# 10k to buy shares in Irish companies



## kiki35 (9 Jan 2007)

hi,

myself and my partner have followed all the steps for investing in shares, as per AAM, have read the handbook etc and now, we have picked 5 solid companies across industry.  We are happy with our choices and now we want to buy certs and hold onto them for about 10 + years.  

My question is : where should we go to buy them and roughly how much will the transaction cost? 

any advice gratefully received!

KK


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## ClubMan (9 Jan 2007)

Have you read the key topics (including those about how to buy/sell shares) and the  forum (which includes indicative broker fees)? Bear in mind the tax implications (e.g. _CGT _on gains and income tax on dividend payments) of holding direct share investments. For some people (e.g. me!) these and other factors are reason enough to opt (as far as possible) instead for indirect share investments through low charging unit linked funds


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## CCOVICH (9 Jan 2007)

Hi kiki

Some of the information in this thread is a little outdated, but may be relevant.

I think that the may have done a survey recently as well.

Stamp Duty of 1% is payable on the value of (Irish) shares purchased.


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## kiki35 (9 Jan 2007)

thank you for your help so far!  I will contact some of the names mentioned on the thread mentioned by CCOvich. 

Clubman, we have maxed out AVCs for our pensions, 2 unit linked funds (for the kids education) and want to do something a little bit different.  We have shares from the companies we work for (one has done well, the other not) and find it interesting.  We are not interested in being landlords, so thought we would buy some shares directly.


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## ClubMan (9 Jan 2007)

kiki35 said:


> Clubman, we have maxed out AVCs for our pensions, 2 unit linked funds (for the kids education) and want to do something a little bit different.  We have shares from the companies we work for (one has done well, the other not) and find it interesting.  We are not interested in being landlords, so thought we would buy some shares directly.


Faie enough. Obviously I wasn't aware of the broader issues before now. Obviously you should be looking to diversify for example across different asset classes, geographic regions, risk/reward profiles. For example even if you don't want to invest directly in property you could invest (some of your money) in a property fund.


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## kiki35 (9 Jan 2007)

hi again,

does anyone have any advice regarding names on share certificates - can you get them made out to 2 people - husband and wife - or does it have to be  1 person. Anyone any words of wisdom?


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## ClubMan (9 Jan 2007)

You can get share issued in joint names. If you have shares in one name then you should be able to transfer them to your spouse or joint names by contacting the company's registrar. No stamp duty applies, no _GGT _liability is triggered (the other spouse "inherits" the original acquisition cost for future _CGT _purposes) and the registrar will normally arrange this for free or for a nominal administration fee.


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## kiki35 (9 Jan 2007)

thanks Clubman, you are a wonderful font of knowledge!


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## ShaneMc (9 Jan 2007)

If you want to buy and hold in share cert form Campbell O' Connor's are your only man. they are very reasonable and dont charge extra for certs.

www.camocon.ie


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## ClubMan (9 Jan 2007)

ClubMan said:


> Have you read the key topics (including those about how to buy/sell shares) and the  forum (which includes indicative broker fees)?


Apologies - the _Financial Best Buys_ list currently does not list stockbroker charges. It used to ages ago. On the other hand I think that here are a couple of threads dealing with broker charges that might be of use to you.


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## Gautama (10 Jan 2007)

kiki35 said:


> we have maxed out AVCs for our pensions, 2 unit linked funds (for the kids education) and want to do something a little bit different.


 
Good call.  Diversification is always a good policy.
I wouldn't bother with these funds, just  because these people are professionals doesn't mean you'll make more money (for you).

There's also the pride factor in buying the shares you have chosen and seeing how better your growth is than the funds/managers/professionals growth.

It's like comparing your own children with friends' children!


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## ClubMan (10 Jan 2007)

Gautama said:


> I wouldn't bother with these funds, just  because these people are professionals doesn't mean you'll make more money (for you).


Presumably you mean actively managed funds? There are always index trackers which don't involve any professionals attempting to pick winning stocks.


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## Gautama (10 Jan 2007)

ClubMan said:


> Presumably you mean actively managed funds? There are always index trackers which don't involve any professionals attempting to pick winning stocks.


 
Yes, primarily actively managed funds. But I don't have much confidence in index trackers either.  
If someone was to ask my advice on the latter, it'd advise them to follow Mr Burgess's recommendation instead and buy the top/big 10 on the ISEQ.  These will, I'd expect, track the ISEQ on the upside.  For those interest in foreign stocks, apply the same to foreign indices.


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## ClubMan (10 Jan 2007)

Gautama said:


> But I don't have much confidence in index trackers either.


Why not? Unless you don't have confidence in the stock markets in general?


