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E-mailThe international stock market expert who correctly advised investors last summer to dump Dublin stocks and instead buy gold says it's now time to buy Irish shares again, including the remnants of the Irish banking sector.
But Khuram Chaudhry, chief European quantitative strategist at Merrill Lynch, says while Irish investors can make money again in the short term, they must offload their shares by May, when he predicts the next phase of the severe global bear market will get under way.
"Even the Irish banks will likely enjoy the bounce. But you sell again in May and buy gold again for the rest of the year," Chaudhry told the Sunday Tribune. The strategist famously advised investors here last summer to dump Irish stocks at a time when the full effects of the banking disaster were still not clear. Tapping a worldwide bounce in global stock markets, the Iseq index of Irish shares closed at 2146 on Friday, 12% above levels hit at the start of the month.
Many experts, cautioning that the bounce is only a so-called "bear market rally", warn that investors could be hit a second time because there are few real signs that the US economy will come out of recession any time soon.
At the time of Chaudhry's warning early last August, the Iseq index was trading at 4089, and AIB and Bank of Ireland were trading at just over €9 and €6, respectively. By this weekend, the Iseq had fallen by almost 50% and AIB and Bank of Ireland closed at 66 cent and 50 cent.
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We have invested in Allied Irish Bank because we feel that even though times are tough right now, the future will be rewarding for this bank and other Irish banks as well.
We live in the United States and we have already started to see some improvements. Retail Sales were better than expected for Feb. 2009. The same applies for housing starts and permits in the United States.
I'm not sure that there will be a pull back in the Irish stock market in May or in the United States.
I expect to see additional improvements to the US economy as the year progresses. In time, it will bring growth for the economies in Europe and Asia. At this time, we are optimistic that there is a light at the end of the tunnel. We believe Ireland will come out of this situation better than ever.