# Irish Stock Market Plummeting



## emsman

has anyone noticed that the ISEQ has been in free-fall the last couple of days. Having just put 25% of my investment into Celtic Freeway funds in Quinn life i wonder should i just get out of it. Even though i hope to leave the investment in for 3+ years.


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## capall

If this is the way you are going to react the stock market is not for you my friend


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## demoivre

emsman said:


> has anyone noticed that the ISEQ has been in free-fall the last couple of days. Having just put 25% of my investment into Celtic Freeway funds in Quinn life i wonder should i just get out of it. Even though i hope to leave the investment in for 3+ years.



3 years is too short a time frame imo. 7 to 10 years is what I would be looking at for this type of investment.


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## Queenspawn

Yes I noticed that alright. But as the others are saying this is the long game. If you don't have the nerve maybe you need to play  a lower risk sport.  The China fund fell like a lead balloon last month, everyone was tempted to bale out but lo and behold its up another 2-3%.  

The Quinn funds are great because you can track them online.. the Quinn fund are a pain because you can track them online.


QP


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## Jaid79

Queenspawn said:


> Yes I noticed that alright. But as the others are saying this is the long game. If you don't have the nerve maybe you need to play a lower risk sport. The China fund fell like a lead balloon last month, everyone was tempted to bale out but lo and behold its up another 2-3%.
> 
> The Quinn funds are great because you can track them online.. the Quinn fund are a pain because you can track them online.
> 
> 
> QP


 
What sort of fees would some body incur for taking part in The Quinn funds? also wouls 10k be a reasonable amount to start with?


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## ClubMan

Did you bother checking their website to see their charges?


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## joe sod

The ISEQ has had an unbelievable run over the last few years especially the last year it peaked at 10,000, now its at 9100, As recently as a year ago it was at just 7100. Therefore I think it is reverting to the mean and is going to give back alot of those gains so be prepared for more big falls, the warning shot was fired last february when the market wobbled at 10100. Yes the mantra goes that investing is a long term game yet the nasdaq has still to recover the heights it achieved in 2000 and this is after a strong resurgance in high tech over the last two years. If you are concerned then put a 15% stop loss or what ever margin you are comfortable with, if the market falls to that level then sell and move onto something else.


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## ronaldo

joe sod said:


> put a 15% stop loss or what ever margin you are comfortable with, if the market falls to that level then sell and move onto something else.


 
I think the strategy followed by most investors should be the exact opposite of the above. It's usually better to hold and buy as much as you can as the market drops. 

Alot of inexperienced investors would say that, had you bought the FTSE 100 index at the hight of the 2000 bubble, you would only be making back your money now. However, had you kept buying as it dropped, your average cost wouldn't be that of the 2000 peaks - it would be alot lower. Add to that the dividends you would have received in the meantime and you would be sitting pretty now.

Think about it from this point of view - Everytime any market has dropped in history, it has always recovered and reached new peaks. Therefore, why sell when the prices drop 15%. Instead, you should buy more safe in the knowledge that, unless the markets do something that they have never done in history, you will recover your loses and gain more on top.


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## gonk

ronaldo said:


> Alot of inexperienced investors would say that, had you bought the FTSE 100 index at the hight of the 2000 bubble, you would only be making back your money now. However, had you kept buying as it dropped, your average cost wouldn't be that of the 2000 peaks - it would be alot lower. Add to that the dividends you would have received in the meantime and you would be sitting pretty now..


 
Inexperience doesn't come into it. For the investments made at the peak of the market, you _would_ only be making your money back now. The performance of the later stream of investments is irrelevant. 



ronaldo said:


> Think about it from this point of view - Everytime any market has dropped in history, it has always recovered and reached new peaks. Therefore, why sell when the prices drop 15%. Instead, you should buy more safe in the knowledge that, unless the markets do something that they have never done in history, you will recover your loses and gain more on top.


 
Well, after 17 years the Nikkei 225 is only around half of its 1990 peak. If it takes as long again to get back to par, you're into investment timeframes that are too long for all but quite young investors. As Keynes said, "in the long run, we're all dead."


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## ClubMan

One year Yahoo chart for ISEQ - hardly "plummeting" as the original poster suggests!  Just look at the 2 and 5 year charts while you're there.


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## SS expert

What would be expected to happen to the ISEQ if there was a house price crash?


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## PMU

emsman said:


> has anyone noticed that the ISEQ has been in free-fall the last couple of days. Having just put 25% of my investment into Celtic Freeway funds in Quinn life i wonder should i just get out of it.


 
  Emsman, you should note that the ISEQ dropped by 30 % in 2002 and by about 4% the previous year.  So it has experienced big drops in the past. As far as I can remember, based on recent performance, you’ve a one in three chance that an investment in the ISEQ will result in a loss in any year; or, to put it another way, you’ve a chance you will suffer a loss one year in every three. So there is nothing ‘significant’ about the way the ISEQ is behaving at present and we’re only halfway through the year.  



joe sod said:


> If you are concerned then put a 15% stop loss or what ever margin you are comfortable with, if the market falls to that level then sell and move onto something else.


 
  If you do this all you will end up with is a 15% loss.  Your ‘something else’ will then need to increase in value by about 18% just to break even. It also means that you’ll lose all your capital after 6 bad investments.



ronaldo said:


> It's usually better to hold and buy as much as you can as the market drops.


 

  While I agree with ronaldo that market drops are an opportunity for buying , but it’s not to “buy as much as you can”, but to buy as much as you need to maintain the weighting of the index in your portfolio.

  Also your asset allocation strategy should also have forced you to sell or to allocate away from the ISEQ when it was on the way up if it were taking up a greater % of your portfolio than its allocation justified.


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## joe sod

"Emsman, you should note that the ISEQ dropped by 30 % in 2002 and by about 4% the previous year. So it has experienced big drops in the past. As far as I can remember, based on recent performance, you’ve a one in three chance that an investment in the ISEQ will result in a loss in any year; or, to put it another way, you’ve a chance you will suffer a loss one year in every three. So there is nothing ‘significant’ about the way the ISEQ is behaving at present and we’re only halfway through the year. "

Yes the iseq dropped in 2002 but it was not in bubble territory then, it was probably safer in 2002 than many other markets around the world, however the wobbles in 2001/2002 was caused by high tech in which the iseq wasn't especially overweight in, this time it is being caused by the subprime collapse and financial sector, and this is where the iseq is now overweight, the iseq has never before experienced a one year gain like the last year, so the best stategy is sit on the sidelines or invest in safer markets around the world


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## emsman

Cheers for all replies. Didn't know it was gonna be that hot of a topic. But i have one more question onit.

