My Investment Tip

After a little dose of doom and gloom, we decided we'd better brighten up the dark days of November with a little investment tip. So far my favourite investment has been property in Abu Dhabi, see post 3rd October. This is working out really well for us; as the dollar continues to fall our investment becomes cheaper and cheaper. Hopefully, by the time it comes to selling in 2009/10, a strengthening dollar will further add to our return.

Our most recent punt is on the stock markets and more specifically the Irish index of shares. We have recently bought 400 shares in The Bank of Ireland @ €9.01. We feel this represents great value. Bank of Ireland (BOI) shares have fallen dramatically in value since highs of €18.83. A 50% decline in share value hardly represents a strongly performing company, but bear with me.

The steady decline in share price has been largely caused by the subprime market volatility and its knock on funding implications for banks. This funding issue is not as significant for Irish banks as they have largely avoided the subprime issue, and also do not require the same level of funding from international capital markets as many of its US and UK competitors. BOI is essentially a profitable bank with profits of over EUR 1 billion forecast for six months to September 2007. Profits for the second half of the year have been revised downward but are still considerable. Concerns over the Irish housing market slowdown have added to the fall in share price.

We purchased a modest holding of 400 shares at EUR 9 yesterday. Coincidentally UBS Fund Services acquired a 3% shareholding in the Bank and many stock brokers have moved from a neutral position to a buy position on the share.

Our main motivation is the tantalizing prospect of making some money off the back of the banks whose increased charges and fees continue to irritate us on a daily basis!

We plan to hold the shares until about March, April 2008 after the BOI year end. I must stress that this is pure speculation and is a high risk strategy, not advisable unless you can afford to lose your investment. We would strongly advise against borrowing to fund such a short term investment. Most advisers would argue that it is not possible to make considerable gains over such a short period of time, we will keep you posted.