"Fill your shoes" revisited

B

Bronco Lane

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moved from the thread on Day Trading

I remember you telling us all years ago to "fill your shoes" when the Bank of Ireland share price was falling. Did you ever hear the saying "never catch a falling knife". Why did you tell us to "fill our shoes? Sentiment or something else? Are you prepared to tell us now all these years later or are you going to delete my post?
Believe it or not it was exactly the outcome of your comment that got me involved in Day Trading. I remember thinking that this guy actually believes this. There has to be some way of making money from people who believe this kind of thing.

https://www.youtube.com/watch?v=z2q7bBVAo74
 
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Bronco Lane said:
I remember you telling us all years ago to "fill your shoes" when the Bank of Ireland share price was falling. Did you ever hear the saying "never catch a falling knife". Why did you tell us to "fill our shoes? Sentiment or something else? Are you prepared to tell us now all these years later or are you going to delete my post?
Click to expand...

Why would I delete your post? For misquoting me? It's better to correct the misquote than to delete it.

http://www.askaboutmoney.com/thread...rty-prices-and-borrowing.133122/#post-1009150


"Bryan Dobson: “Just finally …Irish bank shares are down at where they were in the mid 80s. Is that a buying opportunity?”

Brendan Burgess: I think we are going to look back in a few years time at the state of the Irish banks and the Irish stockmarket generally and say how did we not fill our boots with those shares.

I might regret saying that later

Dobson: Brendan Burgess on your head be it."


The ISEQ General Index was 7,136 at the time. Today, it's 13,582 - i.e. it's up 90%.

Believe it or not it was exactly the outcome of your comment that got me involved in Day Trading. I remember thinking that this guy actually believes this. There has to be some way of making money from people who believe this kind of thing.

I am sorry that you lost money from not believing me.
 
"Bryan Dobson: “Just finally …Irish bank shares are down at where they were in the mid 80s. Is that a buying opportunity?”

Brendan Burgess: I think we are going to look back in a few years time at the state of the Irish banks and the Irish stockmarket generally and say how did we not fill our boots with those shares.

I might regret saying that later

Dobson: Brendan Burgess on your head be it."

I am sorry that you lost money from not believing me.[/QUOTE]

You were wrong and I didn't believe what you were saying on RTE, and I was right not to believe you. Also I didn't lose money because of you. I actually made money because of you. Unfortunately many other people believed in what you said and purchased bank shares for the long term and lost money. Their fault, but your comments did not help. While these were purchasing, others were selling. Among those buying & selling at the time were many Day Traders, these were the people who made money.

Your state that share price movements are random. Do you not think that your comments caused an anomaly to the randomness that you speak of, to the banks share price fluctuations?

For some people holding shares for years is the norm. For some people holding shares for a few months is the norm. For some people holding shares for one full day would give them palpitations.
Some people only want to hold them for minutes.

As I said before there is a time to buy and a time to sell. You decide the timeframe and if you are making a profit then you are not making a loss.
 
I think its unfair to point to something someone said years ago. I have given loads of bad advice in my time! I'm just lucky no one filmed me and can relay it to me , but meh he was asked a question and on the facts he had at the time he answered it , he was either going to be right or wrong. He can only answer on all the information he had at the time and maybe it was a good time to buy but more information made it a bad time to buy, the fact is nobody knows what way the market is going. I kinda feel you and Brendan are debating different things , I see what your saying you are "on it" trading small bits of news that happen each day but Brendan is talking about not beating the market long term like comparing to a person buying and holding stocks. I could probably day trade I appreciate that the day traders are making money out of marco moves in my stocks that I couldn't be bothered to micro manage .
 
Hi Bronco

I get lots of things wrong, but I was not wrong with that comment other than I should not have answered the question. I was asked to come in and explain how the €20,000 deposit guarantee worked and whether it should be increased or not. I explained very clearly that guarantees are not free, and that it should not be increased from €20,000.