I only intend to leave my money in these funds for 3-5 years. SO would it be better to take out my 25% in the Celtic Fund and transfer it to some other fund perhaps Emerging markets or China? I know all about leaving it in long term and the currency risk with other markets but the ISEQ is at its highest in years and i would think that in the next 3-5 years i cannot see myself makin a profit with it??


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## capall

As has been explained in earlier posts by moving out of celtic funds you will be locking in your loss. This is only a valid stategy if you believe the  ISEQ is going to continue to slide with no bounce back. 
By moving to a china/emerging market funds which are areas which are potentially more volatile than say irish or european stock markets and also subject to currency risk you could find yourself cashing out in 3-5 years time taking another loss. In these funds you have to be able to sit out  market volatility


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## emsman

Yes, I understand all that. But that is my point I do think the ISEQ is gonna continue to slide in the short term anyways. So really what i'm asking is what do other people think on how the ISEQ is gonna fair out in the next 3-5 years??


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## charttrader

_SO would it be better to take out my 25% in the Celtic Fund and transfer it to some other fund perhaps Emerging markets or China? I know all about leaving it in long term and the currency risk with other markets but the ISEQ is at its highest in years

_US markets are at all-time highs.  European markets are at all-time highs.  Emerging markets have been going absolutely bananas over the last few years and China, despite the recent correction, has enjoyed stratospheric returns over the last few years.  I have no idea where the ISEQ will be in 3-5 years but if you're nervous because "it's at its highest in years", then the aforementioned markets are  hardly the place for you either.


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## markowitzman

interesting this eve on cnbc lehman asset manager was recommending protective puts on portfolios with exposure to banks etc.


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## joe sod

My advice is stay away from the iseq, there are a few excellent companies in the iseq that compete internationally that are worth putting money into, i know im not allowed name them. It is true that the DOW has reached all time highs but it has only recently taken out the highs reached in 2000, so you would have waited 7 years to be back even in dollar terms, however when you take into account the substantial depreciation of the dollar over that time, the dow has still to reach the highs of 2000. Also the DOW is much more diversified than the iseq with the big oil companies and mining companies causing it to reach all time highs (dollar terms). The majority of the money in the iseq is held by overseas institions and hedge funds, and this money is not loyal but chases returns, that was the reason for the huge run up in the iseq last year. If you don't want to lose out in currency transactions then invest in the big european companies eurostox 50 etc.


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## joe sod

I also agree with the other poster about staying away from emerging markets, because an awful lot of hot money has flowed into them, in fact the iseq is alot safer than emerging markets, i think europe is your safest bet then you wont lose out on currency although i can't see the euro rising much further against the dollar.


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## joe sod

another big fall in the iseq, but the dow also badly hit, i presume europe down too


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## emsman

I'm gonna take my 25% out of the Celtic funds and put it somewhere else. I have 40% in Euro, 20% China, 10% Emerging Markets, 5% Japan. Where would you put your 25% now?? remember this is only gonna be a 5 year plan.


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## demoivre

emsman said:


> remember this is only gonna be a 5 year plan.



So why are you taking the money out after two weeks?


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## demoivre

joe sod said:


> another big fall in the iseq, but the dow also badly hit, i presume europe down too



Short term volatility shouldn't affect long term strategy imo and FWIW the Dow is up as I type.


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## emsman

I've done a little research into the Irish Stock Market and here's my thinking:
Most of the top companies in the ISEQ are Banks and CRH. The banks gets most of their money from construction and seen as construction seems to be slowing down now and for the foreseeable future i can't see the ISEQ being too good in the short term. I only want this investment for 5 years max. So i'm wondering is it better to put my money into another stock market that will do a lot better than the ISEQ in the next couple of years?


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## gonk

emsman said:


> I've done a little research into the Irish Stock Market and here's my thinking:
> Most of the top companies in the ISEQ are Banks and CRH. The banks gets most of their money from construction and seen as construction seems to be slowing down now and for the foreseeable future i can't see the ISEQ being too good in the short term. I only want this investment for 5 years max. So i'm wondering is it better to put my money into another stock market that will do a lot better than the ISEQ in the next couple of years?


 
You are right that the ISEQ is heavily biased towards banking and construction. If there is a serious fall in the Irish property market, they will suffer. But the $64,000 question is, how do you identify which other stock market will do better than the ISEQ? Beware of switching every time there is a downward blip - it could be expensive in the long run. That said, I sold my holding in the ISEQ 20 ETF last week and I'm glad I did - it's down another 6.7% since then. I made a decent profit, but I think the ISEQ has had it for the moment. I'm not saying there will be a crash, or anything like that. I just feel there are better possibilities out there at the moment. (By the way, am I right in thinking the Celtic Freeway fund is just a wrapper for the ISEQ 20 ETF?)

You could consider moving some of your funds out of equities altogether for greater diverstity, into, say, cash, commodities or property. Do Quinn do any funds along these lines?


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## CCOVICH

gonk said:


> (By the way, am I right in thinking the Celtic Freeway fund is just a wrapper for the ISEQ 20 ETF?)


 
Pretty much.



			
				gonk said:
			
		

> You could consider moving some of your funds out of equities altogether for greater diverstity, into, say, cash, commodities or property. Do Quinn do any funds along these lines?


 
Do Quinn offer:

Cash?  Yes.  Commodities?  No.  Property? No.


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## joe sod

A very important point from marc faber about the dow, s+p 500, and nasdaq being still below the 2000 high in real terms even though in nominal terms the dow recently hit new highs (the important point is that the dow has still not taken out the 2000 high)

*"MARC FABER:* We have a bubble in U.S. stocks maybe - but we have a much bigger bubble in Spanish real estate, we have a much bigger bubble in art prices and in prestigious real estate and collectables than say in U.S. equities - which are at the new all-time high, except for the Nasdaq. If you adjust the Dow Jones and the S&P for the depreciation of the dollar then in euro terms the Dow is still down 35% from its 2000 peak, the S&P by a similar amount, and the Nasdaq in euro terms is still down 63% from peak. In gold terms all the U.S. indices are down more than 50% from their peaks. So the U.S. Federal Reserve can print money - in nominal terms they can boost things - but it means the dollar goes down, and certainly goes down against gold. "



This is also an important point in relation to property I do not believe there will be a collapse in nominal terms but the real value of property will be eaten away by inflation so that in 8 years time a 400,000 house will not be a huge amount of money anymore.


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## krinpit

emsman said:


> I've done a little research into the Irish Stock Market and here's my thinking:
> Most of the top companies in the ISEQ are Banks and CRH. The banks gets most of their money from construction and seen as construction seems to be slowing down now and for the foreseeable future i can't see the ISEQ being too good in the short term. I only want this investment for 5 years max. So i'm wondering is it better to put my money into another stock market that will do a lot better than the ISEQ in the next couple of years?



