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Conviction is everything

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Last week, one of my close friends mentioned in passing that he had bought Virgin Galactic, the space tourism company owned by Sir Richard Branson.

Since purchasing a few months back, the stock had continued to slip, and he sold his entire position. The following day the stock jumped 39% after the FAA approved its passenger spaceflight license… such is life.

To be honest, the whole conversation blew my mind. While I have no affinity to Virgin Galactic itself, I think it is fair to say that any investment in to a space exploration company is likely to be a volatile, ultra-long-term investment. In fact, I fail to think of a single investment that would require a more forward-looking investment thesis - yet he held for just three months.

As I dug a little deeper, his actions became a lot easier to understand. Having purchased the company off the back of a headline he saw online, he had no problem selling even faster at a loss. As the stock tanked, his defensive wiring kicked in, and, in an effort to protect from further losses, he sold. Seems rational, right? Many of us would have done the same simply because it's difficult to maintain faith in a company you know nothing about.

All this got me thinking; potentially, the biggest reason retail investors struggle with stock selection and even passive investing is a lack of conviction around what they hold.

Narratives are not enough

Many of the most-discussed investments or stock picks are notorious for being surface-level in nature. DIY investors will blurt their two-line quip about a particular company they have invested in, but if you go in search of some more in-depth supportive analysis, you will be left empty-handed.

The truth about modern-day retail investing: Many of the positions are populated by investors whose investment thesis is supported by little more than a tagline they pulled following an 'in-depth' three-minute Google search.

Now, I'm not saying this whimsical investment approach applies to everyone, nor am I saying that searching online for stock tips is inherently a bad thing (I do it all the time). What I will say is, this quick stock tip search needs to be the beginning of your investment research, not the end.

You can borrow someone's idea, but you cannot borrow their conviction. By simply taking another person's stock tip, you’re left with a plethora of unanswered questions; how much should I invest, at what point should I sell, what changes to the company's outlook will change the investment thesis? These are all questions you need to answer on your own.
 

Do your homework

Over your investing lifetime, major corrections will happen. Any number of random short-term events can tank a stock. When that happens, you need something to fall back on to avoid doing something you later regret.

You will never expose yourself to the exponential returns of truly innovative companies if you don't understand why you own the stock in the first place.

Not one of the Mega-Cap companies that dominate the current investing landscape achieved this status without first experiencing multiple bouts of gut-wrenching volatility.

Those who thought Amazon was just an online bookstore lacked the conviction to hold as the stock plummeted over 90% after the dot com crash. However, for those who had the iron stomach and foresight to see the company's true potential, the rewards were life-changing.

This works in the opposite direction as well. Those who thought Netflix was simply a DVD vending machine company sold their shares as the company jumped in value, while those who held their conviction since IPO multiplied their investment by 500 times without even having to lift a finger.

In short, you need to do your own homework if you want to be a successful active investor. Investing in every tip you see online may work over the short run, but without an understanding of what you own and why you own it, you are in for a painstaking investment experience laced with perpetual uncertainty.

To learn how to generate conviction in your investment decisions visit www.theislandinvestor.com.

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Cost of agricultural land set to increase by 8% this year

By Ted Healy of DNG TED HEALY The results of a survey on agricultural land values conducted by the Society of Chartered Surveyors Ireland (SCSI) was published earlier this week. […]

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By Ted Healy of DNG TED HEALY

The results of a survey on agricultural land values conducted by the Society of Chartered Surveyors Ireland (SCSI) was published earlier this week.

It predicts an increase in land values by an average of 8% this year and an increase of 14% on average in rental values.

The report titled, ‘SCSI/Teagasc Agricultural Land Market Review & Outlook Report 2023’, analyses the agri sector performance over the past year and projects how it will perform over the next 12 months.

In all 134 agri professionals and valuers were surveyed, who expect the outlook for dairy farmers to ease and a challenging future for sheep and tillage farming.

Rental Land values in Munster increased by an average of 13% in the last year with a 9% increase experienced in Leinster.

The report indicates that the average non-residential farmland prices in 2022 ranged from €5,564 per acre for poor quality land – up five percent from €5,308 in 2021 – to €11,172 per acre for good quality land – up two percent from €10,962 the previous year. Strong demand from dairy farmers for good quality land is driving the market.

The majority of those surveyed believe there is likely to be an increase in demand from dairy farmers to purchase farmland in 2023.

One point to note however, is that changes to the European Nitrates Directive, particularly measures aimed at protecting water quality, may have an impact on land prices, especially rental prices.

In order to maintain current levels of milk production – and to comply with the directive – many dairy farms will need to either increase their land area or reduce milk production.

The Residential Zoned Land Tax (RZLT) is also coming down the line at an alarming rate, farmers have until May 1 to make a written appeal. Under the new legislation farmers owning currently zoned land face an annual tax bill of 3% of the market value of their zoned land.

This will result in countless numbers of landowners facing crippling tax bills from next year on. It is expected that this new tax may bring forward extra land sales later this year before the tax takes hold.

The IFA (Irish Farmers Association) have this week sought a senior counsel review of the legislation governing the Residential Zoned Land Tax.

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What is a Fire Safety Certificate?

By John Healy of Healy Insurances A Fire Safety Certificate is an official document that verifies if a building design submitted as part of an application will, if constructed in […]

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By John Healy of Healy Insurances

A Fire Safety Certificate is an official document that verifies if a building design submitted as part of an application will, if constructed in accordance with the plans and specifications approved by the Building Control Authority, comply with the requirements of the Building Regulations.

Fire Safety Certificates are issued by a Building Control Authority. The certificate confirms that the building has adequate escape facilities and that the building is designed in a way that prevents and limits the spread of fire. While all buildings must comply with the fire regulations, not all buildings will need a Fire Safety Certificate.

Which developments require a Fire Safety Certificate?

The Building Control Act (1990 & 2007) specifies the development types that require Fire Safety Certificates:

· Works in connection with the design and construction of a new building
· Works in connection with the material alteration of a day centre, a building containing a flat, a hotel, hostel or guest building, an institutional building, a place of assembly, a shopping centre
· Works in connection with the material alteration of a shop, office or industrial building where additional floor area is being provided within the existing building or where the building is being sub-divided into a number of units for separate occupancy
· Works in connection with the extension of a building by more than 25 square metres
· A building as regards which a material change of use takes place.

Some developments are exempted from requiring a Fire Certificate and can include:

· Certain single storey agricultural buildings
· A building used as a dwelling (other than a flat)
· A single storey domestic garage
· A single storey building ancillary to a dwelling which is used exclusively for recreational or storage purposes or the keeping of plants, birds or animals for domestic purposes and is not used for any trade or business or for human habitation
· Works in connection with a Garda station, a courthouse, a barracks and certain government buildings.

If a building is inspected by a member of the building control authority and it transpired that no Fire Safety Certificate is in place, the building could be subject to closure. For more information see www.kerrycoco.ie/home3/building-control/firesafetycerts.

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