Thematic investing involves identifying certain social, economic, industrial, and demographic trends, or “themes,” that may ultimately drive the positive performance of a portfolio of securities benefiting from these trends.

Typical themes would be

• demographics,
• ageing population,
• climate change,
• peak-oil,
• renewable energy etc.

The history of thematic investing is a chequered one. It is a style of investing that lends itself to marketing gimmicks and is used by fund managers to merely piggy-back on the latest investment trend. It presents the timing challenge of separating short-term fads from longer-term trends, a skill which is in short supply.

Also, thematic investing has more in common with a growth and momentum style of fund management than it does with value investing. We in Foresthill Financial Planning Ltd (part of the Trusted Advisor Group) believe in the principles of value investing.

When successful, it can be extremely rewarding, so it is likely to be an area of interest to investors. But caveat emptor – let the buyer beware. Investing here involves many risks – risks which investors are not even aware of.

If you are lucky enough to invest in the right sector or company, the returns can be extraordinary. But intelligent investing is about taking risks where you are appropriately paid to do so and relying as little on luck as possible. It’s not that clear what the risks are in this segment of the market.

The return from any investment is largely dictated by the price at which you are buying it, not the strength of the story attaching to it. There are many wonderful ‘story’ stocks or themes out there for investors to get caught up in. In terms of renewables and in particular ‘renewable energy’ we feel it is quite certain that it will be an outstanding investment success. What we cannot tell you is … in which of the next 3 decades you will achieve that success!!

There are so many variables which can make any of these themes viable ……or totally unviable! What effect would oil at $150 a barrel have on the viability of solar or wave or wind energy? What if it dropped to $100? Or $80? Or hit $200??

Don’t fixate on the positive outcomes of investing in renewables, to the exclusion of the other possibilities. This usually leads you down a path of over indulgence, where negative outcomes have a detrimental impact. The only conclusion to draw from this is to tread with caution. Be very aware of what it is you are investing in and as we would always advise – don’t bet the house on it.

In our asset allocation model we have an allocation to real assets of c12%. This includes allocation to property of 5%, Forestry 3% and commodities 4%. Not much room to overdo exposure to renewables!

History gives us some perspective from the great gold rushes of the past 200 years (where many struck gold but many many more did not!) The successful did not necessarily themselves dig for the gold… they produced and made their fortunes selling shovels to those who dug for gold!

Loss aversion – we hate to lose!
The fact is that losses hurt us something like two times more than gains give us pleasure!
In practical terms, this means that people are unwilling to convert an unrealized loss into a realized loss. People hang on to losers and watch them go down and down. They hope they recover somewhat so they can then sell them. This is very understandable. It’s how our brains are wired. It’s hard to lose money. It’s hard to admit that you were wrong and ‘chin’ your loss and move on!! For this reason we all tend to hold on to our losers much too long.
Possible remedy
A possible way to overcome this is look into the future and not the past. This is difficult – more difficult than it sounds. The stockmarket doesn’t care what’s happened in the past. All that matters is what will that stock/share/fund/asset will earn in the future! What they have done in the recent past is almost irrelevant.
So that’s what investors need to be thinking about going forward. If an investment stands at a loss, but the original investment strategy is sound, then you should stick to your guns. However, if you have a loss and the ‘investment’ situation or the stock/company has fundamentally changed, or the fund manager has gone off the rails, or the market or sector has altered, then the future has changed; but it’s the future that’s changed. It has little to do with what the share /stock’s returns have been in the past.

Recency Bias – we have short memories!
In investment speak…people tend to overweight the most recent information. This simply means that people have short memories! They are much more aware of what has just happened compared to events further back in the past! So the most recent information carries more weight or influence than it should. This contributes to the well known situation where small private investors wait to see markets perform and gather up the good news before they invest (and therefore miss a great deal of the recovery/rise). They also lose their nerve when markets go down and news gets bad – they sell off and accentuate their losses. Emotional reactions!
Possible remedy
One way to combat this effect is to just look over the long-term. Stock market returns have been 5%- 7% over the long term. That’s a much more relevant number than whether earnings were down 15% last year or up 20% last year.

