy Mounthawk Tralee in the Ballymac sunshine.

The girls hit the ground running, bagging two quick goals from the boots of Lily O’Shaughnessy and Niamh Cantillon.

The Pres defence was solid and dogged throughout and managed to keep Mounthawk from breaching their goal for the duration. Abby Cronin scored three goals and a point to torment the oppostion and Niamh Cantillon scored a second goal plus a point to keep the Killarney school well in front.

Further scores from Muireann Healy and a final goal from Lara O’Neill gave us a final score of 7-4 to 0-11.

It was an excellent performance from the entire team, including the substitutes who all played their part. Captain Eve Culhane proudly accepted the cup on behalf of the team, and St Brigid’s, at the end of the game and joyous celebrations followed.

Congratulations to all the players and to their trainers: Mr Counihan, Ms Healy and Ms Brosnan.

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