Compared with our US and British peers, where almost 50 per cent and 25 per cent of the public hold shares directly, there are now an estimated 380,000 private shareholders in Ireland, representing just 13 per cent of the adult population. However, as investor knowledge broadens, the benefit of share ownership is finding an ever-increasing audience, clearly highlighted by the tremendous response to Sharetrack.
In so far as the competition provided an opportunity for fantasy fortune, equally as many participants were the victims of fantasy foe. Undoubtedly, those burned in recent weeks may question the reputed opportunities for generating significant returns in the stock market. Yet, over the long term, these concerns remain unfounded given that £1,000 invested in Irish shares for the 25 years to 1998 has returned over £70,000, nearly three times that of gilts and property and six times that of deposits.
However, the journey of equity investment can prove to be a volatile path at times and, as such, it is important to bear in mind some of the guiding principles outlined in recent weeks. Firstly, every investor needs to develop an investment plan and philosophy reflecting a realistic attitude toward return and a personal comfort level with risk.
Secondly, as diversification remains key to controlling this risk, a primary focus should be to achieve a balance in terms of geographic, sectoral and stock spread.
Thirdly, while it is essential to monitor the broader investment climate, refrain from the temptation of seeking to time market movements. Although a common aspiration is to sell your entire portfolio at the top of the market and buy at the bottom, this is a precarious objective to achieve.
Fourthly, when contemplating adjustments to your portfolio, fundamental analysis should take priority over concerns regarding price movements. Equally, the sale of specific holdings should not be made without understanding the reasons why such stocks were originally purchased.
Finally, unlike the speculative nature of Sharetrack, investing in equities cannot be viewed as a short-term game but primarily as a wealth-generating opportunity for the long-term patient investor. Coincidentally, the finale of Sharetrack coincides with the floatation of Telecom Eireann, bringing the reality of share ownership to a much wider universe. As we bid farewell to fantasy dealing, the experience gleaned should hopefully prove invaluable for any players willing to enter the real world of the stock markets.
HSBC had a three for one share split, effective July 5th, 1999. All portfolios containing this stock have been adjusted accordingly.
Laura DeVoy works a researcher in the private client department of Goodbody Stockbrokers.
