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Don’t accept unnecessary risk

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By Michael O’Connor, theislandinvestor.com

I always advocate for long-term investing, but this buy-and-hold narrative can be misinterpreted as 'do absolutely nothing'.

I disagree with this take, and if your financial advisor has made no changes to your portfolio over the last few years, you should probably go shopping for a new one.

We had the most predictable and forecast interest rate hiking cycle over the last 18 months. If your portfolio was left sitting in bonds when negative asymmetric returns were clearly on the table (only downside), then you need to be asking some questions.

There is a difference between patience and incompetence. Unfortunately, over the short term, the two are indistinguishable.

If your financial advisor hasn't made any changes to your portfolio because they believe that 'time in the market' is all that matters, that's perfectly fine. That is an investment approach that has been successful for so many. But why are you paying them to sit on your money when you can just invest that money directly yourself on any online brokerage? If the middle-man isn't adding value, remove them.

Check your exposure

Just because you're a long-term investor doesn't mean you need to blindly reach for returns. Tactically adjusting your portfolio to mitigate against obvious risks on the table is an important part of the investment process.

With that said, growing expectations around a recession should not be seen as a 'sell everything' event. You simply need to reassess where your exposure lies.

Ensure you are invested in companies with;

Strong 'Net Margins': Improving revenue is great, but it needs to make the business more profitable. Far too many companies are spending more than they are making, all in the name of customer acquisition. This 'growth at any cost' tactic was rewarded when money was free, but with credit standards tightening and interest rates jumping higher, the endless growth narrative is about to catch up on many of these 'high growth' names.

High 'Free Cash Flow' Margins: In its simplest terms, free cash flow is just the cash that can be taken from a business without disrupting the operations of the business. Importantly, this number factors in the cost of growth. So, if a business is growing and has a good FCF margin, it should pique your interest.

Stable Return on Invested Capital (ROIC): ROIC is just the profits a business makes on the money invested into it. The premise is pretty straightforward. You want to invest in companies with a history of using their equity to generate more profits. Looking at companies with sky-high ROIC can be compelling, but what you want to see is a consistent history of stable ROIC over time. Ignore the once-off data; always analyse the trend.

You can find all this info on any company by simply typing the company's name into sites like stratosphere.io.

Be selective in the risks you take.

My portfolio

I have moved to underweight equities with a focus on quality and energy.

The remainder of my holdings have been moved into short-term treasuries, with a very small portion in long-term treasuries with zero corporate bond exposure.

I also hold roughly 20% in a short-term tactical portfolio mostly made up of distressed financials, tech and mining, but I would categorise these as bets more than investments and not something I necessarily recommend doing.

If you have any questions, please don't hesitate to reach out.

To get my latest 10 stock recommendations, sign up for 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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