When there's blood on the streets...

Wilbur Ross was amongst a group of investors who took a 35% stake in the Bank of Ireland at the height of the GFC in 2011 for €0.10 per share, keeping it from falling into the states hands. Alongside Fairfax financials they held 18% of the bank.

Back in March 2014 they agreed to sell around 6.4% at €0.33 p/s, which was around a 10% discount to the then current market price.

On 9th June 2014 it was announced that he was selling the rest of his stake (1.8bn shares) for around €0.26-0.275 p/s. (current price €0.28)

In three years he managed to more or less triple his investment.

Ross is a well known trouble shooter who made his mark in restructuring failed companies in various different industries.

What his trade highlights is that if you can overcome the fear factor then the rewards can be astronomical. Fear is a very big part of trading especially over big events like the GFC, Ukraine, US budget impasse etc etc. When fear hits a market it creates a stampede effect and it’s the people that don’t join in that make the big bucks.

One of my best ever trades was opening a newspaper to the FTSE 100 in the midst of the financial crisis and picking stocks of good companies that had been trashed due to the panic selling. My sole reason was that the markets had been caned for weeks and the fear factor was at its highest. With some good company stock prices trading 80/90 down on their pre-crisis levels there wasn’t much more for them to lose and they weren’t getting wiped off the face of the earth. It was a trade I had to wait for 2 years before it really started to take off, but it was overriding the fear that the world wasn’t going to end that made me the money.

Now I’m not comparing myself to Ross in any way, shape or form but overcoming fear is something we all need to work on. Adam is very good at trading through the fear factor. He did it with Syria and the Ukraine with great results.

Picking tops and bottoms in normal markets can be a mugs game (unless it's done properly) and we’re all guilty of it. Picking the bottoms of big events like the GFC can be easy if you have the ability to step back and apply simple logic. In my case it was a simple question of; “Will everything go to zero?”. My answer then was “no”. Ross did it with the Bank of Ireland and earnt a 300% return in 3 years.

Big major global economic events don’t come around too often but the next time they do look to run against the herd when the herd is really scared of running off a cliff.

Don't be a Lemming