I have shares in three Irish companies – Bank of Ireland, Kingspan and CRH. While I bought Bank of Ireland shares over a number of years at a low price, I bought CRH and Kingspan under a year ago.
While I had been prepared to hold on to the shares for the next five to eight years, considering the value that has been wiped off the Irish Stock Exchange in recent months and the prospect of a no-deal Brexit, I’m now seriously thinking about selling my shares.
I am considering two options: sell and wait and see what happens, or cut my losses and invest the money in a peer-to-peer lending company such as Property Bridges or Linked Finance. Are there any issues that I should consider before I make a final decision?
Ms M.K., Dublin
Indeed there are, but the first thing to note is that while this column can and does clarify options for people in relation to what rules do and don’t allow, it cannot give specific investment advice.
Quite apart from any competence or otherwise that I may have, I am not licensed by the Central Bank to do so and they would take a decidedly dim view if I was to enter that territory.
That said, there are some general issues to consider. You seem to be of a mind to sell regardless with the only issue being whether to then wait with a view to reinvesting in the stock market or invest the money elsewhere with a peer-to-peer lender. But the first question would appear to be whether this is the time to sell at all?
If media reports are to be believed, many companies (and their investors presumably) have already priced in much of the anticipated disruption that is expected form a worst-case Brexit scenario. This may, or may not, be the case but it is certainly an issue worth considering.
Your first option relies on timing the market and, as my colleague Proinsias O'Mahony argued as recently as last week on these pages, getting that timing right seems to elude investors – including fund managers – in maximising investment returns (https://iti.ms/2OqW3Dl).
Given that the general experience is that people lose out by selling too early and buying too late, he suggests that time in the market is more important than timing the market.
Turmoil
In your own case, notwithstanding the turmoil of the ongoing Brexit debate – if one can credit the continuing shambles with such a term – Kingspan appears to be about 20 per cent up over the past year and CRH is treading water.
It’s also the case that Brexit is far from the only factor to consider when deciding the fate of your shareholdings. Each has their own sectoral, and in some cases, company-specific drivers of stock market movement.
Unless you believe that the actual fact of Brexit is going to undermine the investment case further than it already has and in a more structural sense – ie with limited scope for share price recovery – you need to ask yourself if selling now is the right move. By your own account, you had initially invested for the long term.
*What, then, of your other option – investing in peer-to-peer crowdfunding platform. I'm not sure if you mean investing in the platform – a limited opportunity – or via the platform. This latter is certainly a higher risk option than investing in blue-chip shares.The companies availing of such platforms tend to be smaller businesses (SMEs) that might struggle to access traditional funding. The rewards can be great but so too can the risks.
And one the of largest Irish peer-to-peer lenders, Grid Finance, recently decided to close the door to smaller investors – those with less than €100,000 – on the basis that the sector was not adequately regulated to protect smaller investors less aware of the risks involved.
On a more general point, I would be concerned, however, if all your equity investment was in the one, very small Irish market. It’s a very open economy here and its fortunes – investor sentiment towards its stock market – can be easily and dramatically swayed by events outside our control.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or email dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice
* This article was edited on March 26th
