They were advertised as an investment which literally couldn’t fail.
Ireland was a very different country back then. People broadly trusted the Government and the financial institutions and the market economy was a relatively new thing.
The advertising was _everywhere_ and people didn’t just talk of “are you buying your Telecom Éireann shares”, the question was “how much are you putting in?”.
People were told that this was basically a quicker version of State Savings: if you put a pound in you’d be _guaranteed_ £20 back. (Obviously we can’t _say_ it’s a guarantee, but you know it and we know it 😉).
Obviously people then had the bright idea of borrowing money to buy shares, and then once the price tanked, everyone panicked.
The main upshot is a lot of small investors got burned and decided that in future they’d not invest in intangibles again, but put their spare money into a physical investment.
Like a buy-to-let house.
What could possibly go wrong with that?
Not really a culture of share investment in the country, given punitive taxes and lack of wealth until recently. Two small a market to support multiple public companies. Also EU firms more likely to have bank funding than equity funding compared to the US.
The Telecom shares were sold to the public by the State below their fair market value. For anyone who was prepared to sell quickly, they were about as close as you will ever get to a sure thing in the stock market. For anyone who did not want to sell quickly, they were buying a poorly diversified stock portfolio that put their full investment at serious risk. Unfortunately, most of those who bought the shares were not informed of these basic investment insights, and held them for the long term, losing a large part of their investment as a consequence.
We have so few public companies as we are such a small country that we can’t sustain publicly owned business, we rely on overseas investment sadly.
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They were advertised as an investment which literally couldn’t fail.
Ireland was a very different country back then. People broadly trusted the Government and the financial institutions and the market economy was a relatively new thing.
The advertising was _everywhere_ and people didn’t just talk of “are you buying your Telecom Éireann shares”, the question was “how much are you putting in?”.
People were told that this was basically a quicker version of State Savings: if you put a pound in you’d be _guaranteed_ £20 back. (Obviously we can’t _say_ it’s a guarantee, but you know it and we know it 😉).
Obviously people then had the bright idea of borrowing money to buy shares, and then once the price tanked, everyone panicked.
The main upshot is a lot of small investors got burned and decided that in future they’d not invest in intangibles again, but put their spare money into a physical investment.
Like a buy-to-let house.
What could possibly go wrong with that?
Not really a culture of share investment in the country, given punitive taxes and lack of wealth until recently. Two small a market to support multiple public companies. Also EU firms more likely to have bank funding than equity funding compared to the US.
The Telecom shares were sold to the public by the State below their fair market value. For anyone who was prepared to sell quickly, they were about as close as you will ever get to a sure thing in the stock market. For anyone who did not want to sell quickly, they were buying a poorly diversified stock portfolio that put their full investment at serious risk. Unfortunately, most of those who bought the shares were not informed of these basic investment insights, and held them for the long term, losing a large part of their investment as a consequence.
We have so few public companies as we are such a small country that we can’t sustain publicly owned business, we rely on overseas investment sadly.