Liams Last Post : Q3 ends strongly positive , Q4 opportunities still in Ireland...

Good Afternoon ,

 

Well the Q3 draws to a close with a surprise economic number from the USA which served to give the market a fright and remind us how fragile the market sentiment actually is . That being said the immediate sell off was soon halted with th down down -1.3% and at time of writing the market has already climbed back to a loss of only -0.75%

 

 During ht e quarter the bull ru continued ad piled excruciating pressure on many portfolio managers some of whom not only underperformed last year but are underperforming this  The typical story I have heard is one of PM's facing into the fourth quarter with asset allocation decidions towards equities being made and a portfolio which is if anything still to defensive.

 

In my time in Irish equities , there are times when you may as well set yourself on fire in order to capture attention and there are other times when a diligent analyst with spreadsheets may convince a PM to buy a stock.  The market has been in a very tight range for the last couple of weeks looking fr direction but just before it entered that mode , I certainly noted a certain amount of the 'Gimme a Name ' Syndrome which occurs when desperate men are driven to search for any name that might add some sex and violence to their portfolio.

 

The Dow was up +14.4% , Europe +10.6% , London +20.6% and Ireland +23.8%

 

I had been saying during the quarter that there was value in Ireland and it is slowly being recognised. Still lots of opportunities , some stocks such as CRH continue to be deeply unpopular and are yet to have their day. The Banks future performance needs some clarity about NAMA ,and we will be on tenterhooks awaiting the decision of a small group of Green party members whose decision may be based on their view on cycle lanes rather than what is good for the country…or the market. Expect plenty of volatility here… I note the absence of any loud leadership noises from the leaders of the Green Part canvassing support for the NAMA legislation which they helped shape.   

 

In the fourth Quarter we may hear about the future of the short selling ban… what an interesting moment to potentially free the banks to the true views of the market…

 

I leave you to ponder the topic I have been writing about for the past couple of weeks , the market hiatus , the narrow range and the lack of liquidity…This came about as the consensus seemed to be calling for a pull back… Sure the market pulled back, driven by a buyer strike rather than selling pressure…. Tomorrow is the start of Q4 , did the number today tell us anything that we don't know ? no… does it mean that rates are likely to remain low for longer  ? Yes and the fears about the speed of drainage of the massive liquidity injections into the market are probably misplaced as with numbers this weak , then this liquidity is bound to be left in the system for longer.

 

 And as for Ireland, we have had economic stats showing that the rate of economic collapse has slowed and today that the Unemployment rate has steadied at 12.3% which is also very interesting news… no signs of a recovery but maybe we are at the bottom…and the bottom is hopefully not so deep as initially feared.

 

This story is not over yet…the games are just beginning ….

 

My favourite stocks from here : CRH , PaddyPower , Grafton ,  Kerry , Origin ,Total Produce , Paddy Power ….

 

I think it is going higher…. Get ready….

 

Have a good evening

 

Liam

 

 

 

 

 

 

 

 

___________________________________________

Liam Boggan

　

Merrion Stockbrokers

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