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## Gautama (11 Jan 2007)

ClubMan said:


> Why not?


 
Trackers just follow the market. If the ISEQ goes up 10%, your tracker goes up 10%. For me, it's more desirable to do better than the standard, in this example, greater than 10%. I see it like those savings accounts that give the same rate as the ECB rate... it's ok. 
Only dead fish go with the flow.



ClubMan said:


> Unless you don't have confidence in the stock markets in general?


 
No.


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## ClubMan (11 Jan 2007)

Gautama said:


> Trackers just follow the market. If the ISEQ goes up 10%, your tracker goes up 10%. For me, it's more desirable to do better than the standard, in this example, greater than 10%. I see it like those savings accounts that give the same rate as the ECB rate... it's ok.
> Only dead fish go with the flow.


So you are confident that you can beat the market/index on an ongoing basis? 


> No.


You mean you don't have confidence in the stock markets in general?


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## Gautama (11 Jan 2007)

ClubMan said:


> So you are confident that you can beat the market/index on an ongoing basis?


 
I've followed my own variation of Jim Slater's "Zulu Principle", where I've focussed on the ISEQ.  Given the size of the ISEQ, it's easy to apply the Zulu Principle to it.  So far, so good, I'm way ahead (though I have to give a nod to Mr Burgess). If it tumbles, I've a get out level that will still see me well ahead.  Would love to bring up one share in particular.  I had a gut feeling about it for the last three years, suddenly in the last weeks it's soared.  Milk and mushrooms!



ClubMan said:


> You mean you don't have confidence in the stock markets in general?


 
No.


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## sherib (12 Jan 2007)

> Originally Posted by *Guatama*
> .......it'd advise them to follow Mr Burgess's recommendation instead and buy the top/big 10 on the ISEQ.
> 
> Given the size of the ISEQ, it's easy to apply the Zulu Principle to it. So far, so good, I'm way ahead (though I have to give a nod to Mr Burgess).


 
Does this mean selecting a number of shares on the ISEQ and investing in them via a Stockbroker? I'm a novice and the advice often given seems to assume a level of knowledge which I haven't got so I'd appreciate a little more explanation on the above quotes - and I don't mean naming your top ten!


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## diarmuidc (12 Jan 2007)

Gautama said:


> Trackers just follow the market. If the ISEQ goes up 10%, your tracker goes up 10%. For me, it's more desirable to do better than the standard, in this example, greater than 10%. I see it like those savings accounts that give the same rate as the ECB rate... it's ok.
> Only dead fish go with the flow.



I think this discussion has been done to death but for me the bottom line is that if you feel that you have better stock picking skill than 80%-90% of *professional *fund managers then go for it. Otherwise all research into the subject would indicate "going with the flow" is the winning solution.


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## Diziet (12 Jan 2007)

diarmuidc said:


> I think this discussion has been done to death but for me the bottom line is that if you feel that you have better stock picking skill than 80%-90% of *professional *fund managers then go for it. Otherwise all research into the subject would indicate "going with the flow" is the winning solution.


 
The trouble with funds is that the charges eat into your earnings, and, due to the principle of compound interest, can create a very significant difference within 10 years or so over investing directly. 

We (partner and I) have been investing in shares for the past 8 years, and have comfortably outperformed the market within that period. We are not investment professionals and it does not involve rocket science, just an understanding of numbers, lots of reading and research and plugging numbers into spreadsheets. It is possible, but it takes a bit of effort and the ability to switch off emotional responses to shares and go with the logic alone. 

In any case, professional fund managers will not tailor a relatively small investment to suit an individual, so, while some are good at their jobs, it is not necessarily correct that funds are the best option for an individual. Plus, there are funds that do no better than the index as a whole, which takes no skill at all.

cheers,
Diziet


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## Carrie2006 (12 Jan 2007)

If you are interested in growth but more importantly protecting your capital, the best funds to choose are those that perform well when markets are both up and down.  There are funds out there that generate outperformance (not absolute or positive returns) in both bull and bear markets offering more downside protection for your money.  Contray to what a lot of people think some fund mangers have qualifications such as MBAs, CFAs etc and have years and years of successful investment experience. That does often put them in a better position to select stocks that may outperform.  If you do invest in a fund do so with a medium - to - long-term time horizon.  

Regarding investing in individual stocks, of course we can all be lucky and find that killer company whose share price doubles over a year. However, these companies are the exception rather than the norm. So don't go into the stockmarket with the illusion that you will become an overnight millionaire. If you invested money in apple back in 2000 you would have made a killing, it would have been a very different story if you invested in Enron.

