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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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Book of Condolences for Pope Francis at Cathedral

  A Book of Condolences has been opened at St Mary’s Cathedral for those wishing to pay their respects following the death of Pope Francis. The Pope, who led the […]

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A Book of Condolences has been opened at St Mary’s Cathedral for those wishing to pay their respects following the death of Pope Francis.

The Pope, who led the Catholic Church for twelve years, died on Monday at the age of 88.

He had been suffering from double pneumonia in recent weeks, but his death still came as a shock to many. Just hours before his passing, he had been seen greeting crowds in St Peter’s Square during Easter Sunday celebrations.

Locally, Bishop Ray Browne has led the tributes. He described Pope Francis as “a gentle shepherd” who brought humility and compassion to his role.

“It was with great sadness that I learned of the death of our Holy Father Pope Francis,” Bishop Browne said. “From the moment he chose the name Francis, rooted in humility, he signalled a papacy of building peace, care for the poor, and love for all of God’s creation.”

The bishop also highlighted the Pope’s focus on protecting the planet and caring for the marginalised, calling him “a voice for the voiceless” and “a witness to the Gospel in word and deed.”

A special Mass in memory of Pope Francis was held at St Mary’s Cathedral on Wednesday.

The Pope’s funeral Mass will take place on Saturday at 10.00am in St Peter’s Square. It will be led by Cardinal Giovanni Battista Re, Dean of the College of Cardinals, and concelebrated by church leaders from around the world.

Due to the Pope’s passing, the special Mass for the canonisation of Blessed Carlo Acutis, which was due to take place this Sunday has been cancelled.

Mass will still take place at the usual time of 11.30am. A new date for the celebration will be announced in due course.

Blessed Carlo Acutis was due to be officially declared a saint in Rome on Sunda but that has been postponed.

Carlo Acutis had a deep devotion to St Francis of Assisi, and his final resting place is in Assisi, near the tombs of St Francis and St Clare.

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Con O’Leary: Killarney loses a vibrant and popular personality

Killarney Chamber of Tourism and Commerce has led the tributes to the late Con O’Leary, an extremely popular and very successful businessman in the town, who passed away in the […]

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Killarney Chamber of Tourism and Commerce has led the tributes to the late Con O’Leary, an extremely popular and very successful businessman in the town, who passed away in the early hours of Sunday.

Con was a vibrant and popular personality in Killarney where he operated The Laurels on Main Street, a thriving bar and restaurant, which he inherited following the passing of his father, Thado.
The business organisation said from a social perspective, The Laurels became the beating heart of the town and it was a landmark at the Market Cross in the same way as Clery’s clock was in the capital city.
Chamber said Con’s passing really marks the end of an era as he was one of a golden age of inspirational local business people who developed and built Killarney, through hard work, bravery and great commercial flair, and helped create the wonderful tourist attraction and holiday destination it is today.
“Con was very proud of Killarney and he played a very active part in progressing the town at many levels.
“He was a man that was never short of great ideas and his contribution to the business life of the town and as a director of Killarney Race Company was immense,” Chamber said.
“He was ahead of his time in many respects with the introduction by what became known as “the singing lounge” many years ago and The Laurels always led by example through its successes in the annual Killarney Looking Good competition”.
The business representative organisation noted that the O’Leary family has always been very supporting of the town and Con’s daughter, Kate, was a very dynamic Chamber President and is still a very valued member of the executive.
Chamber expressed deep sympathy to Con’s wife, Anne, children Kate, Niall, Tara and Lorna, sons-in-law, grandchildren, sisters, relatives and friends as well as the dedicated staff in The Laurels, past and present, who Con always had great time for and a great rapport with.

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