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Failure is inevitable

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By Michael O’Connor

Successful investing is about learning from your mistakes... or mine!

Last week I shared a story about one of my friends who had lost a sizeable amount following an ill-informed yet entirely commonplace investing blunder. This week, to even up the playing field, I thought it would be only fair to go through some of my own hideous investments.

One of my first meaningful investments was into a cryptocurrency called Ripple (XRP) in late 2017. Armed with little-to-no understanding of the crypto space and about an hour of research, I decided that a $2,000 position was the only logical next step. My investment thesis at the time went something like this.

"It was trading at 20c a coin three weeks ago, and now it's at $2.20. If it continues like this, I'll be a millionaire by Easter."

It started off well, jumping from $2.20 to $3.30 a coin. A 30% jump in just a matter of days. My genius clearly knew no bounds.

The subsequent three months were somewhat less successful; it was a cataclysmic disaster, to put it mildly. The price did a vertical nosedive from $3.40 to $0.5c in a matter of weeks. My guaranteed millions had turned into a significant loss during a time when I definitely couldn't afford a 'significant loss'.. I was paying rent in Dublin at the time… enough said.

Another of my most memorable investing blunders is one I have discussed previously. This ended much more successfully but honestly haunts me far more than any loss ever will.

I purchased the much-beloved Canadian E-Commerce company 'Shopify' in late 2018 and sold after doubling my money just a few months later. I then watched on from the sidelines with tears in my eyes as Shopify went on one of the most relentless runs I have ever seen from a Large Cap company, a 20X jump from the day I purchased.

It may seem strange that I spend so much time regaling investing horror stories, given that my overall goal is to encourage and help people to start investing. Still, there is a couple of important universal take-aways from these personal anecdotes.

Nobody gets it right all the time

You simply need to be right more often than you are wrong. Casinos are heralded as money-making machines but only win 54% of the time. Not every investing position will be a winner. You will be wrong plenty of times during the course of your investing journey, and that's perfectly fine.

It's always important to highlight failures. We are all human. Modern technology has ensured that we are berated by personal highlight reels on a daily basis. Skills are advertised, flaws are hidden. We have a societal tendency to describe successful investors as having guru-like powers. This 'pedestal culture' means everyone else looks at them and says, "I could never do that", which is unfortunate because more people would be willing to try if they knew that those they admire are probably ordinary people who played the odds right. I know this held me back for longer than I care to admit.

"When you are keenly aware of your own struggles but blind to others", it's easy to assume you're missing some skill or secret that others have" – Morgan Housel.

Don't let fear of failure stop you from getting started. Learn by doing. I have learned a lot from all my investing mistakes, and they have ultimately made me more successful over time. While I am acutely aware that this sounds like something you would pull out of a fortune cookie at an all-you-can-eat Chinese buffet, it still stands true.

Start small but start now.

To learn how to start your own investing journey, visit www.theislandinvestor.com.

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Property & Finance

How long can it last?

Equity Wobble US stock markets extended their recovery following a sharp sell-off at the start of the week. Mounting concerns over the spread of the Delta variant and its ability to interrupt a strong reopening and economic recovery resulted in the worst day for global stocks in some months on Monday. Since then, a string […]

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Equity Wobble

US stock markets extended their recovery following a sharp sell-off at the start of the week. Mounting concerns over the spread of the Delta variant and its ability to interrupt a strong reopening and economic recovery resulted in the worst day for global stocks in some months on Monday.

Since then, a string of upbeat earnings reports and some aggressive ‘buying the dip’ strategies revived market optimism.

Double Your Money

The S&P 500 has now doubled in value in just 15 months following the March 2020 Pullback: The second fastest double in history, second only to the 1932 reversal after the infamous 80%+ crash of the great depression.

It is worth noting that the cumulative earnings for companies within the S&P 500 is set to double over the same period.

The market hasn’t doubled for no reason despite what some market heretics proclaim.

