Irish Stock Market Plummeting
- Thread starter emsman
- Start date
So why are you taking the money out after two weeks?
Short term volatility shouldn't affect long term strategy imo and FWIW the Dow is up as I type.
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?
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?
G
gonk
Guest
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?
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.
"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.
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)
G
gonk
Guest
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.
Spot on.
You always have to take something with a grain of salt when comparisons are being made to abnormally high (or low) valuations.
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?
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?
R
radioactivem
Guest
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
it's a good buying opportunity though
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.
G
gonk
Guest
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.
Markjbloggs
Registered User
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- 384
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.
G
gonk
Guest
Now 2.85% and falling . . .
charttrader
Registered User
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- 117
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.
??? 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.
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.