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Ftse Makes A Great Long Term Investment?

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I thought people were saying that inflation had been under reported. That means in real terms most things must be really cheap. (just playing devil's advocate)

Quite possibly, they changed the way they measure inflation back in the 80's (Clinton started the fiddling), however with Shadow stats etc available I would be surprised if they used the recent official figures as everyone knows they under reported inflation and would render the work generating this graph useless.

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Great chart in this weeks Money Week.

Not bothering to get a log in - does that chart include dividends? They're quite a large part of any profit.

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Not bothering to get a log in - does that chart include dividends? They're quite a large part of any profit.

No it is not a graph of £1 invested in 1690 with dividends reinvested turning in to many £billion.

It is the inflation adjusted level of the FTSE ( it must be based at some point in time but it is not shown in the graph).

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No it is not a graph of £1 invested in 1690 with dividends reinvested turning in to many £billion.

It is the inflation adjusted level of the FTSE ( it must be based at some point in time but it is not shown in the graph).

if that is the case then use of this chart as a criticism of share investing is meaningless. Dividend reinvestment is one of the main components of real returns.

Dividend streams are what companies are ultimately (once mature) run for.

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if that is the case then use of this chart as a criticism of share investing is meaningless. Dividend reinvestment is one of the main components of real returns.

Dividend streams are what companies are ultimately (once mature) run for.

Most of FTSE 300 is offering negative real yields (inflation is understated by government) so even if the stock market maintains this level of over valuation you are not making a real return.

I think Hotairmail reply below is closer to the reason for current valuations. This is why the wealth destruction phase is so important and should be allowed to run it's course. Once every one is back in on the inflationary trade (many avoided the first phase without too much damage, think about all the cash buyers who went into property last year...) the main collapse will do what it needs to do and destroy the excess cash allowing for real positive returns on assets.

If we assume the data is correct, then I think it is relevant.

What it is telling you is how highly rated stocks are. It doesn't tell you whether this is a good time to invest. And given that assets are inverse to yields, then it may simply reflect that we are in exceptionally low inflation times. The sheer amount of money out there is driving yields down and assets up even as the deflationary black hole of China etc. keeps reported price inflation in check.

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http://www.dailywealth.com

Stock-Markets / Financial Markets 2010

Sep 24, 2010 - 04:31 PM

By: DailyWealth

Dr. Steve Sjuggerud writes: "We face another seven years or so of bad times," Robert Shiller said this week.

Through luck or skill, he's been pretty darn right about these things..

He perfectly timed his prediction of the dot-com bust in his 2000 book Irrational Exuberance. His book on the severe risks in the housing market came out in 2008.

Here in 2010, he says, "We face another seven years of bad times." Seven years would put us in 2017. Shiller's rough guess of seven years fits in with a big-picture idea I have. I call it the Generational Switch...

The key to making a fortune in stocks (and avoiding getting obliterated) is having a basic idea of when stocks might have a long stretch of gains... and when they might do nothing.

This isn't easy to do. But when you look at it over history, a simple pattern does emerge...

Each generation, the pattern switches.

One generation gets obliterated by the stock market, knocking everyone out of stocks. Then the next generation lives through a soaring stock market.

It's not clockwork... but it seems there's more at work than just chance. Take a look:

If you had lived through the Great Depression – if you had lived through an entire generation where stocks lost money (17 years from 1930-1947) – would you ever consider buying stocks again?

Probably not. Yet that's when you should have bought... Stocks rose by more than 500% in the next generation, from 1947 to 1965.

Folks who invested heavily throughout the 1970s learned you could "never" make money in stocks. You needed real assets, like real estate and gold. Boy, were they wrong in the 1980s and 1990s. Gold fell in half from its 1980 peak to 1999.

If the last investment generation ended around 1999, and if the pattern holds, then we could see stocks do poorly for something like 17 years... or until roughly 2016. That's pretty close to what Shiller is saying.

The popular wisdom in 1999 was that you always want to be invested in stocks. Nobody wanted gold. But since the end of 1999, stocks (as measured by the S&P 500 index) are down, as I'm sure you're well aware. Meanwhile, commodities (as measured by the CRB Index) are up over 100%.

The last generation of stock investors is still holding some love for stocks. And they're still a bit afraid to commit to commodities like gold. But they will. History suggests they'll have given up on stocks and be fully loaded in commodities... by 2016.

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  • 259 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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