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The Facts Behind Bear and Bull Runs from a Different Animal

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The Facts Behind Bear and Bull Runs from a Different Animal 10 The Sunday Times November 25, 2018 BUSINESS BRIEFING DALATA MARKET WATCH DAVID QUINN prices of more than €300,000 a room. Ten years on from the negative returns in most THE ISSUE Dalata management has a UK Lehman collapse and the portfolios over 12 months. NO-DEAL BREXIT growth plan that is focused on the top The facts mayhem of 2008, US stock No-one likes to see a fall in 20 UK cities. prices this summer hit an value in their portfolio so its Dalata Hotel Group’s share price has all-time high in what is the only natural to want to time declined 35% since July and now behind longest bull market run in the market and get out at the trades close to an 18-month low, modern history. Yet last top. There are two problems despite the group being on course THE ANALYST Monday alone, $150bn with this strategy. First, we Robbins for record earnings when it reports DARREN McKINLEY, CANTOR (€131bn) was written off the have no idea if this is the top, offers an its results for the latest financial year bear and value of FAANG (Facebook, or just a consolidation before outsider’s in late February. We view the weakness as a great Amazon, Apple, Netflix and further gains. Second, if we view of Dalata shares have been punished opportunity to consider an investment Google owner Alphabet). do sell now and wait for the investing by its British exposure, with the group in Dalata. Its Irish business is a cash cow bull runs Fears of a market crash, will we be able to get full of operating 1,968 rooms in the UK (out and will help the group turn free cash meltdown are never far away. back in at the bottom? It sensible of 7,820 rooms in total) and generating flow positive in 2019. Joint ventures Tony Robbins, known requires us to make two advice about 20% of its revenue from the UK with institutional landlords will help globally for his motivational separate timing calls perfectly, (80% from the Republic of Ireland). keep its UK expansion plan capital light. from a speaking and extravagant when even one is difficult. We they can forecast, time Once a bear market ends, the In addition, 21% of hotel rooms Earnings before interest, taxes, conference style, recently have more than €100bn sitting markets and outperform. next 12 months can see sold in Ireland are bought by British depreciation and amortisation have published Unshakeable: in cash in Ireland, and much Evidence would suggest very market gains, and the bull visitors, who could be negatively grown by 80% over the past three different Your Financial Freedom of that has been sitting for a few, if any, add any value. In returns. In 2008, the market impacted by a “hard Brexit”. years and are expected to grow by a Playbook, an outsider’s view long time as investors missed the words of Warren Buffett, was in free fall; now, at 115 With concerns growing last week further 18% in 2019. Post the sell-off, of investing that features the early part of this bull run. “the only value of stock months, we have the longest over a “no-deal”, investors have which prices in a hard Brexit, Dalata interesting common sense forecasters is to make bull run in modern history. become nervous about the impact trades on 11.5 times 2018 earnings and animal recommendations. As Fact 2: Fewer than 20% of fortune-tellers look good”. of such an event on Irish companies 1.05 times book value. A soft Brexit someone from outside the all corrections turn into a Fact 7: The greatest danger with UK exposure. would be a catalyst for the shares. investment world, he has bear market Fact 4: The market has is being out of the market An agreement that results in a close nothing to gain, so there are Selling stock means selling at always risen, despite short- From 1996 to 2015, the S&P relationship between the UK and EU Dalata no get-rich-quick schemes in a low, right before the market term setbacks 500 returned an average of would be good for Dalata. the book — you won’t see rebounds. About 80% of Market drops are regular, but 8.2% a year. If you missed out €8 crypto currencies or short- corrections are short breaks temporary. The S&P 500 on the top 10 trading days term trading — just facts that in bull markets — so selling achieved a positive annual during that period, your 7 nicely summarise best practice early means you miss the rest return 27 of the past 36 years, returns dwindled to 4.5% a THE BOSS when investing your savings. of the upward trend. Markets 75% of the time, despite year. If you missed the top 20 PAT McCANN 6 tend to rise 75% of the time, regular