Don't forget that companies like CRH are multinational operations with many diverse holdings. The Irish property slowdown doesn't appear to have affected them too much. Anyway, from an Irish construction point of view, don't forget about the major projects included in Transport 21 (Metro, Luas, Dart, Motorways, road upgrades)


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## gonk

joe sod said:


> If you adjust the Dow Jones and the S&P for the depreciation of the dollar then in euro terms the Dow is still down 35% from its 2000 peak, the S&P by a similar amount, and the Nasdaq in euro terms is still down 63% from peak.


 
The 2000 peak came about as a result of the dot com boom, when outlandishly unrealistic valuations were placed on companies which could claim the most peripheral involvement in the tech sector.

Remember Baltimore? Ex-FTSE 100 member, whose share price collapsed 99% before being delisted?

The point is that the 2000 peak was an aberration, not a fair valuation to which it is reasonable to expect inflation-adjusted prices to revert.


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## Howitzer

gonk said:


> The point is that the 2000 peak was an aberration, not a fair valuation to which it is reasonable to expect inflation-adjusted prices to revert.


 
Spot on. 

You always have to take something with a grain of salt when comparisons are being made to abnormally high (or low) valuations.


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## werner

Obviously the sentiment with the housing market is having a major impact on the ISEQ especially with the financials.

I wonder will increases in mortgage relief in December's Budget help lead to a recovery in the demand for property?

The economy is still doing well, we have had a rise in the GDP of 7.5% & GNP of 6.4% in the first quarter of the year. I don't think the ISEQ is reflecting the underlyng economic strength so I do expect a recovery.

Anyone care to guess how low the 20 will go before there is an upswing?

BTW can anyone advise if Quinn Life's Celtic Freeway reinvests dividends earned for Celtic Freeway in its funds?


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## radioactivem

It could go lower if bad sentiment about the housing market keeps affecting the main bank stocks (aib, boi) which are relatively heavily weighted in the iseq 20. Some of the brokers seem to think it's overdone and that it will pick up after the summer when the trading volumes aren't so low - so hopefully that will happen. The thing is, only about 10% of AIB and CRH earnings come directly from their irish divisions.. (I think)
it's a good buying opportunity though


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## Sunny

radioactivem said:


> It could go lower if bad sentiment about the housing market keeps affecting the main bank stocks (aib, boi) which are relatively heavily weighted in the iseq 20. Some of the brokers seem to think it's overdone and that it will pick up after the summer when the trading volumes aren't so low - so hopefully that will happen. The thing is, only about 10% of AIB and CRH earnings come directly from their irish divisions.. (I think)
> it's a good buying opportunity though


 
Why is everyone blaming the fall on some so called negative sentiment on the housing market and ignoring the more general situation? Equities are under pressure worldwide due to concerns about the US economy and the possibility that we could be seeing the beginning of a credit squeeze which will impact on LBO and M&A activity, both of which have been major drivers of equity prices. The ISEQ is just following the downward trend albeit at a faster pace than other indices.


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## gonk

radioactivem said:


> it's a good buying opportunity though


 
I'd want to see some recovery before I'd be convinced of that. The ISEQ 20 is down another 2.2% so far today.


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## Markjbloggs

Sunny said:


> Equities are under pressure worldwide due to concerns about the US economy and the possibility that we could be seeing the beginning of a credit squeeze which will impact on LBO and M&A activity, both of which have been major drivers of equity prices. The ISEQ is just following the downward trend albeit at a faster pace than other indices.



Not strictly true - ISEQ is by far the worst performing index. Most Asian stock markets are up recently and turmoil in the US seems confined to the financials.  Conclusion has to be that the ISEQ is being weighed down by the Irelands' housing woes.


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## gonk

gonk said:


> I'd want to see some recovery before I'd be convinced of that. The ISEQ 20 is down another 2.2% so far today.


 
Now 2.85% and falling . . .


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## charttrader

_Why is everyone blaming the fall on some so called negative sentiment on the housing market and ignoring the more general situation? Equities are under pressure worldwide due to concerns about the US economy and the possibility that we could be seeing the beginning of a credit squeeze which will impact on LBO and M&A activity, both of which have been major drivers of equity prices. The ISEQ is just following the downward trend albeit at a faster pace than other indices.

_???  Most major markets have been on a major bull run since the Spring correction.  Dow was at all time high just last week - 2000 points or so above its March low.  Iseq, in contrast, has been looking iffy for months.


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## Sunny

charttrader said:


> _Why is everyone blaming the fall on some so called negative sentiment on the housing market and ignoring the more general situation? Equities are under pressure worldwide due to concerns about the US economy and the possibility that we could be seeing the beginning of a credit squeeze which will impact on LBO and M&A activity, both of which have been major drivers of equity prices. The ISEQ is just following the downward trend albeit at a faster pace than other indices._
> 
> ??? Most major markets have been on a major bull run since the Spring correction. Dow was at all time high just last week - 2000 points or so above its March low. Iseq, in contrast, has been looking iffy for months.


 
I was talking about the last few days not trends. The ISEQ was always going to struggle once the housing market showed signs of cooling due to the importance of CRH and the banks to the index. However, the 6 billion euro written off the index today is not caused by housing market worries especially when the economy is growing at 4-5%. It is caused because there is a general repricing of risk worldwide and the equity markets are finally listening to what the credit markets has been saying for the past while.


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## joe sod

gonk said:


> The 2000 peak came about as a result of the dot com boom, when outlandishly unrealistic valuations were placed on companies which could claim the most peripheral involvement in the tech sector.
> 
> Remember Baltimore? Ex-FTSE 100 member, whose share price collapsed 99% before being delisted?
> 
> The point is that the 2000 peak was an aberration, not a fair valuation to which it is reasonable to expect inflation-adjusted prices to revert.


 
If it was an abberation, try telling that to the people who lost money then, it hasn't even recovered 1999 levels, are you saying this is also an abberation and that two years of investing involving billions and billions of dollars was just an abberation, so then the iseq at 10000 was also an abberation and depeending how low it goes 9000, 8000 etc can this also be dismissed as an abberation. I don't recall many analysts telling investors in 1999, 2000 that this was an abberation (actually *MARC FABER* above was warning investors about the extreme over valuations then), however i do agree that the undervaluation of the euro compared to the overvaluation of the dollar the had alot to do with it. But an awful lot of european money including irish was flowing to the US markets which caused the dollar/euro valuations then.


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## joe sod

I maybe negative on the iseq as a whole but i am not negative on some stocks in the iseq. Basically i think that in the current environment you have to pick the strongest fittest companies in the iseq rather than the whole iseq.


