Wednesday, December 23, 2009

Economics 23/12/2009: Ending 2009 in Red

As 2009 is drawing to a close, let's take a quick look at the broad shares performance in Ireland. starting with a 10-year picture for ISEQ, S&P500 and Nasdaq:
This clearly shows just how dreadful the crisis has been for Ireland - in terms of total decline on the peak valuations. A five-year view confirms this:
But it also shows that 2008 was much worse for Ireland Inc than it was for the benchmarks. And despite the deceptive nature of statistics (remember - we started 2009 at a much lower valuation than other indices, so we could have expected a much stronger bounce from the bottom over 2009 bear rally), we remain heavy underperformers over 5 year horizon.
Ditto over the two year horizon although much closer/tighter view on the 2009 alone:
And if you were swayed by the 'buy' signals from our ever-optimistic brokers in the H2 2009, here is what you've been aiming for:
Yeeeks... At the beginning of the year, I predicted that the markets will continue discounting Ireland throughout 2009 on the back of the adverse news flow (deeper recession, failures in fiscal governance and collapse of banking) relative to the broader global indices. Clearly, they did.

Oh and one more reminder - back in July-August 2008 an MD of our top-5 stockbrokerage firms issued a fanfare-sounding Green Jersey note telling his clients that 'markets come back'.
Were we to listen - we would be buying ISEQ at 5,070 and valuing it today at under 3,000 - a 40.8% drop. Some price for a Green Jersey.

Oh, and it wasn't exactly a ride for the risk-averse, even compared to the scary trender like Nasdaq:
So markets do come back, don't take me wrong - except in their own time and at their own speed. Better luck in 2010, folks!

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