drops. trading days, your returns Fact 1: On average, but during the other 25% were just 2.1%. And if you Born in Sligo, Pat McCann, 67, started 5 corrections happen once investors do damage by Fact 5: Historically, bear missed out on the top 30 work at Ryan Hotels and eventually per year selling low. markets have happened trading days, your returns became chief executive of Jurys Doyle The uncertainty of a every three to five years vanished into thin air. 4 Hotel Group. He and his management correction can prompt Fact 3: Nobody can predict Between 1900 and 2015, The moral of the story? If team founded Dalata in 2007 before Jun Jul Aug Sep Oct people to make big mistakes consistently whether the there were 34 bear markets, you stay in the market long listing the company in 2014. Source: Yahoo but most are over before you market will rise or fall varying from 45 to 694 days, enough, compounding works Dalata’s acquisition of nine Moran know it. Corrections of 10% During this nine-year bull on average lasting about a its magic and you end up with Bewley’s hotels for €455m in 2014 Market cap: €863m; Share price: are normal, in fact we have run, there have been many year. It takes about three a healthy return. (€181,000 a room) was a shrewd €4.73; DPS: 0.112; EPS: €0.45; already had two corrections predictions of crashes. No years on average for these Dublin-biased investment that equates Shareholders: Ameriprise Financial of that magnitude in 2018. one can time the market. large corrections to recover. David Quinn, a certified to a third of the group’s portfolio. (10.4%); FMR (9.8%); Credit Agricole The correction at the end of Commentators, fund financial planner, runs Hotels in Dublin are now transacting at (5.9%); Allianz (4%) October was a concern for managers and advisers make Fact 6: Bear markets Investwise, a financial and investors and has led to a good living trying to show become bull markets pension advisory firm ISEQ FTSE 100 55.24 61.02 0.92% 0.88% H:7,257.41 H:7,903.5 DATABANK 5,928.21 L:5,772.58 6,952.86 L:6,851.6 IRISH SHARES THE WEEK IN THE MARKETS THE ECONOMY ISEQ RISERS DOLLAR Consumer price index current rate annual change Ryanair Holdings: €12.59, U 6.2% EUR > USD 30 Abbey 14.5 +1.4 16.2 13.6 1.39 7.44 310.9 32 Kenmare Resources (£) 1.96 –7.35 3.05 1.96 2.88 4.51 214.3 Glenveagh Properties: 88c, U 5.38% Z0.1% U0.9% 7,500 Mincon Group: €1.30, U 3.17% 4 AIB Group 3.75 –0.27 5.8 3.66 5.28 10.84 10184.3 2 Kerry Group 92.9 –0.8 99.7 76 0.82 24.38 16377.8 Residential property price index current rate annual change 7,000 $1.13 41 Aminex 0.02 –10.53 0.04 0.02 – – 61.9 5 Kingspan Group 40.1 –2.81 44.28 32.02 1.18 19.33 7219.8 V 0.01 FALLERS U0.7% U8.2% 12-month high: $1.25 45 Amryt Pharma (£) 0.13 +0 0.22 0.12 0 – 34.4 42 Mainstay Medical International 5.25 –63.29 16.5 5.25 – – 46 6,500 Mainstay Medical International: €5.25, low: $1.12 Vehicles licensed for the first time Oct 2018 annual change V 63.29% 24 Applegreen 6.02 –2.59 6.76 5.35 0.29 18.86 726 33 Malin Corporation 4.5 –10 10 3.86 – – 205.5 6,000 First Derivatives: €26.10, V 34.42% POUND 5,086 Z4.8% Independent News & Media: 6c, V 18.7% 38 Aryzta 1.08 –15.56 7.21 1.08 0 10 97.1 31 Mincon Group 1.3 +3.17 1.75 1 1.61 16.3 273.7 EUR > GBP 5,500 Average earnings a week prev. quarter qoq change 6 Bank of Ireland 5.77 –3.19 8.25 5.65 3.75 8.74 6195.2 23 Origin Enterprises 5.98 –0.33 6.82 4.93 3.54 11.39 751 €742 €739 U0.4% 16 C&C Group 3.19 –1.24 3.6 2.58 4.98 11.11 986.8 2017 2018 £0.88 46 Ormonde Mining 0.06 +3.13 0.07 0.02 – – 26.5 Source: Yahoo W 0.00 Unemployment on last month annual change 15 Cairn Homes (£) 1.39 +3.12 2 1.29 2.58 15.68 1094.8 48 Ovoca Bio 0.08 +0 0.16 0.08 – – 6.5 12-month high: £0.90 low: £0.86 36 CPL Resources 5.7 –1.72 6.5 5.6 2.6 8.67 156.4 126,400/5.3% Z1,700 Z37,245 7 Paddy Power Betfair (£) 71.55 –0.69 91.85 60 2.7 20.46 5870 DOW JONES CAC 40 1 CRH 24.14 –0.04 33.09 23.37 3.03 11.56 20007.2 24,285.95 4,946.95 YEN Manufacturing output current rate annual change 21 Permanent TSB Group 1.75 –3.74 2.44 1.67 0 12.18 796.6 78.25 H:5,657.4 YEN > USD 19 Dalata Hotel Group 4.7 –6 7.35 4.59 2.39 10.53 866.1 1,127.27 H:26,951.8 U2.1% U6.7% 47 Petroneft Resources (£) 0.02 +0 0.02 0.01 0 – 10.6 4.44% L:23,344.5 1.56% L:4,894.3 35 Datalex 2.2 –2.22 3.5 2.1 2.64 24.24 171.8 Retail sales current rate annual change 39 Providence Resources 0.16 –8.57 0.22 0.07 – – 95.6 ¥112.93 9 DCC (£) 57.25 –1.72 78.08 55.55 2.49 15.51 5624.2 NASDAQ DAX U 0.11 U1.5% U6.5% 3 Ryanair Holdings 12.59 +6.2 18.05 11.04 0 12.42 14269.5 6,938.98 11,192.69 12-month high: ¥114.54 44 Donegal Investment Group 8.5 –1.73 9.75 7.25 2.06 18.41 35.6 low: ¥104.55 Irish trade latest month prev.
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