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## evan

I see dublin getting hit the worst of all european markets, it seems foreign funds are all selling the dublin market


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## Sarsfield

evan said:


> I see dublin getting hit the worst of all european markets, it seems foreign funds are all selling the dublin market


 
And given that these funds are likely to seek and find opportunities elsewhere, this money won't be back anytime soon.  So it's hard to see a quick revival of the Dublin market.


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## demoivre

Sarsfield said:


> And given that these funds are likely to seek and find opportunities elsewhere, this money won't be back anytime soon.  So it's hard to see a quick revival of the Dublin market.



ISEQ overall up 4.5% today so far so looks like someone is buying! Notwithstanding Irish banks exposure to the Irish property market the recent well documented falls in the ISEQ should also be taken in the context of the spectacular gains in the index from June 06 to June 07 where it rose by about 47%.


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## gonk

demoivre said:


> ISEQ overall up 4.5% today so far so looks like someone is buying!


 
I suppose it could only go down so far, when the likes of Bank of Ireland were available yesterday at about a 5% dividend yield.


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## runner

AIB results out tomorrow. Should give some indication as they are broadly representative of ISEC difficulties. Could be 'dead cat bounce' today!


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## South

I would imagine these results are not going to be too surprising, it's the outlook that investors are concerned about.


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## Sunny

South said:


> I would imagine these results are not going to be too surprising, it's the outlook that investors are concerned about.


 
I am going to hazard a guess and say that the outlook will be "economy is performing well, credit quality is excellent, housing market slow down is welcome and that profitability is still expected to grow strongly"....Any deviation from that common thread or even the slightest negative sentiment and the ISEQ will enter free fall again. No pressure on AIB then!!


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## JR Rizzo

South said:


> I would imagine these results are not going to be too surprising, it's the outlook that investors are concerned about.


 
Isnt it ALWAYS the outlook that investors are concerned about 

what do the so-called professional experts think about the ISEQs crash??

Its interesting and (as always) annoying to read the irish economy spin doctor's reports and articles around this time,
aside from (obviously risky) property market there was *no ISEQ doom and gloom forecasting *from any bank economists, brokers, government departments within the last few months.

(when its convenient to now ignore property market trouble)
we have a high growth, low employment, low debt-asset ratio
economy,

but

hang on!

*the ISEQ has dropped (rather "had correction") nearly 20%*

so how did the *outlook *for the big irish companies drop by such a HUGE
amount in such a short time with no ECB rate shocks??

20% drops arent supposed to happen to strong economies without
ANY warning!?!?

5 maybe 10% would be OK,
but the fact that the iseq has plummeted so much
and none of the aforementioned spin-doctors even mentioned this
possibility and risk (ok, its not in their professional interests to)
shows up their credibility,
but more importantly exposes the DANGERS of blindly following most investment professionals advice.

*however these spin-doctors are not all bad*,
there has been alot of honest commentary about irish property (which is
so influencial on ISEQ!), albeit after alot of bubble blowing SPIN!

we have been warned to expect various property slowdowns,
so the smart investor takes these forecasts into account when considering trading ISEQ companies, 

but why hasnt the the property uncertainty and fear preaching
fed across into ISEQ company analysis and forecasting??

the key question:-
is it usual behaviour for property prices to *follow *banks, builder, etc stock prices?
or for national stock prices to follow nationaly property prices??

or are we simpley just feeling the fear of the US sub-prime meltdown?

JR.


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## krinpit

JR Rizzo said:


> or are we simpley just feeling the fear of the US sub-prime meltdown?
> 
> JR.



I'm no expert, but my understanding of the current climate is that borrowers are defaulting on mortgages in the US sub prime market. This has caused the collapse of a few lending institutions. This has led to worries about lending practices, especially lending for investment in the stock market. This has led to banks insisting that loans be paid back/or restricting the lending of new money for this purpose. This means a reduced liquidity in the market (as fewer investors can afford to buy stock). With this reduced liquidity, comes reduced demand which causes prices to fall (simple economics right?). 

The fear element that you mention is probably a result of investors viewing the state of the US markets, and realising that it could easily happen in Ireland, given the current property slowdown and interest rates hikes.

I realise it's probably a bit more complicated than that (i.e.: so much of the iseq directly relies on construction and lending for construction), but I think it's the guts of it


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## Markjbloggs

Hearing rumours that Caxton Associates, one of the 10 largest Hedge funds in the world, is about to blow up.

Fasten your seatbelts!!!


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## charttrader

Sounds like this rumour is baseless;  

_Caxton denies any such rumors. According a friend o' DealBreaker, there was a "larger than normal liquidation in order to reduce risk," the main fund is down 3-4% mtd and Caxton "made money today.

_[broken link removed]


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## z109

Still it's not being let go!
[broken link removed]

What's the significance of hedge fund blow ups to the ordinary person whose main investment is pension/PRSA/PIP?


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## joe sod

The subprime crisis is hitting financial stocks the worst that is why the iseq is getting hit badly because it is now heavy in financial stocks, maybe if the banks keep falling the iseq will become more balanced. In the short term there maybe a recovery, but i think the iseq is going to thread sideways for a few years simply because financial stocks are now out of fashion and it will take a few years for renewed investor interest, so don't be too quick in jumping back in.


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## Brendan Burgess

We don't discuss individual shares on Askaboutmoney. 

I appreciate it's hard to have this discussion without breaking that rule, but does this thread contribute anything? It's pure speculation type stuff. It's a little like the discussion of house prices.  I think it might be better discussed over on askaboutshares.com? 

Brendan
Administrator


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## demoivre

I disagree. This is a discussion about the fall in the ISEQ which is relevant to many investors. In particular I think the disproportinate decline in the ISEQ relative to other world indices, and the possible reasons behind that decline, is very important regarding one's decision to invest in the ISEQ. One or two individual stocks have been mentioned in the thread but imo that is substantially different to discussing  valuations on particular stocks. There are numerous threads on AAM that involve speculation about why a particular event has happened or is going to happen, so I don't see why this one should be singled out on that basis.


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## werner

demoivre said:


> I disagree. so I don't see why this one should be singled out on that basis.


 
I am in full agreement with you there demoivre. Having read this site for quite some time far too many topics and threads have been strangled on askaboutmoney.com with little valid reasons.

The ISEQ has previously dropped in the summer i.e." sell in May etc" ( look up the historical stats yourselves) but this year there has been panic selling other wise we would not have seen the quick rebounds. Is there some stock market manipulation of the ISEQ going on? 

Going forward should the ISEQ's ETF holdings be rebalanced to reflect the current economic situation? If so would anyone care to suggest how it should be rebalanced? e.g. less in financials, construction etc?


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## diarmuidc

werner said:


> Going forward should the ISEQ's ETF holdings be rebalanced to reflect the current economic situation?