Social proof – we like to conform!
Humans are wired to be social animals. We take comfort in the crowd. We always have and always will. Maybe we are wired that way for survival purposes, going back hundreds and thousands of years?
This can get us into a lot of trouble. Just because the crowd is doing something doesn’t mean its right. It doesn’t means it’s wrong, but it certainly doesn’t mean its right. Allied to this the media can often reinforce things – because what sells magazines and ads on the telly is what’s popular. So the media tends to talk about what’s in favor, not what’s not in favor.
Possible remedy
So investors must be mindful that just because everybody else is doing it, doesn’t mean it’s the right decision. It’s not relevant. It’s your money. It’s the stock or fund that you own. Own it for the right reasons, not because it’s in vogue!

Endowment effect – we overvalue what we own!
This is where investors overvalue what they already own – sometimes know as “falling in love with your own stocks?” It might be a share or fund that has done well for you over many years, but is stagnating for whatever reason now. You may be reluctant to let it go. It’s because you’re not evaluating things on a level playing field. Nowhere is this effect more obvious than in peoples ‘opinions’ of what their own house (or property) is worth!!….compared to the neighbours house or the exact same property around the corner!!
Investors should always evaluate shares or funds on a level playing pitch, whether they own the share/fund or not. The ownership is not relevant. All that matters is – “how will it perform in the future?” So, again, it’s very hard to do. Saying that “this fund has made me lots of money” or “this manager has done really well in the past six or seven years.” is pointless. These points are not relevant.
Possible remedy
Investors must consider what the future offers compared to what other options they have? – the Opportunity cost?? If they think this stock/fund will continue to grow at a 3%-4% rate, but other options can give 6 or 8% then they have to make the hard call. So, evaluating other alternatives always makes sense.

Confirmation bias – we like to think we are right!
It is a fact that we process information that we already agree with more easily. We hang out with people who think like us. And in investing, that means if we feel good about the market, we probably read a bullish investor. If not, then the opposite is likely – we will agree with and therefore read the pessimistic commentator/analyst.
Possible remedy
To combat this people need to read varied opinions, listen to individuals and consciously seek out individuals and points-of-view that are contrary to theirs. This won’t be easy to stomach because these people’s views are disagreeing with them. They are actually telling them that they think they could be wrong! This is not what any of us want to hear …but…. this can be really valuable information to know.
So, trust your own opinions, but verify them. Verify them by actively seeking out people with the other point of view, and then testing your own beliefs. You might wind up sticking to your guns or you might come across information you wouldn’t have otherwise found that will help you make a better decision.

Career Risk – who wants to lose their job?
This is an emotion or experience that is more relevant to a fund manager than to a private investor. It is generally portfolio/fund/stockbroking managers who might suffer from what is called career risk.
If you’re a portfolio manager in a Life, Pension or Stockbroking House, your performance versus the benchmark and your peers is being tracked weekly if not daily! You underperform for a couple of weeks, or you have a bad quarter then you are going to soon start to feel the heat. You are going to feel pressure if you stand out from the crowd or if you have gone on a solo-run in terms of investment decisions. You may even feel that your job or career will be threatened if your performance compares badly with the so-called benchmark or ‘herd’.
So making forthright decisions or ‘swinging-the-bat’ in investment terms, may be a big issue for a fund manager. Unfortunately, investment history is littered with stories of managers who called things correctly, only to lose their nerve (or their jobs) shortly before their contrarian predictions came true! Obviously, as an individual investor, you can’t fire yourself. You have no career risk in that sense. So, hopefully, you can think a little more rationally.

Again, in summary, investors should do their best to avoid these emotional traps. They need to have an investment philosophy. From it, they need to develop an investment strategy. Then they need to devise an investment plan… and then stick to it, while reviewing its validity at predetermined intervals.

