Financial Planning &
Solutions
We Point You In The Right Direction
The Next “BIG” Thing!!!
Have you ever watched any of the
programmes on the Shopping Channels where
everything from exercise equipment to
cooking utensils to make-up to jewellery is
sold? These programmes run for about 20
minutes and are glorified commercials. They
all run to pretty much the same format and if
you have seen them you’ll know what I’m
talking about but for those who haven’t, let
me explain how these programmes work.
They normally are set up with two presenters.
The first presenter acts as the host and the
second presenter is the person trying to flog
the product. The second presenter goes
through all the features of the product and
the host has several epiphany moments when
he/she realises what a difference the product
is going to make to their lives (all for the low
low price of €19.99).
Where these programmes are really clever
however is in the “ad” portion of the
programme. The life you live before you
purchase the product on offer is filmed in
Black & White. Everything is dreary and life is
just so hard. Purchase the product however
and suddenly your life goes back to full colour
and everyday is a carnival. The product is
going to have that much of an effect on your
life. Before you know it, you are the proud
owner of another dust gatherer that sits in
your shed, closet, under the bed.
What is it about these programmes that make
people buy the products on offer? Simply put,
it’s the fear that you are missing out on
something. That the purchase of this product
will knock all of 30 seconds of your usual
routine and think of all the stuff you could get
done in those 30 seconds.
Justin O’Gorman trading as Financial Planning & Solutions is an Authorised Adviser regulated by
the Central Bank of Ireland.
No. 57452
19 Clonlea, Woodpark, Ballinteer, Dublin 16. Tel: 01 2981817 Mobile: 087 2670223
Email: justin@fpands.ie Website: www.fpands.ie Registered Business Name No. 402457
It’s the same with Investments.
There is a constant search for the next big
investment idea, the next small company with
the potential to be an Apple or a Microsoft.
Get in on the ground floor and watch the
value of your investment soar to limitless
amounts.
How many next big things
actually turn out to be the Real
McCoy? How many investors
end up with useless share
certificates after a company
spectacularly fails?
While there is no doubt that individuals have
made huge gains by finding these nuggets,
there are also countless stories of investors
who ended up being burned as their
investments tanked.
Think back to the Dotcom bubble. All rational
investment reasoning went out the window as
companies with no genuine chance of long
term existence were suddenly worth billions.
Investors kept ploughing funds into these
companies because they saw the huge gains
that were being made by others.
Unfortunately and predictably, the wheels
came off and those who were last in to the
party suffered the most.
This investment story has been played out on
numerous occasions in the past and it is not
just the less informed investor who gets
caught. Sir Isaac Newton was famously caught
out by the South Seas bubble in 1720 and is
quoted as saying “I can calculate the
 Financial Planning &
Solutions
We Point You In The Right Direction
movement of stars but not the madness of Can Bubbles be avoided?
men”.
On a personal basis I believe that Markets will
We in Ireland have just experienced our own always experience Investment Bubbles. It is
Investment Bubble in the Property Market just their nature.
and the country is paying for our madness.
On an individual basis, it is possible to avoid
The Causes of Investment Bubbles? Investment Bubbles. All the people who didn’t
buy into the property boom avoided that
All investment bubbles are driven by a crash. These
number of factors: individuals were
able to ignore
1. The belief that “this time it’s the noise that
different”. was being
2. The taking for granted of returns that created by the
are seen originally as exceptional and rest of the world
are now seen as the base expectation at that time.
3. The willingness of investors to put However, in their
aside all reasonable analysis of the avoidance of the
market because of fear of losing out Property Bubble,
on something the returns their
4. Greed. When an Investment Bubble investment
begins to form, investments in other portfolio earned
areas are snubbed because the over the last few
returns appear poor in relative terms. years may have
Investors are unwilling to accept been less than Tulip Mania in Holland in the early
these relatively poorer returns and anticipated. 1600’s is commonly regarded as
continue to plough into the Bubble to the very first Investment Bubble.
chase the higher returns. This Therefore, the Single Tulip bulbs were selling for
continues to feed the Bubble. question all extraordinary prices. A tulip,
5. Borrowing. When Investors believe investors need an known as "the Viceroy", displayed
that the returns on an investment are answer to is in a 1637 Dutch catalog, cost
between 3000 and 4200 florins
such that not only is it worth investing “how can I get
depending on size. A skilled
existing money but it is also worth my investment
craftsman at the time earned
borrowing to invest, then a classic portfolio to
about 300 florins a year.
Bubble is forming. produce a
consistent return
If one looks back through history, every without ending
Bubble starts, continues and ends the same up taking Risk I am not happy with?”
way and the 5 elements mentioned above will
have been adhered to. Investment Diversification

You cannot protect your investment 100%

from Risk. It is simply not possible. However,

Justin O’Gorman trading as Financial Planning & Solutions is an Authorised Adviser regulated by
the Central Bank of Ireland.
No. 57452