When he asked me the final question, I should have replied "You asked me to talk about the bank guarantee - I would need a lot longer to talk about investing in shares." My summary "I think we are going to look back in a few years time at the state of the Irish banks and the Irish stockmarket generally and say how did we not fill our boots with those shares." has been shown to be right. The ISEQ has increased by 90% since then. I stayed invested in the stockmarket back then and I am glad I did. I wish I knew then which shares were overvalued and which were undervalued but I don't have that skill, which is why I had and still have a balanced portfolio. The stockmarket continued to decline after September 2008. I continued to advise that a balanced portfolio of shares was the best long term strategy. My AIB shares were wiped - but the gains on the other shares far outweighed the losses on my bank shares.

Brendan
 
Well, the ISEQ General Index has certainly recovered strongly over the last 7 years but I'm afraid the same can't be said about the financial constituents of that index.

If reinvested dividends were included, the divergent performance of the financial and non-financial stocks would look even more dramatic.

To be honest, I don't have a dog in this fight. I really don't believe any retail investor should ever have any need to hold shares in any individual companies any more, whether for a minute or three decades.

However, if people want to spend their time searching for unicorns - well, fire ahead...
 
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Brendan

I just had a look at the infamous clip....

Are you looking for a professorship in Trinity?! o_O

Remember - you were invited onto the programme as an expert - and consequently are subject to exacting standards.

You said the banks were well regulated - Not true

You identified liquidity as the key risk to banks - Not true

That was then. Today you wrote......

Brendan Burgess said:
I suspect that this is very rare and is part of PaddyPower's PR to make punters think that they can make money.
Click to expand...

This, of course, is true because it's what you suspected. It, nonetheless, is undeniably wrong - my son worked with a large bookmaker and I can confirm the accuracy of Fella's post in this regard.
 
Hi Dan

As I said, I often get things wrong. And of course I was wrong about the banks being well regulated. But we did not know at the time what we know now about the Central Bank.

The key risk to the banks at that time certainly was liquidity. There was the beginning of a run on the bank. I said that the banks were solvent. That was probably not correct. But a few months later, PwC, having studied the capital position of the banks on behalf of Finance came to the same conclusion.

Did you watch the whole interview? I was very clear that if lenders were not solvent, they should be let fail. That the deposit guarantee should not be raised above €20,000. That would have saved the taxpayers a lot of money. But that might be wrong as well. Had AIB and BoI been let fail, there would have been even bigger damage to the economy. Irish Nationwide and Anglo should certainly have been let go.

Brendan
 
I suppose what I'm wondering - and apologies if you have covered this elsewhere previously - is what evaluations had you done to support your contentions that:

1. The banks were well regulated?

2. The banks were solvent?
 
Hi Dan

I think it's worthwhile reading the full transcript of that interview:

http://brendanburgess.ie/brendan-bu...burgess-advises-against-government-guarantee/

Joan Burton was calling for an increase in the government guarantee and I was advocating strongly against it:

"Dobson: Is it not unthinkable that an Irish government or any government would allow a retail bank, a major retail bank with all these branches and with all these customers to go under?

Brendan Burgess: I don’t think it’s inconceivable at all. The Government regulates Irish banks but the government does not and should not guarantee Irish banks and that is a very , very important distinction.

If banks behave badly in their lending or if they are reckless in their management or whatever, they should be allowed to go to the wall and that is a fact of economic life.

It would have an effect on the economy but giving some sort of soft guarantee to a badly managed banks would be irresponsible and very bad news for the long term."

Back to your questions. Why did I form the wrong opinion that the banks were well regulated? I dealt with the Financial Regulator on consumer issues, and they weren't great. Because of the banking secrecy rules, we got no insight into their prudential supervision. However, I was under the impression that they were very conservative. They were proactive around the time of the Northern Rock issue. I had put down a motion of no confidence in Michael Fingleton a few years earlier, and they prudential guys tried to block it saying that it could damage confidence in the bank and trigger a run. At that time, Pat Neary and Con Horan had very good reputations. I was wrong in my assessment, but there was no evidence at all at the time which would suggest otherwise.

Why did I conclude that the banks were solvent? The big issue affecting international banks at the time was the securitised sub-prime loans and complicated derivative products. The Irish lenders had little or no exposure to them. According to the accounts, the Irish banks were very well capitalised and could comfortably withstand a crash in property prices. As I have noted above, some months later, PwC examined the books of all the banks, and concluded that they were solvent. From memory, I think that they concluded, that not only were they solvent, but that they were adequately capitalised.
 