Investment, like many sports, is a profession which involves a combination of skill and luck. Where luck plays a significant role what we can measure in the short term, may not be what matters in the long term. Ultimately, it is a good process that leads to good performance, accepting that process gets swamped in the short term by luck.

Clearly success is going to be measured by something observable and this will inevitably focus on results, but investors need to focus more on the process and how performance is generated. If I stay in a hand of poker with an off suit 8 and a 2, I might get lucky and catch a full house, but I wouldn’t want to rely on it. Equally, you can get lucky with investments via a bad process, but this is not a route to long term success.

Take the obsession right now with the breakup of the Euro. The stampede into gold, Swiss francs and cash under the mattress is a classic example of blind panic and irrational decision making. This is not to suggest that a euro break up is not possible. Of course it is, but this should not be the only outcome that investors are focussed upon. Sensible diversification is being thrown out the window.

A sensible approach to investments should consider all possibilities and invest where appropriately being paid for the risks involved. Is lending money to Germany for 2% appropriate compensation for the risks? Is paying $1,800 an oz for a useless metal used as a fashion accessory appropriate compensation for the risk?

In The Trusted Advisor Group, we follow a simple and (what we believe) robust Investment Philosophy. Some of the key principles are

• Value investment principles
• Tactical Asset Allocation with sensible rebalancing

No matter how persuasive the narrative backing up a particular investment thesis, investors’ should not base investment strategy around narrow predictions that may have a 10% or 20% chance of occurring. By all means consider the possibilities and make allowances in your portfolio for this, but don’t build your investment strategy around one possible outcome. Consider all possibilities.

At the end of the day, investing is a probabilistic endeavour. To assess whether an investment makes sense you must make assumptions about the likelihood of certain events and weigh that up against the payoffs from those scenarios.

Investment implications of an Irish exit from the Euro

How an exit would play out is unfortunately very open to debate. There is a lot of contractual and legal uncertainty surrounding this, so bear this in mind. In the search for precedents, the comparison with the break from Sterling in 1979 is not helpful. Ireland broke with Sterling to join a currency with a stronger anchor (Deutschmark), so the two events are not comparable.

The expectation is that the new Irish currency would depreciate significantly against the Euro if it continued to exist or depreciate against the harder Euro economies currencies i.e. Germany in the event of a total break-up. A unilateral exit (i.e. Ireland exiting while the Euro continued to exist) is thought to be extremely unlikely. It is more likely that there would be a complete break-up.

The theory is that the Irish Government would impose exchange controls to prevent a rush of assets out of the country. This is speculation and it’s not clear that this would actually happen. But if that was the case, the follow through would be:

1. Irish deposits in Irish banks would most likely be re-denominated in Punts, with no translational benefits if new currency depreciates. It’s not at all clear that this would happen, but it would follow on from an imposition of exchange controls.
2. By the same logic, holders of euro deposits in non-Irish banks based in Ireland are unlikely to benefit as the accounts would be redenominated in Punts, with no translational benefits.
3. Investments in non-Irish assets would receive a translational benefit back into Irish Punts. That means, holding non Irish assets (shares in Google for example), would receive a translational benefit, if repatriated into the new (assumed weaker) Irish currency. However, if the Government decided to automatically re-denominate euro deposits as Punt deposits, then this opens up the possibility of all sorts of other restrictions. This could possibly include some penalty on holders of these assets also.
4. Holders of euro deposits in non-Irish banks based outside of Ireland would potentially benefit from an exchange into a depreciated Punt. As for point 3, the possibility of a penalty cannot be ruled out.

Investment Strategies if concerned about an Irish exit from the Euro

Given the uncertainties outlined above, it should come as no surprise to find that there is no perfect hedge, save for physical holdings of internationally tradable assets (precious metals for e.g.) and non-Euro cash. Nevertheless, the following are worth consideration in assuaging clients concerns about the Euro.

