Did we miss an important milestone?

Brendan Burgess

Brendan Burgess

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The ISEQ Overall Index peaked at 6457 on 22 June 2001. Today, it is around 5646, so we are 13% off its peak.

But if you look at the ISEQ Total Return Index, which reinvests dividends, it's a different story.

It peaked at 8654 on 22 June 2001.
It recovered that level on 1 September 2004, and is now at 8938.

So anyone who was unlucky enough to invest in the Irish Stock Market on the worst possible date has recovered their losses just three years later.

Presumably, equity SSIAs are now outperforming deposits? Does anyone have any data on this?

Brendan
 
> Presumably, equity SSIAs are now outperforming deposits? Does anyone have any data on this?

No data but as far as I know in general equity SSIAs are indeed outperforming deposit SSIAs. Also, the journos are no longer churning out scare stories about how equity SSIA holders are losing their shirts and how those wicked stock markets are screwing punters again blah blah blah so I guess that's more evidence...
 
My records show investment gains of 12% (excludes Govt top-up) on my QL Celtic SSIA (commenced June 2001) and 11% on herself's EBS Growth fund SSIA (commenced August 2001).
 
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So anyone who was unlucky enough to invest in the Irish Stock Market on the worst possible date has recovered their losses just three years later.
Click to expand...

They haven't quite recovered their losses. They've missed out on an opportunity to get gains from some other investment - their money has stagnated.

However, someone that instead bought Irish property has benefited handsomely.

Still, interesting milestone.
 
Re: .

Max

I have deleted your posts and will delete all further posts, unless they are civil. You make some valid points, and it is a shame to have to delete them. But it's entirely up to you.

Brendan
 
re iseq

i was wondering is it wise to keep an equity ssia investing in the iseq index given that its near its all time high.
 
Hi Brendan,

Where did you get your information? I know that dividend reinvestment boosts your returns significantly but if the benchmark index is about 5600 can the total return index really be over 8000? What sort of a timeframe are we talking about?

I've asked a friend in the investment business to check your numbers and he said the total return is only slightly ahead of the benchmark index.
 
Agree TR figure

The key is whether the addition of dividends would make up the 13% difference that was quoted.

A dividend yield of 3-4% would seem sensible so Brendan's figures look ok.

The TR index and the capital index are two separate indices.
 
Today the index itself, which does not include dividends,ISEQ index closed at a new record high of 6,499.97 compared to its former high of 6,458.

Corrected typo - Replaced 'losed' with 'closed'.
 
Paraphrasing Allen Greenspan's comment on the 'irrational exhuberance' of the US stock markets - Oops!
 
29 April 2005 - Dublin's ISEQ Overall was among the heavier fallers, losing 0.6pc, or 35 points, to 5798.5 points.
 
I’ve often wondered on the standards of financial commentary in the press in Ireland. Max Hopper’s post of today is the first one I’ve seen on this forum or indeed anywhere that comments on the drastic fall in the ISEQ in the past two weeks. Since April 13 the ISEQ has declined from 6182 to 5798 yesterday, i.e. putting it back to where it was in October 2004. If house prices had declined like this it would be regarded as a national catastrophe. Yet the financial press treated this decline lightly as in: ‘The market had another poor day yesterday . . .’. In reality it is your pension funds and SSIAs that are declining, and value is disappearing from your equity-based interments. I haven’t seen, in the Irish media, for example, commentary such as occurred in London Times this week http://business.timesonline.co.uk/article/0,,9556-1581997,00.html on the decline of the FTSE.

But what is also interesting is the approach of stock broker’s to the market decline. What is their advice? Why it’s ignore market conditions and buy more stocks! It really makes you wonder. For example, on 14 April Goodbody had a Buy recommendation for AIB at 16.63, a Buy for Ryanair at 6.21, a Buy for Kerry Group at 19, and a Buy for Grafton at 9.55, etc. If you had followed their advice you would have seen the value of your investments decline. By yesterday AIB had declined to 15.75, Ryanair to 5.60, Kerry Group to 18.80, and Grafton to 8.80. That these might be long-term recommendations has nothing to do with it. If Ryanair was a good deal at 6.21 it was a better deal at 5.60. The other brokers’ picks were not that different with at least one broker making repeated buy recommendations for a certain company as its price continued to decline. Despite the market decline over the past 10 days brokers have continued to reommend buys almost all of which have largely declined in value.
 
From today's Irish Times:


ISEQ Overall 5798.49
12 month high 6798.30 (17/2/2005)
12 month low 5106.37 (10/5/2004)

So the ISEQ is currently 15% off it's 12 month high, and 12% off it's 12 month low.

A couple of observations. A lot of companies have recently reported earning for 2004, stocks have gone ex. dividend etc. and all of this has led to profit taking and hence a fall in many share prices.


SSIAs and pension funds
SSIAs don't begin to mature until April 2006. A lot can happen between now and then. It wasn't so long ago that equity SSIA funds were performing far worse than they are now, and they have recovered. To start reporting that the country's SSIA account holders 'lost' 10%, 20%, 30% whatever in a week and advising people to 'get out now' would strike me as sensationlist. Pension funds have been doing badly for quite some time, but that is due to the returns on bonds as well as equities.

Broker recommendations
These are based on longer horizons than 10 days. Brokers set a target, and advise that you should buy and hold until the price reaches that target. Whether you accept the recommendation is up to you. But do you really think that the decline in value of AIB, Kerry, Ryanair etc. is in any way permanent? I don't have any information that would lead me to believe that these share prices won't recover to the prices of April 14, and the newspapers and brokers probably don't either.

Only day traders and hedge funds take the sort of short-term bets you are alluding to (10 day periods). They are big enough to look after themselves, and don't need to press or brokers to get their information.
 
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