That sort of negates the whole point of index linked ETFs. ETF's holdings are weighted according to market cap in the index (regardless of what the current economic situation is). What you are looking for is a managed fund.


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## capall

I think house prices are going to rocket(upwards) over the next few months,the ISEQ will rebound,the tribunals will end,the rain will stop


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## tyoung

werner said:


> I am in full agreement with you there demoivre. Having read this site for quite some time far too many topics and threads have been strangled on askaboutmoney.com with little valid reasons.
> 
> The ISEQ has previously dropped in the summer i.e." sell in May etc" ( look up the historical stats yourselves) but this year there has been panic selling other wise we would not have seen the quick rebounds. Is there some stock market manipulation of the ISEQ going on?
> 
> Going forward should the ISEQ's ETF holdings be rebalanced to reflect the current economic situation? If so would anyone care to suggest how it should be rebalanced? e.g. less in financials, construction etc?



The ISEQ ETF is being rebalanced. See here.

http://www.ise.ie/app/showdailyindex.asp

The financial index has fallen much more than the general index. This means that financials now make less of the index than they did a year ago.


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## techman

The above link only shows the performance in absolute terms and % terms of the different ISEQ indices.

Nothing to do with rebalancing of the ETF.


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## tyoung

The point is the financial index has done a lot worse than the general index over the last year. Therefore financial stocks make up less of the overall index than they did a year ago.
 Taken to extreme if the financial index fell to zero, financials would have a zero weighting in the overall index.
 This is one of the characteristics of index funds/trackers. Outperforming sectors/stocks gain increasing weightings in the index while the weighting of underperforming sectors falls.


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## South

tyoung said:


> This is one of the characteristics of index funds/trackers. Outperforming sectors/stocks gain increasing weightings in the index while the weighting of underperforming sectors falls.


 
But it is historic performance that is being tracked...in other words the weighting to financial is now lower because financial has had a crap month BUT when financials started collapsing their weight would have been high so an ETF would have been badly hit by the decline of financials.


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## joe sod

http://www.independent.ie/business/...-a-buy-based-on-limited-exposure-1055268.html

is this really independent impartial advice from the irish business media, i have noticed a tendancy to downplay negative news while at the same time trying to create good news stories from flimsy data.


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## Brendan Burgess

Hi Joe 

One broker says he would not be buying bank shares. 
Two brokers say that they would. 

It seems to me to be news reporting and not advice. 

They give further information:
Irish banks don't punt much with their finances. 
AIB reported buying some distressed loans recently at good prices.


Brendan


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## joe sod

[broken link removed]

It is interesting to note that the business media are playing down the slump in the iseq but it is the opposite with other commentators even brendan o connor who is more likely to be commenting on trivia.


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## Brendan Burgess

Hi Joe

And who do you think is better informed? 

Brendan


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## joe sod

Well the iseq has been falling pretty steadily since summer now at 7,500. however it was at this level at the beginning of 2006 at the height of the property boom therefore i think it has some way to go yet, maybe 6000 or 6500 will see resistance and buyers attracted back into the market


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## IFT

edit..http://www.directsharedeal.com/webt...cordCount=-1&TopStocks2ID=ISEQ&PriceSource=RT


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## Godfather

Jeee... That's so sad!


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## stanbowles

ISEQ is down another 3% today. What is rather amazing about this slide which is now near 30% from year highs is that all other stock markets - including Eurostoxx as well as the Dow and FTSE - have lost single digit %s. 

Why is the ISEQ being hammered so disproportionately? Construction and banking seem particularly badly affected but are we to believe that AIB have same / greater exposure to the American mortgage mkt and subprime woes as the big American banks? 

It seems that the market is discounting a full blown recession here in Ireland, where apart from froth in the property mkt - currently unwinding - the economic basics are still v.positive. While in the States the market has been merrily shuttling back and forth between all time highs of 13-14,000 DOW eventhough all indicators look terrible except GDP growth - dollar collapsing, huge deficits, property bubble bursting.

Final comment: the DOW is clearly due a major correction. If and when that comes, will the ISEQ keep on tanking downwards?

Woe is me, Stan


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## gonk

stanbowles said:


> Why is the ISEQ being hammered so disproportionately? Construction and banking seem particularly badly affected but are we to believe that AIB have same / greater exposure to the American mortgage mkt and subprime woes as the big American banks?


 
First of all the ISEQ is very heavily biased towards banking and construction compared to other larger broader-based indices.

Secondly, it has had an amazing run, going up much higher and faster than the main global indices. So, I guess it had farther to fall.

Even after the 30% fall this summer and autumn, the 5 year performance of the ISEQ is up 70%, compared to 60% for the FTSE 100 for the same period.


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## stanbowles

thanks gonk, this is interesting information ... but I'm not sure that it really answers the question as to why the ISEQ is so out of line and uncorrelated with other stock markets ...

... it is easier to adduce reasons for the mark up of Irish shares in recent years - increased profitability - than to point out what explains a 30% fall in recent months when other markets apparently more exposed to risk have fallen marginally if at all.  P/Es of most of the top Irish companies remained comparatively undemanding even as shares went up in recent years. Now they are according to Davys in their daily market report at 'historical' lows (yep, I guess, they would say that). Following is excerpt from http://www.rte.ie/business/2007/morningrep/download/1108davy.pdf

"As a result, the forward P/E on the market has fallen to 8.7x. That is the lowest on record since we began calculating Irish market P/Es in the mid-1980s. The discount relative to the E300 has widened out to 32%, having traded at parity as recently as last March.
All of the top four stocks (the three banks and CRH) are trading on historically low P/Es. And the P/E on Bank of Ireland, at 6.3x, is now significantly lower than the prospective yield of 6.9%. The 'rump' of ALBK now trades on a P/E of not much more than 4.5x."

Buy, buy, buy, bye, bye. Stan.​


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## z109

_yoganmahew_

_Please reacquaint yourself with the Posting Guidelines. _

_Do not discuss the valuation of individual shares. TYoung's use of a company to illustrate a point is ok. _

_Discussing financial shares generally is ok. _

_Brendan__Administrator_


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## gonk

stanbowles said:


> ... it is easier to adduce reasons for the mark up of Irish shares in recent years - increased profitability - than to point out what explains a 30% fall in recent months when other markets apparently more exposed to risk have fallen marginally if at all.


 
Well, here's one possible explanation from this morning's _Irish Times:_

'Financial stocks have lost more than a third of their value so far this year - and are now more than 40% per shy of the peak they hit last February. As usual the banks were the main contributors to the declines, with one dealer saying that international investors simply had no desire to put their money into anything vaguely on the periphery - and that's just where Ireland is considered to be. "It's seen as okay to lose money on Citigroup, but not on the likes of Anglo [Irish Bank]," he said.'