• Buying German/ Swedish/ Danish/ Swiss or Norwegian (i.e. non Euro, or ‘strong’ Euro) Government bonds. The downside to this is that you will be lending your money to these Governments for not much more than 3% p.a. This would of course seem like a pretty attractive deal in the event of a break-up.
• Buying precious metals and having access to hard currencies (identified above) that are resident outside the state.
• The simplest, though not the most effective in the event of penalties, is investing in unit-linked funds which hold non-Irish assets. Notwithstanding the fact that unit-linked funds are quoted in euros, many of them hold assets in non-euro currencies. When translated back into a devalued Punt, assets denominated in Sterling, Dollar, Yen and other non-euro currencies receive a translational benefit, all else being equal.

On the basis that this is possible, but not probable, you must work on the basis it won’t happen, but take it into consideration with a portion of a portfolio. Deal with the uncertainty by taking up some of the issues raised here and acting accordingly. Talk to your independent financial advisor.

In stock markets, the recency effect is particularly strong during good markets. People remember most, if not all of their winning stocks and forget about all the losers. Or if losers have turned into winners, most investors feel that there’s no way that they could be bit again by the same correction bug. The cognitive bias created by the recency effect clouds sound judgment and decision making. Investors and their advisors should be aware of this.
 The recency effect, coupled with unbalanced reporting of financial media that often incorrectly reports on the true state of the economy, catches many investors on-the-hop when corrections do occur. In our current global markets, the recency effect has a strong part to play and it is our job as advisers to advise on as balanced, as logical and considered basis as possible.

Ireland today gained EU approval to extend the guarantee scheme for banks until the end of the year after regulators said it was appropriate for dealing with economic problems in the country.

‘The extended measures are well targeted, proportionate and limited in time and scope,’ the European Commission said in a statement, as it extended the scheme for a further six months.

The Commission only approves guarantee schemes on a six month basis and today’s extension will extend the Eligible Liabilities Guarantee scheme until the end of the year.

‘The time extension to the guarantee scheme is part of the necessary State support for the banking sector to facilitate the completion of the institutions’ restructuring plans in which they clearly demonstrate their intention to progressively reduce and ultimately eliminate their reliance on the State guarantee,’ commented Finance Minister Michael Noonan.

The Commission also extended a similar scheme in Spain today.

All in all, this is great news and let’s hope it translates from ‘web traffic’ to actual ‘tourists-on-the-ground’ traffic.

I have been asked to address you today, not as an expert on the golf industry but as a keen observer of the Irish economy.

In 2010 our golf fortunes in performance terms have never been better. Irish professional golfers dominate the world rankings relative to our size. We have three in the world top 25 for an island population of 6m – a ratio of 2m:1 compared with Australia, our closest rival, with 11m:1, England 13m:1 and the USA with a ratio of 30m:1. My point is that Padraig, Rory and Graeme did not lick their talent off the ground – it was nurtured and developed by many of the people, organisations and clubs here today. It is interesting to compare this easily recognisable success with the much reported demise of the Irish economy and State.

Ireland’s success since the foundation of the State is often best observed from outside rather than from within. We are an island nation with real spirit which has time and again fought against and dealt with enormous economic challenges. Today is no different and to appreciate those challenges we should examine the facts of the current situation and not the emotion.

In the last twenty years, when resources in the ground and former empires no longer afforded the Western world an easy living, Ireland has prospered. It is often overlooked, but Ireland’s economy has been largely people-based for centuries, not just the few years that the knowledge economy has been the buzz word. What was once exported via the boat and aeroplane was retained which generated great opportunity and real success for Ireland. By way of example consider the IFSC of which I am slightly familiar with. Today the IFSC directly employs 32,700 of which 6,000 are in indigenous Irish firms, and pays almost EUR2bn of wages not to mention the multiplier effect around that. Nationally the IFSC generates EUR2.1Bn in tax per annum, 36% of all corporation taxes, accounts for 10% of multi-national employment, contributes 7.1% of Irish GDP and comprises 5% of all 27 EU cross border financial services. It accounts for about a third of Ireland’s service exports numbered at EUR20bn.