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The best sight is hindsight.

Easy to through back comments made 7 years ago after the subsequent disclosures of how the banks behaved and how the Central Bank was asleep at the wheel.

Remember, the banks hoodwinked the government too, something that saw the IMF called in and the Pension Reserve Fund decimated. The effects of the lies will be felt for generations.


Steven
www.bluewaterfp.ie
 
As the saying goes, “prediction is difficult, especially about the future”.

However, the errors of the past should, hopefully, lead to wisdom and success in the future.

The lesson I would draw from the recent financial crash is that it is (and always was) very risky to invest any significant portion of your net worth in a concentrated portfolio of equities, particularly a portfolio of shares issued by companies in a single sector of a small economy.
 
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That's true but is there a danger people are making the same mistakes again with the dairy and food companies. They now constitute a large proportion of the iseq just like the banks did back in 2007. Even with the trouble in world food markets with the closure of the Russian market and China jitters their shares keep rising inexorably. It's a side issue but it is noticeable.
 
joe sod said:
That's true but is there a danger people are making the same mistakes again with the dairy and food companies. They now constitute a large proportion of the iseq just like the banks did back in 2007.
Click to expand...

I couldn't agree more.

Making mistakes provides a great education but you need to understand what your mistake was in the first place before you it can teach you anything.
 
Brendan Burgess said:
The ISEQ has increased by 90% since then. I stayed invested in the stockmarket back then and I am glad I did
Click to expand...

Was the 90% calculated after the bank shares had crashed or before the bank shares had crashed? It would be interesting to see the percentages over different timeframes.

Back in the day many investors would have invested in the top companies. AIB, BoI, IPBS, INM, CRH, Fyffes, Glanbia, Kerry Group, ICG. If they were weighted in the first 4 named then they would have been almost wiped out. I believe many invested in the banks believing them to be a safe investment.

Having lost their money many would not have the money nor the inclination to reinvest so they would not have benefitted from any upturn.

I was not a holder of the bank shares but I was and still am a holder of INM & CRH. In addition to Day Trading I also held shares medium term. Now for me, medium term is about a year maybe two. Unfortunately for me, I am holding about 8 shares (mostlY U.K.) that I had hoped to keep medium term but have now turned into long term.

Stupidly I have not cashed in the good ones when they were on a high and bought back in again when they were low. If I had done this I would have eroded those losses built up in the dogs that I own.
 
The ISEQ index since the night that Brendan made his tv appearance...and how it's done against the S&P 500 and MSCI World Index.

Edit: Problems uploading the graph.

The S&P 500 has risen 162.73%
ISEQ has risen 143.86%
MSCI World Index has risen 113.42%

I still wouldn't recommend investing in the Irish index though, far too small an index with not enough diversification. High risk stuff.
 
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Brendan Burgess said:
Hi Steven

I have calculated it at 90%. Are you looking at the index excluding banks? I am looking at the Overall Index, total return.

Brendan
Click to expand...

Hi Brendan

I'm using the data supplied by FE Analytics, a fund returns piece of software that I use. It would be a general index
 
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Bronco Lane said:
moved from the thread on Day Trading

I remember you telling us all years ago to "fill your shoes" when the Bank of Ireland share price was falling. Did you ever hear the saying "never catch a falling knife". Why did you tell us to "fill our shoes? Sentiment or something else? Are you prepared to tell us now all these years later or are you going to delete my post?
Believe it or not it was exactly the outcome of your comment that got me involved in Day Trading. I remember thinking that this guy actually believes this. There has to be some way of making money from people who believe this kind of thing.

https://www.youtube.com/watch?v=z2q7bBVAo74
Click to expand...
Sarenco said:
As the saying goes, “prediction is difficult, especially about the future”.

However, the errors of the past should, hopefully, lead to wisdom and success in the future.

The lesson I would draw from the recent financial crash is that it is (and always was) very risky to invest any significant portion of your net worth in a concentrated portfolio of equities, particularly a portfolio of shares issued by companies in a single sector of a small economy.
Click to expand...


i sometimes hear people refer to the fact that they had their pension in bank shares and thus condemn all pension plans as a result , since when is a legitimate pension consisting of only one sector in one country , i would not call that close to a pension , a very narrow portfolio
 
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