A Closer Look

After a brief respite due to strong market rotation dynamics, the narrow breadth of the S&P 500 is back in focus. The S&P 500 is up 4% since June 3, but ~80% of that move can be attributed to just the largest five stocks. This concentration in returns is one to watch as narrowing breadth is a sign of internal weakness and can sometimes precede pullback periods.

Market Outlook

As we focus on the second half of the year, investors will undoubtedly be haunted by fleeting bouts of uncertainty. Echoes of ‘this surely can’t last forever’ screech louder and louder as markets continue to notch up all-time highs. This uncertainty and doubt is an inherent part of the human condition that even the most steadfast investor must grapple with.

Lately, market participants are constantly worrying about, well, everything. Their concerns range from inflation and the Delta variant to tech regulation and tensions with China. None of these fears are irrational, but they are part and parcel of any investment. While all these concerns could negatively impact markets over the near term, there is no reward without risk, and historically, it hasn’t paid to be a pessimist.

While the outlook is broadly positive, uncertainties remain, as mentioned above. Economic statistics have been consistently positive in recent times, but this positive news stream is now simply functioning to maintain the current levels of market exuberance.

As we advance, it won’t be enough to say that businesses are recovering, and earnings are increasing. The market will need to hear about a stable recovery and more robust future earnings to come. As a result, market participants will be far more sensitive to any negative news, fuelling the fragility and volatility in the most exposed sectors of the market.

My overarching view is that economic recovery will persist, and upside remains, fuelled by higher earnings, fiscal stimulus, and low interest rates. With that said, pullbacks and market rotations are likely, and any deviation away from this base case scenario will create a painful environment for those holding the most speculative names.

As always, caution and patience are the order of the day.

For investing tips, go to www.theislandinvestor.com.

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Property & Finance

Tips to manage your home in the heatwave

By Ted Healy of DNG TED HEALY Our recent spell of good weather is certainly welcome but it does lead to some practical problems in the home. With the mercury rising to 30 degrees in some areas and night time temperatures ‘dropping’ to only 19 degrees, we find ourselves doing everything in our power to try and […]

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By Ted Healy of DNG TED HEALY

Our recent spell of good weather is certainly welcome but it does lead to some practical problems in the home.

With the mercury rising to 30 degrees in some areas and night time temperatures ‘dropping’ to only 19 degrees, we find ourselves doing everything in our power to try and stay cool.

With weather advisory warnings in place for high temperatures, we have all found our homes are heating up!
While we are quite happy to fork out our well-earned Euro for that foreign trip to the sun to bake in the Mediterranean heat, we now find ourselves in the unusual position of the good weather visiting us for a change!

While it is easy to enjoy the sunshine from the swimming pool in Portugal or the beach in Spain it is a different story when walking into your hot house at home.

Unfortunately, the large majority of us don’t have the luxury of air-conditioned homes as much of the new building technologies we have experienced revolve around heating our homes. We now find ourselves looking for ways to cool them down!

While the natural reaction is to open the windows, it is recommended to keep windows, blinds and curtains closed as this will keep the hot air out. If opening them, make sure to do so at opposite ends of the house to create an airflow throughout.

To circulate cool air inside, fill up some bowls with water and ice and place them in different areas of the house – in front of a fan works best if you have one.

Another simple but effective option is to cook outside. Use the BBQ as the oven generates heat inside the house.

Trying to get to sleep at night can be particularly difficult in soaring temperatures. Here is a novel tip to help you catch those z’s; consider freezing your bedcovers before going to bed!

It may sound daft but give it a try; strip the sheets, place in a bag and pop them in the freezer. When it is time to hit the pillow, simply put them back on and they will be nice and cool!

Also, try taking a cold shower before bed.

Any halogen light bulbs in the house will also create additional heat, so consider replacing with LED lights.

Open the attic hatch to keep the house as ventilated as possible, allowing heat to escape through the roof.

And finally turn off any appliances, like the TV, when not in use. Electrical appliances can give off a surprising quantity of heat, particularly while charging.

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