Today Ireland exports in total EUR84Bn compared to 1990 when our exports were EUR18Bn. The growth in technology and other knowledge based sectors has driven the success of Ireland. Do not let the fake marvel of the property boom and its collapse take from those achievements as they form the bedrock for our next stage of success. It is not by fluke or some sentimental journey that the leaders of the technology and pharmaceutical industries have major operations here. World class companies like Google, Microsoft, Intel, Wyeth and IBM are here because of our knowledge-based abilities.

Anything that nourishes this trend should be the priority for Irish society, anything that hampers it should be choked off ruthlessly. In times when your back is to the wall, it is fundamental truths like this that matter. All good decisions flow from being aware of these truths, conversely all bad decisions are the ones that ignore them. At the risk of pride I should know, for I have probably made as many good decisions as bad ones – the surprising fact is that I’m equally proud of most of them, albeit for different reasons!   As they say, good judgement comes from experience, experience comes from bad judgement.

Ireland was in serious economic crisis between 1987 and 1992. While the boom created an unsustainable bubble in property, the fundamentals of our position in 20 years have been undeniably transformed. Debt to GNP in 1987 was almost 125% and it took almost one third of the tax take to pay for the interest alone. The spread over German bunds in 1987 was a full 10%; even with a cloud of default hanging over us we have not reached those levels. In 1993 Ireland was forced to devalue its currency by 10% and unemployment was 18%. Our national statistics are hard to compare because of the impact of foreign corporations, however according to the NTMA our net Debt to GDP ratio was 40% at the end of 2009, before we factor in the cost of NAMA. The cost of servicing the debt is the real short term determinant and that will be a fraction of what it was in the late 1980s. On every measure we are not back to where we were and people should be re-assured on this point.

Mistakes may be painful to bear witness to, but they are incredibly valuable if learned from. All decisions can be criticised with the benefit of hindsight; the leader’s role is to make the call based on the data to hand and their own best instincts.  Unfortunately, the data and forecasts provided by Government Departments particularly Finance have been well wide of the mark. 

In 1987, GNP was EUR32bn – today the latest estimate for 2009 was that it was EUR131bn, which, even when you factor in the definite drop this year, is a huge jump. Population in Ireland today is 4.5m compared with 3.8m in 1990 when it was actually decreasing. Despite the job losses since 2008, the Irish workforce today stands at 1.86m, compared with 1.94m in 2005 and only 1.28m in 1990. This is a huge ‘positive’ in terms of going forward and serves to underline the difference relative to twenty years ago.

The discussions on the mismanagement of the economy, the behaviour and ineffective regulation of the banks compounded by NAMA understandably arouse great fury but they largely miss the point. What matters now is that we learn from the mistakes and use our position to best effect, however challenging that may be.

In terms of actions to ensure that Ireland prospers, it is fundamental that the human talent that can drive that process is not incentivised to leave. We used to talk of capital flight in Ireland 20 years ago – the real danger today is the flight of the skills and the know-how needed for the next chapter in our story. Having invested in their education and skills are we prepared to let that ability leave? It seems to me that Ireland faces a choice between a moderate tax economy with a competitive social welfare and public sector, versus an economy with high taxes and generous social and public packages. It cannot now do both; it could have only chosen the latter if the property derived tax income of the bubble had not been squandered.

I have lived outside Ireland for most of the last two decades. Despite the oft-repeated incorrect claim that this was tax driven, it was actually because I wanted to pursue international opportunities and not be suffocated by journalists and politicians here.  Irrespective of where I reside or what passport I hold, I was born in Ireland and will die an Irishman.   Part of the Desmond DNA is a responsibility to contribute where possible to Ireland.    Since 2000 I have invested a Net €250m in the country, generating many jobs, tax income for the State and high value/knowledge based revenue for the export market.    However, I could have done this elsewhere but in my view there is no better opportunity than to work with your fellow countrymen and women. 