If you are going to invest in individual stocks then make sure you don't put all your eggs in one basket, spread your money across at least ten different stocks, preferably with some sector diversification (unless you are very confident on an individual sector). You could also consider investing in one or two mid or small cap stocks to add additional diversification to your portfolio (small caps have outperformed large caps over the last few years, they are predicting that 2007 will be the year of the large cap but they said that in 2005 and 2006 and small caps significantly outperformed in those years!).  Before and during your investment in a company, watch out for things like the companies earnings announcements etc, key financial ratios such as Price/Earnings ratios, Price to Book ratio, dividend yields, free cash flow etc. For a more qualitative feel for the company, frequently go on the companies web site to hear of new product launches, Merger and Acquisition activity etc. All these factors influence the companies share price. Activity in competitor companies can also have an effect.  

Happy investing! I hope it works out great for you guys.


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## phoenix_n (12 Jan 2007)

Carrie2006 said:


> they are predicting that 2007 will be the year of the large cap but they said that in 2005 and 2006 and small caps significantly outperformed in those years!).


 
Great post. What do you mean by caps?


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## CCOVICH (12 Jan 2007)

Caps=short for market capitalisation.


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## zephyro (12 Jan 2007)

Carrie2006 said:


> Contray to what a lot of people think some fund mangers have qualifications such as MBAs, CFAs etc and have years and years of successful investment experience.



Some fund mangers have qualifications such as MBAs, CFAs etc and have years and years of *un*successful investment experience.


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## phoenix_n (12 Jan 2007)

CCOVICH said:


> Caps=short for market capitalisation.


 
Market Capitalisation

Why would they predict that these companies may fair better this year over small cap companies ? What factors would lead one to believe this.


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## Gautama (12 Jan 2007)

sherib said:


> Does this mean selecting a number of shares on the ISEQ and investing in them via a Stockbroker?


 
If you have the shares selected then you could go to a broker (or bank) to buy them as execution service only, or you could open an online account.

As for the Top Ten, read the advice (in Key Posts?) by Brendan Burgess. The top ten are the largest companies (market capitalisation) on the ISEQ. You'll get that from the financial pages of the daily papers. Some, handily, just list the top ten. One thing where this does fall down a little is that you are very exposed to financial stocks. If the banks come tumbling down (falling with house prices?) then you don't have much diversification.

Incidentally, I'm not a professional at this, and as I now am in the proud possession of a mortgage I haven't actually bought anything since 2005. But my prior purchases have been great.


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## Gautama (12 Jan 2007)

Diziet said:


> The trouble with funds is that the charges eat into your earnings


 
This too can happen when you go diy, if you allow yourself to be swayed too much by selling this, then buying that, then this, that...
Fees and duty eat profits.



Diziet said:


> while some are good at their jobs


 
This is a great point. Just think of your own workplace. Some are good/great at the jobs. Others are sshhiittee. No difference in finance.


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## Gautama (12 Jan 2007)

phoenix_n said:


> Market Capitalisation
> 
> Why would they predict that these companies may fair better this year over small cap companies ? What factors would lead one to believe this.


 
I often wonder this.  Financial shows on the radio love talking about the old reliables.  I guess that's why... they are reliable.

But elephants don't gallop!


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## Carrie2006 (16 Jan 2007)

Large caps are cheaper than small caps in PE terms at the moment. They are also reasonaly valued relative to their long-term historic average (currently approx 13X versus five year average of over 17X).


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## Carrie2006 (16 Jan 2007)

zephyro said:


> Some fund mangers have qualifications such as MBAs, CFAs etc and have years and years of *un*successful investment experience.


 
Yes of course there are! That is why you careful check the managers credentials and performance history before you put any money in!!!


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## PMU (16 Jan 2007)

Will you get sufficient diversification with the five shares you have identified?  If you buy individual shares you are assuming additional specific risk that you would not have if you had invested in an Iseq tracker or the Iseq Etf, where you will assume only market risk.   If you invest in a tracker, such as QL’s or New Ireland Smartfund’s, you also will be able to cost-average in. (Broker’s fees appear to make cost-averaging into etfs expensive.)  If you have only a limited amount to invest I think it would be prudent for you to consider a split between Iseq and Eurostoxx euro denominated trackers.  You’ve no currency risk and get the gains from the IE and EU markets.  Note that if you have pension / PRSA it may be more tax efficient to up your pension payments.
  If you are interested in specific IE shares you should look at the business section of last Sunday’s ‘Sunday Times’ on Merrion Stockbrokers’ 10 Stock Model Portfolio.  You can check this out on the Merion Stockbrokers site. (I’m not recommending these stocks – I’m an index tracking boy).


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## Markjbloggs (17 Jan 2007)

Could you post a link to one of these studies - it's not that I don't believe you (I do !!) but just want to see my suspicions confirmed in writing.