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## Brendan Burgess

Folks

This is an important topic. Please stick to the Posting Guidelines. 

We do not discuss the valuation of individual shares. 

This has become even more critical since the introduction of the Markets Abuse Directive which led to Phoenix Magazine being fined for their coverage:

[broken link removed]

*[FONT=Verdana,Bold]


[FONT=Verdana,Bold] 
Market Abuse (Directive 2003/6/EC) Regulations 2005
(‘the Market Abuse Regulations’)

Settlement Agreement
between the Financial Regulator and
Penfield Enterprises Ltd and Mr John Mulcahy (‘the publisher’)

[/FONT] 
The Financial Regulator has concluded a Settlement Agreement with effect from 30 October 2007 with Penfield Enterprises Ltd t/a The Phoenix magazine and the publisher in relation to breaches which occurred of the disclosure requirements in relation to recommendations with respect to financial instruments included in Regulations 18 and 21 of the Market Abuse Regulations.

The matter has been settled on the basis that the breaches are admitted, a fine of €5,000 has been imposed and new measures are to be introduced by the company to support compliance with the Market Abuse Regulations in the future.


Click to expand...

*​[/FONT]​Brendan


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## z109

yoganmahew said:


> _yoganmahew_
> 
> _Please reacquaint yourself with the Posting Guidelines. _
> 
> _Do not discuss the valuation of individual shares. TYoung's use of a company to illustrate a point is ok. _
> 
> _Discussing financial shares generally is ok. _
> 
> _Brendan__Administrator_


Hi Brendan, I was replying to stanbowles quote of a Davy report saying the big 4 in Ireland represent good value and his "buy, buy, buy" recommendation.

Whether or not these shares are good value is a matter of opinion.

What I was trying to do was to counter the obscenely upbeat notes from Irish analysts that are at odds with the views of many international commentators. 

Maybe I can rephrase my point as looking at current p/e ratios in a rapidly changing global economy with specific sectoral risks in housing, construction and the financing of both is not a reliable method of projecting forward p/e ratios.


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## Brendan Burgess

That's fine.

It can be difficult to have such a discussion without talking about individual shares, but it's an important Posting Guideline. 

Brendan


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## tyoung

35% fall in about 9 months while most other markets are flat to up. Even for the volatile Irish market this is extraordinary.


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## Sunny

tyoung said:


> 35% fall in about 9 months while most other markets are flat to up. Even for the volatile Irish market this is extraordinary.


 
I agree. Wouldn't surprise me if there was significant shorting of the index and certain shares in it by hedge funds.


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## digdeep

I think there has rarely been a better time to buy the ISEQ or components thereof.  The prices of all our major banks has effectivley halved in 6 months against a backdrop of a marginal predicted detereoration in our unemployment prospects (still exceptionally low by international standards) and a broadly positive economic environment. The PEs were fairly in line with EPS growth over all that time so we're not witnessing the inevitable implosion of and unhealthy and unjustified price bubble.  These earnings forecasts have been or are suspected to be slightly trimmed by a few percent.  The crashes in share prices don't remotely reflect the reality of these companies which operate in a mature comprehensible and tradtionally blue chip industry.  
Now I.m not calling this the bottom,  think pessimism has taken over and it will take considerable good news consistently over time to bring it back, a lot of people have been burned. But It's at such times fortunes are made.  Witness Warren Buffett


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## bungaloid

tyoung said:


> 35% fall in about 9 months while most other markets are flat to up. Even for the volatile Irish market this is extraordinary.




I agree, extraordinary. The stockbrokers use "volatile" as a euphenism for a collapse. Irish banks are down 50% since the summer and are getting back to post 911 levels. That is a collapse or a crash. Let's say it out loud - its a crash. And its ongoing. And all the while the calls to "buy" from financial services industry become increasingly shrill. 

What if you assume the market valuation of Irish banks is correct? (Always a good first assumption, put aside stories about nasty foreigners, hedge funds etc.) Then what is the market pricing? Just a mild economic slowdown? A full-blown recession? Or are there bad loans or worse being priced, possibly connected with the end of the building boom?

You can't say Irish bank stocks are cheap unless you know which of these scenarios the market is pricing and why. What scenario is being priced and why is it wrong.


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## joe sod

The falls over the last while have wiped out the valuations of the last two years, however i think those valuations were unrealistic and are not going to be revisited in the near future. Those valuations should not be seen as a benchmark in which the iseq is bound to return those valuations are now history, todays valuations are the reality. Those valuations were caused by hedge funds and foreign funds buying into the irish market because of the growth here and because they had cheap money and liquidity looking for a home. I don't think there were any long term legendary investors like the much quoted buffet buying into ireland over the last 2 years. Those funds have left the irish market en masse and they won't be returning because they now don't have the money. However i think the market maybe nearing equilibrium and may bop around the 6000 mark for a long time. However i would not be buying into the iseq because it will rebound quickly to the 10,000 mark it reached in february. If you are to buy you will have to be prepared to wait for the slow steady growth and because you think the huge selling pressure maybe coming near its end.


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## Gautama

Am I right in thinking that for some of the equity-based SSIAs, people were advised to leave their money in for more than the 5 years?  If so, those that followed this advise have not got on as well as they could have.  If they closed it off between May 2006 and April 2007 they would have done nicely, however after this their returns would have dropped considerably.
Any chance that people pulling out of such equity-based SSIAs over the last few months have partially caused the current slump.


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## digdeep

I'm not suggesting for a second that the ISEQ wasn't overvalued at 10000 or that the economic environment has only temporarily dipped and will resume the same blistering trajectory of the last few years.  What I'm saying is that the Irish banks have suffered declines in price totally out of proportion to their earnings.  
If you look at their PEs over the last 5 years they have been roughly on average 11-12 some higher, can't mention names.  Now they are trading at 5.5-7.  of course tey shoud be lower but half.  The construction industry, which accounts for roughly 25% of our economic activity has started to slow, not collapse. Unemployment MIGHT creep up to 5-5.2%.  Still very very low and compatible with very strong economic growth.  House prices got ridiculous and now are correcting - that was always going to happen but thtnkfully our developers pulled their horns in quickly so they won't go bust and fire everybody leaving a bigger unemployment problem.  
So, while there are bound to be bonus hungry fund managers around the world running scared of a double whammy of undisclosed losses on subprime investments and a declining property market that doesn't mean that the earnings of these companies are going to suffer in the same degree.  The dust will settle and value will be recognised.  These same fund managers hunting fat bonuses won't ignore earnings forever.  When they feel the downside trajectory is gone they'll be back.  Why? Because one of our banks when it last traded at this price had earnings less than half what they are today.  I would agree with you if I thought the banks' earnings were going to fall by half.  I don't think so do you?