The State must ensure that it deploys its resources in line with the needs of a modern knowledge based economy. Training people with skills for foreign building sites will not facilitate growth here. Incentivising people through the tax system to invest in their own knowledge and skills will derive more benefits than anything I can think of, for it is impossible to waste a penny on education. Ireland has previously used the tax system to incentivise pensions, investment and, to excessive levels, the property market – what if we were to use it now to drive the real opportunity for Ireland in the knowledge economy? Society can only afford to help those actually in need if there is an engine capable of delivering the income to the State; looking around we are somewhat short of that horsepower.

It is often said that Ireland competes for foreign direct investment solely on the merits of its low corporate taxes. This is incorrect – there are many other forces at play that Ireland combines for advantage. However it is vital that the country offers an attractive employment destination for key employees of foreign owned corporations. In the same way that we lost competitiveness as a result of high costs, the high tax rates of the 1980s drove talent and many dynamic people from these shores. A repeat of this will be disastrous for Ireland. Uncertainty in this regard is toxic. If there are to be tax rises and welfare reductions, then share that knowledge and let people plan, not live in ‘fear and hoarding’. Equally, if the personal debt mountain is to be managed, detail the reforms and measures now with urgency and do not let the international markets hazard a guess and discount on uncertainty as they do today.

I would like to address the issue of ‘the Banks’. Wherever one sits on the matter of the bank guarantee and NAMA, we must move on and deal with the matter now that it has happened. Because NAMA continues its misguided deeds today I feel I need to make certain comments. NAMA was never going to work as it created a paradox of epic proportions; the less NAMA paid for loans, the greater the extent of the balance sheet crisis for the Banks. By forcing matters based on an untested theory misleadingly framed, borne of a totally inexact non-science and coming from a discredited source, we deprived ourselves of the natural facility to let time cure some of the problem. Furthermore, we have allowed those managers who lent the money, to slink away from dealing with and ameliorating the consequences of their decisions; a cardinal sin in management. The approach is unparalleled in the world and the direct opposite of the measures taken in the most advanced economies. NAMA must be reformed if we are to retrieve the situation to any extent.

Banks themselves are really nothing more than huge pools of assets and liabilities, managed and regulated by humans with varying degrees of fallibility. In a financial collapse the only part of the Bank that can be valued with any certainty are the liabilities. When the asset dominoes begin to fall it takes a bulwark to stop them. What we are seeing now is simply the absence of such a bulwark.

The nuances of the Irish public finances are largely irrelevant in the eyes of the bond market. The bond market simply views the Irish State and the Banks as the same bet. It is the weight of the liabilities of the Banks that is driving the cost of borrowing money, not the latest budget projections. Ireland’s combined Bank and State balance sheets are obviously unsustainably large.  As the Banks have begun to shrink their own positions they have merely transferred the problem to the State.

The reality is, with the daily dependency on the ECB as a lender of last resort, the combined Bank State has already been refinanced. The most glaring anomaly is that this refinance is short-term in nature and not matched with the longer term funding need. The irony is that this was the main reason the Irish Banks failed when they did – borrowing short to lend long, a schoolboy level error. Least you think otherwise, the Banks would have failed in the medium term anyway as the underlying position was totally unsustainable with insane valuations.

There is much talk of Ireland losing its fiscal independence and economic sovereignty. This is patronising in the extreme, for every adult knows that Ireland ceded this sovereignty as far back as the Maastricht treaty and the subsequent establishment of the Euro. Up to 2008, the Euro was the greatest risk taken in the history of the State. However imperfect, the Euro has provided a vital ingredient in the platform for long term reward. Our national strategy would amount to nothing if the punt was floating today as we do not have the scale or wealth generated by the City of London as Britain does.

At this point, it seems to me that we must make a choice between a number of options – losing the Banks, refinancing through the EU/IMF or a sovereign default. In short to get the Banks off our balance sheet we must move them on and lose control of their strategic direction which might be no bad thing. Assuming it’s highly unlikely that we can get rid of them soon unless there is an international visionary banker Ireland will be forced into tapping alternative funding or into a default.