19 Clonlea, Woodpark, Ballinteer, Dublin 16. Tel: 01 2981817 Mobile: 087 2670223

Email: justin@fpands.ie Website: www.fpands.ie Registered Business Name No. 402457


We Point You In The Right Direction
you can reduce the risk your portfolio is
exposed to by careful investment planning.
A well crafted investment plan will have as its
core principle, asset diversification.
Diversifying the assets held within a portfolio
is like adding layers of protection to the
overall portfolio. If one section of the
portfolio is performing poorly, the other
sections should act as a counterbalance.
Depending on the weighting invested in each
section, the portfolio may still sustain a loss
but the loss should not be as bad as a
portfolio with no diversification at all.
For example, Investor A decides to buy shares
in 4 companies and invests 25% of his cash in
each company. Investor B decides to invest his
cash in those same 4 companies but he also
decides to spread his investment to include
some Bonds and some Commodities.
Which series would you prefer to have your money invested in?
The next week Stock Markets fall by 20% and
even though Investor A has invested in 4
different companies, his investment is all held
in Shares and his portfolio is down 20%.
Investor B has also experienced a fall of 20%
on his shares but his Bond and Commodity
Justin O’Gorman trading as Financial Planning & Solutions is an Authorised Adviser regulated by
the Central Bank of Ireland.
No. 57452
19 Clonlea, Woodpark, Ballinteer, Dublin 16. Tel: 01 2981817 Mobile: 087 2670223
Email: justin@fpands.ie Website: www.fpands.ie Registered Business Name No. 402457
Financial Planning &
Solutions
Investments have acted as protection on the
portfolio so he ends up with a smaller loss
than Investor A.
The counter argument to a Diversified
Portfolio is that if the shares in Investor A’s
portfolio had increased in value then his
return would have been greater than Investor
B. This is true. However, in my personal
experience and despite how savvy investors
think they are, losses on a portfolio are
greeted with greater dismay than gains are
greeted with joy.
In the market today, an investor has a much
greater choice as to what to invest their funds
in. Asset classes available include the
traditional Shares, Property, Bonds
(Corporate, Sovereign and Indexing) and Cash.
Investors can also invest in Currency,
Commodities, Alternatives including Waste
Management, Water Management and
Renewable Energy as well as Absolute Return
Fund Strategies and Exchange Traded Funds.
With such a wide range of investment options
on offer, an investor has the ability to build a
well balanced and diversified portfolio which
should protect them from the risk of ending
up in a future Bubble.
And finally.....Returns
Going back to the point I made at the start of
this article and again in relation to Investment
Bubbles, if an investor believes that returns of
20/30/100% per annum are the norm, then
they are creating the environment for further
Bubbles.
However, if an investor accepts, that by
adapting a well balanced investment strategy
the extremes of highs and lows can be
eradicated for more stable returns, then the
investment markets do provide investors with
 Financial Planning &
Solutions
We Point You In The Right Direction
the ability to increase the size of their
portfolios within acceptable risk parameters.

Financial Planning & Solutions would be

delighted to discuss the investment strategies
that best suit your circumstances. Please
contact us for further information.

Disclaimer
This report has been prepared by Financial Planning &
Solutions for information purposes only to assist
investors to be more informed about their investment
decisions and is not intended to and does not constitute
personal recommendations nor provide the sole basis
for any evaluation of the investment options discussed.
Specifically the information contained in this report
should not be taken as an offer or solicitation of
investment advice or, encourage the purchase or sale of
any particular investment.
Not all recommendations are necessarily suitable for all
investors and Financial Planning & Solutions
recommends that specific advice should always be
sought prior to investment, based on the particular
circumstances of the investor. The information in this
report has been obtained from sources, which Financial
Planning & Solutions believes to be reliable and all
reasonable efforts are made to present accurate
information
Financial Planning & Solutions gives no warranty or
guarantee as to, and do not accept responsibility for,
the correctness, completeness, timeliness or accuracy of
the information provided or its transmission. Nor shall
Financial Planning & Solutions or any of its employees
be liable to for any losses, damages, costs, claims,
demands or expenses of any kind whatsoever, whether
direct or indirect, suffered or incurred in consequence
of any use of, or reliance upon, the information. Any
person acting on the information contained in this
report does so entirely at his or her own risk.
Past performance is not a reliable guide to future
performance. The value of your investment may go
down as well as up. Investors should be aware that
forwarding looking statements and forecasts may not be
realised. This report may not be reproduced (in whole or
in part) altered, transmitted or made available to any
other person without the prior written permission of
Financial Planning & Solutions.

Justin O’Gorman trading as Financial Planning & Solutions is an Authorised Adviser regulated by
the Central Bank of Ireland.
No. 57452

19 Clonlea, Woodpark, Ballinteer, Dublin 16. Tel: 01 2981817 Mobile: 087 2670223

Email: justin@fpands.ie Website: www.fpands.ie Registered Business Name No. 402457