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## nad

joe sod said:


> Well the iseq has been falling pretty steadily since summer now at 7,500. however it was at this level at the beginning of 2006 at the height of the property boom therefore i think it has some way to go yet, maybe 6000 or 6500 will see resistance and buyers attracted back into the market


 
Well Joe Sod
I must congradulate you on the above forecast of the trading range of the iseq which you made on the 6th november, it will be interesting to see at what level it will bottom out.


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## tyoung

Digdeep, I would largely agree.
  In Oct 06 in this thread,
http://www.askaboutmoney.com/showthread.php?t=38721
I wrote this:
Avoid property. Avoid bonds. Both all risk no reward.
 large cap blue chip stocks reasonable. Divesify out of Ireland. Too dependent on property market. Modest overweight Asia/Japan.
I don't own gold silver or any commodities but I am interested in oil. The projected supply/demand Nos suggest higher prices ahead. I would buy the oil majors. 
I'm very bearish on the dollar longterm But I think the main beneficiaries will be Asian currencies which will add a tailwind to their stockmarkets.
 The pound is also way overvalued.
The major bet is whether we have a global recession(hard landing) versus a slowdown(soft landing) and how the US imbalances get unwound(if they get unwound at all)
I don't know the answer but a mainly large cap stocks with an modest overweight in energy and Asia with a decent dollop of cash offers a reasonable balance.
 If we did get a selloff I'd be looking to buy stocks.
Regards

  Apart from Japan most of that was pretty good particularly "Divesify out of Ireland. Too dependent on property market."
  For 08 I'd stay with Japan but get out/avoid China/ India and buy the Irish market.  I wouldn't put new money in emerging markets. 
  The dollar is nearly finished correcting against the euro. I think the pound still has along way to fall(UK Buy to Lettors beware!)


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## z109

digdeep said:


> I'm not suggesting for a second that the ISEQ wasn't overvalued at 10000 or that the economic environment has only temporarily dipped and will resume the same blistering trajectory of the last few years.  What I'm saying is that the Irish banks have suffered declines in price totally out of proportion to their earnings.
> If you look at their PEs over the last 5 years they have been roughly on average 11-12 some higher, can't mention names.  Now they are trading at 5.5-7.  of course tey shoud be lower but half.  The construction industry, which accounts for roughly 25% of our economic activity has started to slow, not collapse. Unemployment MIGHT creep up to 5-5.2%.  Still very very low and compatible with very strong economic growth.  House prices got ridiculous and now are correcting - that was always going to happen but thtnkfully our developers pulled their horns in quickly so they won't go bust and fire everybody leaving a bigger unemployment problem.
> So, while there are bound to be bonus hungry fund managers around the world running scared of a double whammy of undisclosed losses on subprime investments and a declining property market that doesn't mean that the earnings of these companies are going to suffer in the same degree.  The dust will settle and value will be recognised.  These same fund managers hunting fat bonuses won't ignore earnings forever.  When they feel the downside trajectory is gone they'll be back.  Why? Because one of our banks when it last traded at this price had earnings less than half what they are today.  I would agree with you if I thought the banks' earnings were going to fall by half.  I don't think so do you?



I couldn't disagree more with you, but, the posting guidelines do not allow me to give my reasons.

What I will say is:
Finfacts reports:
"The Irish construction labour force in Q2, 2007 is estimated at 415,900 persons, including an estimate for indirect employment and assuming an unemployment rate in line with the national average (4.6%). *This estimate corresponds to almost 19% of the national labour force of 2.21 million (sa). There were 126,100 directly employed in construction in early 1998 compared with 282,000 in late 2006."
*If you think the extra 130,000 people between late 2006 and Q2 2007 is anything other than residential, please let me know.

88,219 houses were built in 2006. Maybe 77,000 will be built in 2007. The CIF is saying that 33,000 will be built in 2008. Homebond registrations tend to support their figure (unreliable as they are). How you can say that unemployment will only reach 5.5% without massive net migration, I don't know. If there is massive net migration, it will not do much for either house prices or rents.
 
Add to this declining competitiveness with the rest of the world (outside the EU) for our products prices in dollars and you have exporters suffering a squeeze.

The buy to let market has disappeared. Property investmentment is a loss-maker at the moment. Until it become profitable again, the banks are going to suffer reduced earnings.

Yes, I think banks will be trading at half their current profits in a years time.


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## digdeep

Actually I disagree that that was all construction in residential.  Huge infrastructure projects like roads, office blocks massive mixed use complexes and several new towns in the greater dublin area would be a few of the other things that contributed to it and will continue to contribute to it.  Of course residential was a significant part of it but that activity isn't going to just halt.  Do you really think that so many developers who probably know a hell of a lot more about property than you or I, bought land at record prices in the last few years and watched interest rates rising on huge loans can just afford to stop building.  Some of those who owned land banks they bought cheaply will hold back to see how all this pans out but the margins are still there and there is still a huge predicted population growth expected in our cities especially dublin.  

And we have been uncompetitive compared with other countries for years. We have a 12.5% tax rate. Some may move operations abroad but Google hiring 800 more people recently is a pretty good sign for me.  AS to the banks income, as a nation we now owe nearly as much on personal debt as we do on mortgages.  Entrepreneurship and business start ups continue to boom.  While of course the banks will react to changes in the property market and the news there is somewhat negative I think suggesting that their profits in a years time will half, in a first world economy that is performomg well is ridiculous.  I'd love to know how often a retail bank's profit has ever fallen by 50% in a year anywhere.  That would imply an economic implosion 1929 style.  This is not that.  or do you think we're heading for a depression nest year?


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## stir crazy

Its' interesting how uncertainty always produces views to extremes. This can of course be exploited. I have seen those extreme views before. One recent example is the dot com bubble. People who didnt know what they were talking about were buying into the sales talk too late in the game and suffered as a result.
I think the possible benefits weighed against the losses for staying out of the stock market until after christmas exceeds the possible  returns versus risk for going in.
No investor should have a gambling mindset. That is plain stupid. The question I would have is _why are we going to enter a depression_ ?


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## z109

stir crazy said:


> Its' interesting how uncertainty always produces views to extremes. This can of course be exploited. I have seen those extreme views before. One recent example is the dot com bubble. People who didnt know what they were talking about were buying into the sales talk too late in the game and suffered as a result.
> I think the possible benefits weighed against the losses for staying out of the stock market until after christmas exceeds the possible  returns versus risk for going in.
> No investor should have a gambling mindset. That is plain stupid. The question I would have is _why are we going to enter a depression_ ?