I am not privy to what is going on in Europe or the ECB but I have never in my experience seen a situation where delaying restructuring has improved matters. As an Irishman, it wounds my pride to see the country in this position but, as a business man, there is only one choice that must appear obvious to all; we must refinance urgently with the EU, while we can and before the rush. Other nations, great and small, have debt crises but they have not been exposed as ours have.

Assuming we are stuck with the Banks, it is vital that we become unstuck very quickly even after the current phase has run its course. It is vital that, as a minimum, either Bank of Ireland or AIB be handed over to foreign or private ownership. Otherwise Ireland will be doomed to an uncompetitive, politicised banking system overseen by faceless mandarins in the Department of Finance, the Central Bank and their political masters.

While there are some very good people in the public service and I am the son of a civil servant, there is little depth and quality at the senior departmental levels. The complete regulatory failure aside, if the quality was there the solutions to the current crisis would be commensurate with the horrendous scale of the problem. The visionaries of the civil service we saw in early years have not been replaced. Today the senior management of the service can’t take criticism, abandon their responsibilities to a bewildering array of quangos, become suspicious of success and are never accountable. The standard response to failure is to move the senior civil servant on to another parish.   I have over the past 18 months written to various government departments with suggestions and in most cases I haven’t even got an acknowledgement.   It is my experience that if you challenge these people they will endeavour to make you persona non grata.   Let’s second people from the Private to Public sector and vice versa so we will again see vibrancy, transparency and accountability.

There is a stratum within Irish society that takes a form of delight in disaster and the failure of others. In their land of squinting windows, pouring scorn and being resentful of success is standard fare. The identity of these people is self-evident, but most decent people choose not to descend to their level and confront them. We will not be able to deal with the problems in our society if the true meaning of the word ‘fair’ is not reintroduced to the everyday lexicon. For as long as this handful from the media, unions and political elite control the national dialogue, Ireland shall struggle. They are the modern inheritors of the mantle of the censors, the hierarchy and the pious who forced so much Irish ability overseas in the past. They must not be allowed to reign again.

On a point of optimism, the reality is that by dealing with the state finances professionally and aggressively, we can make the most of our position. As long as the truths I mention above are kept in mind and the macro economic factors are managed, I think Ireland will bounce back quickly afterwards. I know that with the right vision and reform the Irish people shall ensure it.

I state this with confidence because we remain a compelling story for success. Our commercial sector is very adaptive, flexible, creative and motivated. Despite my earlier comments, certain parts of our public sector are strong, particularly the state agencies handling innovation and inward investment. Our workforce has depth, with 0.5m more in employment now than 16 years ago, when we were first dubbed the Celtic Tiger. Ireland is also far more diverse than at any time before; the new Irish present opportunities to harness the power of inward emigration that has driven other economies.  

As you might guess from my earlier views, I believe that there must be fundamental political and constitutional reform of the State. Without it, how can the citizens of this Republic have any faith in the solution and strategy for success from the same source that has failed them? Talented people of whatever background and belief should be involved in fixing the problems. The era of Civil War politics, passed on as a family business across generations must be laid to rest.

We have people and companies in Ireland today that are world leaders and deal with the most advanced and sophisticated international concerns. While officialdom here might wish to fool themselves that they don’t exist, we must find a way to bring them into the solution. Ireland has a small population and market. Many of our best commercial people ply their trade in the markets outside of the country. We have a national emergency, not merely of a financial nature, but of values as well. We need to combine these people with the other outstanding people in Ireland, who are more often found in caring professions and vocations where financial reward is not sought. The great patriotic men and women who formed the State left something which, while not perfect, was noble. We must rally to that cause and eliminate those obstacles that are in the way.

Finally to bring it back to today’s golf business theme there is some really good news that I would like to bring to your attention. The urbanisation of the World which drives the demand for the services and technology sectors that we do well in Ireland is accelerating at an exponential pace. Sometime during the last three years, more than 50% of the World’s population became urban, for the first time EVER. By 2030, i.e. in twenty years’ time, 75% of the World’s population will live in cities. That is phenomenal and the sort of thing that we here today should be paying attention to.