SPC100 said:


> Unfortunately academic studies show it is impossible to identify which funds will do well in advance. Their advice is to be invest passively, buy and hold, when the market falls, you should be buying more.
> 
> It is only when markets fall, that you get better long term returns. This is why you need to invest when markets are falling in order to get the best possible returns from stock markets.


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## zephyro (17 Jan 2007)

Markjbloggs said:


> Could you post a link to one of these studies - it's not that I don't believe you (I do !!) but just want to see my suspicions confirmed in writing.


 
http://www.investorhome.com/mutual.htm#do


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## Markjbloggs (17 Jan 2007)

Thanks, Zephyro.


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## PMU (17 Jan 2007)

Markjbloggs said:


> Could you post a link to one of these studies - it's not that I don't believe you (I do !!) but just want to see my suspicions confirmed in writing.



Check out: 'Bogle on Mutual Funds: New Perspectives for the Intelligent Investor', by John Bogle, founder of Vanguard Securities


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## Carrie2006 (17 Jan 2007)

I think a more balanced view to whether you should invest in mutual funds or individual stocks should be considered.  Yes some people have access to Bloomberg, DataStream, Reuters etc... they can understand share price movements when they read them in the newspapers, they are completely comfortable with understanding a business strategy and reading their balance sheet. 

However, in reality some people do not have the financial acumen to understand why one stock is better than another, they may not know how to read a balance sheet, I could go on and on.  In that case, rather than playing ennie meanie miney mo (or however you spell that) in the hope that they pick the right companies, giving their money to a professional who understands the market, has in-built diversification and has a solid performance record may be an eminently more sensible idea. For the record, I know plenty of portfolio managers who have generated solid consistent returns through a variety of markets and I would personally trust to manage my money effectively.  

I am not saying that direct investment in stocks is a bad idea, however it may not be a suitable investment solution for everyone. This website outlines the advantages and disadvantages to both. 
http://msucares.com/pubs/publications/p2273.htm


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## Carrie2006 (17 Jan 2007)

Fact: Investing in individual shares is far riskier than investing a diversified portfolio
Fact: Individual stocks can significantly underperform a benchmark
Fact: If you invest all your money in one stock and it declines by 50%, then you loose 50% of the value of your portfolio. If however you invest all your money in a fund that invests in a portfolio of 30 - 50 stocks you loose a hell of a lot less!  
Fact: past performance is not a guide to future returns at both a stock level and a fund level
Fact: Investors have different levels of investment knowledge and largely follow the herd when it comes to investing in individual shares rather than knowing anything about the company. How many people in Ireland lost out because they followed the herd and invested in Eircom and didn't cash out at the right time. 
Fact: getting someone else to manage your money is much easier for a lot of people
Fact: the asset management industry is huge, if mutual funds are such a bad idea why do these companies exist? 
Yes, there are a million arguments as to why stocks are better than funds, but there are a million arguments that work the other way too.  I could argue the merits and demerits of both types of investment, however, I seem to be defending Portfolio Managers. 
I am not going to say anymore on the matter, people can make up their own minds. I did enjoy the intellectual debate however!


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## charttrader (17 Jan 2007)

_ Fact: getting someone else to manage your money is much easier for a lot of people

_If you don't want to manage your own money, stick it into an index fund rather than paying a group of overpaid under-performers.

_ Fact: the asset management industry is huge, if mutual funds are such a bad idea why do these companies exist?

_Why do they exist??? To make a profit at the expense of naive clients who don't know that they are being ripped off.


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## charttrader (17 Jan 2007)

_Investors ... largely follow the herd when it comes to investing in individual shares

_So do fund managers. As Gordon Gekko puts it in Wall Street; "Ever wonder why fund managers can't beat the S&P 500? 'Cause they're sheep, and sheep get slaughtered".


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## Carrie2006 (18 Jan 2007)

Some examples of funds who have outperformed their benchmarks (and hence would outperform index trackers) just in the European equity sector:




[broken link removed]

[broken link removed]

[broken link removed]


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## charttrader (18 Jan 2007)

Carrie2006 said:


> Some examples of funds who have outperformed their benchmarks (and hence would outperform index trackers) just in the European equity sector:
> 
> 
> 
> ...



The fact that one can point to a few funds that beat the indices is hardly relevant.  Some funds are bound to do so. What's relevant is that the vast majority don't.  One study that looked at UK fund performance from 1982-2001 found that over 80% of managed funds failed to beat the Ftse over that time. US data is similar.


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## Carrie2006 (18 Jan 2007)

I would imagine most of these are Mikey mouse companies rather than reputable asset managers. I could only find a few as I was on my lunch break!


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