Depression? I don't know:
From wikipedia:

"In macroeconomics, a *Recession* is a decline in any country's Gross Domestic Product (GDP), or negative real economic growth, for two or more successive quarters of a year. However, this definition is not universally accepted. The American National Bureau of Economic Research defines a recession more ambiguously as "a significant decline in economic activity spread across the economy, lasting more than a few months." A recession may involve simultaneous declines in coincident measures of overall economic activity such as employment, investment, and corporate profits. Recessions may be associated with falling prices (deflation), or, alternatively, sharply rising prices (inflation) in a process known as stagflation. A severe or long recession is referred to as an *economic depression*. A devastating breakdown of an economy is called economic collapse. Newspaper columnist Sidney J. Harris amusingly distinguished terms this way: a recession is when you lose your job; a depression is when I lose mine."

The US seems set for a recession. Whether that will prolong into a depression is difficult to say (I'm not a 'leading' economist!). 

What I think are key events:
1. If, as has been put about, there is $500bn of worthless commercial paper, then the lending cost to the financial system will be $5tr.
2. If that amount of liquidity (money to you and me!) dries up, don't expect to see the banks lending much for the next while.
3. If the other mortgage resets over the next three years are even a little bit as bad as sub-prime has been, the American consumer will have other things on his mind than buying Asian/European produce. This will surely put the US economy into a severe recession.
4. If the oil price is kept artificially high despite the fall-off in demand due to economic slowdown, inflationary pressures will limit central banks ability to reduce interest rates.

There are many more ifs that could be added to the list. It could all just blow over like the 9/11 recession that never was. Like stir crazy, I am not willing to take a punt now, as it would be just a punt. I can see no evidence at the moment that this will be a short-term event.


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## digdeep

I don't think this is a short term thing either.  I'm not expecting to see prices doubling in 6 months or a year.  Undoubtedly it isn't justified that they would go back to where they were.  But the Irish Banks stayed out of the subprime credit thing.  they have all said so openly and wouldn't play with fire by trying to fool the investor.  That leaves the impact of the property market.  So far there have only been modest SLOWING OF GROWTH in earnings NOT losses or no gains at all.  so lets assume that EPS stands still for a year or 2 and doesn't grow at all, many of the banks are still trading at a pe of around 6.  If they were averaging recently around 12 and you even knock 25% off their PEs to account for a thus far moderate property and economic downturn that would put them around 9.  That leaves 50% upside potential in the price purely on the basis of increasing PE before any earnings growth.  It might take 2 years to get there.  Thats 25% per annum.  I'd take that.  Thats the essence of value investing - you wait because 50% of market gains in a 20 year period take place durig 7% of the time.  How does anybody know really when the bottom will be so buy when valuations look really cheap and shares oversold and wait until the guys whose jobs depend on hitting quarterly or yearly returns targets (and who can't afford to take a long view) feel its safe to go back in.  If you're not in you can't win but if you can't afford to stay in for the long hold stay out.  thats the discipline and it works better than any other and there are any number of stats to back it up.


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## bungaloid

Brendan said:


> Hi Joe
> 
> One broker says he would not be buying bank shares.
> Two brokers say that they would.
> 
> It seems to me to be news reporting and not advice.
> 
> They give further information:
> Irish banks don't punt much with their finances. *
> AIB reported buying some distressed loans recently at good prices.*
> 
> 
> Brendan



.. that was august 10 ..ouch! 

if they liked those distressed loans in august they must love them now.


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## markowitzman

SPC100 for what it is worth this is in my opinion the most sensible advice on this thread.


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## joe sod

nad said:


> Well Joe Sod
> I must congradulate you on the above forecast of the trading range of the iseq which you made on the 6th november, it will be interesting to see at what level it will bottom out.



i am no forecaster, it was only a two years ago the iseq was at the 6000 level , however noone can predict the future, if there is more bad news it may fall further than this noone can tell, however i think the big sell offs in the iseq maybe nearing its end, i think next year will tell the real story on the banks and how there earnings have been affected. The bank of ireland may have had record profits but alot of those earnings were earned in the still booming economy, next year will start showing the trend for the future. It is the foreign funds that have had such a dramatic effect on the iseq, therefore it is the value of the iseq in comparison with other world markets and the risks in the iseq in comparison with other world markets that will determine if it recovers or how quickly it starts going positive again. The foreign funds will not re enter until they know how much the irish economy has been affected by the housing slump, dollar and oil.


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## joe sod

"Do you really think that so many developers who probably know a hell of a lot more about property than you or I, bought land at record prices in the last few years and watched interest rates rising on huge loans can just afford to stop building. Some of those who owned land banks they bought cheaply will hold back to see how all this pans out but the margins are still there and there is still a huge predicted population growth expected in our cities especially dublin."

       Im not so sure about this alot of the property developers bought their land with huge loans, therefore they may not have much of a say, it takes more borrowings to build the houses, will the suddenly cautious banks be willing to lend out even more money on risky developments. The banks themselves are suffering from a contraction in credit.


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## joe sod

One of the key long lasting problems with the iseq is its lack of diversity, there are no big commodity stocks or technology stocks. While the government could do little about commodities it could have done alot about technology. It has done little to encourage indiginous technology companies, the baltimores of 2001 were allowed to go bust, and the government went back to what it loves most banks and builders. In fact third level funding for research and development was cut in 2002 rather than increased in response to the dotcom slump. This shows how fickle and short termist the government is. It is interesting that the big technology stocks like microsoft have been unaffected by the current turmoil in the stock market.


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## bungaloid

The present set of circumstances are unique in Irish stockmarket history- interest rates set externally, major currency realignment, bursting of an insane property bubble, fallout from dodgy lending practices, global credit crunch, inflationary commodity prices. Have I forgotten anything?

In my opinion technical analysis is useless until these events play out a lot more. Looking at a "long term moving average" now is a bit like checking your GPS when the car is hanging over a cliff..


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## RainyDay

bungaloid said:


> Looking at a "long term moving average" now is a bit like checking your GPS when the car is hanging over a cliff..



Beautiful analogy!


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## Brendan Burgess

Dinarius

I shouldn't have to keep reminding people that we don't discuss individual shares on Askaboutmoney. We will allow some discussion of shares to illustrate a point, but your post is a major breach of the Posting Guidelines. 

Brendan


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## joe sod

it seems that 6000 is now the new equilibrium level for the iseq, every time it breaks above 7000 it is pulled back down,


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## Dinarius

Brendan said:


> Dinarius
> 
> I shouldn't have to keep reminding people that we don't discuss individual shares on Askaboutmoney. We will allow some discussion of shares to illustrate a point, but your post is a major breach of the Posting Guidelines.
> 
> Brendan



Apologies for that.

D.


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