Surely it is not hard in marketing terms to excite this world of high-rise, congested, financially wealthy but time-poor urban dwellers with images of the excellence of golf and ‘craic’ in Ireland. I suggest to you here today that that image form part of your thinking – golf is unique in terms of the nourishment of the human spirit; where else do you get space, fresh air, scenery and a few hours to ponder one’s own learning?

I mention the Irish spirit above with all that comes with it. For the golfer, be they domestic, British, American or from further afield, that spirit translates into our culture. ‘Fun, interesting, boisterous, personal and dedicated’ is how the Irish and our golf industry differentiate. There are others speaking here today who know more about integrating those qualities into a business than I, so I shall leave that to them.

If Ireland is to succeed with its golf industry, it seems to me that we must play to our strengths. We have a first class infrastructure. What seems to me to be vitally important is getting the golfer on the island in the first place. Thereafter, it is a simple process of a few hours’ drive to link the main golf clusters on the East and South West coasts with the rest of the country. There is little advantage in spreading marketing resources thinly everywhere – it might be ‘fair’ but competition is not fair. The fairness can be addressed later when we can refine and drive the golfer to different parts of the island less saturated than elsewhere. 

In conclusion, I would like to thank you all for listening to me today. I wish you all well with the conference. I would like to pay tribute to the Carr family for all they have given golf in Ireland and the wider World.

In terms of Ireland, I would ask that you all consider the fact that it doesn’t get dark at 5pm every day which is always good news for golfers and economists alike…..

Ireland by the numbers – Did you know that Ireland is home to 8 of the top 10 global technology companies and 15 of the top 25 medical devices firms? We produce enough beef each year to feed 30 million Europeans. 1 out of every 5 burgers served in McDonalds in Europe is Irish beef. Find out more in this 3 minute overview.

Ireland by the Numbers         Ireland means business for the world
960 foreign companies
- employing 138,000 workers      – cutting edge    – technology      – research         – IT hardware and
- software         – pharmaceuticals           – medical devices

Home to some of the world’s leading companies:
8 of the top 10 pharmaceutical companies / 15 of the top 25 in medical devices / More than 50% of the world’s leading financial services firms / 8 of the top 10 technology companies.
In fact the total US investment into Ireland is greater than into: – Brazil, Russia, India and China COMBINED.

More food for thought:
Ireland produces enough beef each year for 30m Europeans. In fact we’re the largest exporter of beef in Europe and the 4^thlargest in the world. 1 out of 5 burgers served in McDonalds across Europe is Irish beef
Speaking of cows:
- Ireland exports 80% of its dairy production                    – We make 15% of the world’s infant formula

We’re taking care of people in other ways:
- 10 of the world’s top-selling prescription drugs are made in Ireland
Ireland is a giant in medical technology    -           More than 24,000 people are employed by 160 medical technology companies in Ireland and 80 of these companies are INDIGENOUS.
For every 100 jobs created in life sciences manufacturing, an additional 100 jobs are created in supporting services.
6.9 bn in exports of medical devices         – 2nd largest exporter of medical devices in Europe after Germany
And one Sligo-based medical devices firm makes enough tubing to circle the globe.- Every year-Twice.
Exports like these will lead Ireland back to growth. In fact, Irish companies own more stock investments overseas (ODI) than foreign companies make into Ireland. ( 189.7bn v 169.3bn)

Which shouldn’t really surprise you. But here are some other things that might:
Half of the world’s fleet of leased aircraft is managed from Ireland.
We employ 16,000 people in forest products, and the sector produces 1.9 bn for the economy.
Ireland is the largest provider of cross-border life insurance in the EU with 16.4bn in premiums in 2009
1.4 TRILLION euro in funds are administered from Ireland

And we are competitive:
4th for labour productivity                                   3rd for flexibility and adaptability of people
3rd for being open to new ideas              1st for real corporate taxes
1st for financial skills                              1st for availability of skilled labour          

So we’re not kidding when we say Ireland means business!!!……..

…thank you for that IBEC!!