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Ftse 15 Years On Still Below Peak

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http://www.bbc.co.uk/news/business-30589031

Fifteen years ago, on 30 December 1999, the FTSE 100 index of the UK's biggest companies hit its highest closing level ever - at 6,930.

Conventional wisdom says that anyone who invests in shares over such a long period can expect to make money.

But after two stock market crashes, the terrorist attacks of 9/11, and a euro crisis or two, the market has still not regained its 1999 peak.

Three times in 2014 the index came close, but each time fell back.

So on Christmas Eve the FTSE 100 stood at 6,610, still more than 300 points short of its record level.

On paper, it looks like the average investor will have lost money.

_79969579_ftse_graph_1999_624.gif

Does this indicate the UK economy has been effectively in a recession for 15 years? The housing boom merely covering up the cracks of deeper problems within UK plc? Are we now going to have a triple dip? It appears it's recently been near breaking the old record and failed.

Can the FTSE be used as an indicator over the long term about how healthy the economy is? Do we need some FED type action to boost it to new record highs?

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I guess it was a London financial backed con.

I remember being told how the stock market doubles every 10 years ( sounds familliar ).

Nothing defies basic mathematics, not the stock market and not the.....

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http://www.bbc.co.uk/news/business-30589031

Can the FTSE be used as an indicator over the long term about how healthy the economy is?

At best it's a crude approximation. If you were to look at the underlying profitability of the constituent companies of the FTSE 100 you'd see that, at the 1999 high, the FTSE was extremely frothy, at the 2007 high the FTSE was frothy but not insanely so, and if you look at the price today relative to earnings, the FTSE is just a whisker above it's long term average.

So, a reasonably alarm free year in 2015 with a very small recovery in oil and commodity prices, should easily see the FTSE surge through the previous high and even an 8,000 FTSE wouldn't be induce too much vertigo. But an untidy Greek exit and further oil price falls might take the FTSE below 6,000.

I'm carrying a bit more of my investments than usual in very short term corporate bonds and cash, so I guess I'm expecting some shocks in 2015. But if the FTSE does start exploring 6000 or below I won't hesitate, I'll load up on equities and hold tight waiting for a FTSE at 10,000.

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It suggests it was a tad overvalued on 30.12.1999

Conventional wisdom says that anyone who invests in shares over such a long period can expect to make money.

"Convential wisdom" says if you buy during periods of overvaluation (1999) future returns will be low/negative

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At best it's a crude approximation. If you were to look at the underlying profitability of the constituent companies of the FTSE 100 you'd see that, at the 1999 high, the FTSE was extremely frothy, at the 2007 high the FTSE was frothy but not insanely so, and if you look at the price today relative to earnings, the FTSE is just a whisker above it's long term average.

So, a reasonably alarm free year in 2015 with a very small recovery in oil and commodity prices, should easily see the FTSE surge through the previous high and even an 8,000 FTSE wouldn't be induce too much vertigo. But an untidy Greek exit and further oil price falls might take the FTSE below 6,000.

I'm carrying a bit more of my investments than usual in very short term corporate bonds and cash, so I guess I'm expecting some shocks in 2015. But if the FTSE does start exploring 6000 or below I won't hesitate, I'll load up on equities and hold tight waiting for a FTSE at 10,000.

+1. Excellent post.

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At best it's a crude approximation. If you were to look at the underlying profitability of the constituent companies of the FTSE 100 you'd see that, at the 1999 high, the FTSE was extremely frothy, at the 2007 high the FTSE was frothy but not insanely so, and if you look at the price today relative to earnings, the FTSE is just a whisker above it's long term average.

So, a reasonably alarm free year in 2015 with a very small recovery in oil and commodity prices, should easily see the FTSE surge through the previous high and even an 8,000 FTSE wouldn't be induce too much vertigo. But an untidy Greek exit and further oil price falls might take the FTSE below 6,000.

I'm carrying a bit more of my investments than usual in very short term corporate bonds and cash, so I guess I'm expecting some shocks in 2015. But if the FTSE does start exploring 6000 or below I won't hesitate, I'll load up on equities and hold tight waiting for a FTSE at 10,000.

That's where I am. Equities are the least overvalued of a number of investment options and do pay an OK yield. I'm looking at holding 10 years plus, and if I even just pick up a 3.5% yield that still beats what I expect cash, bonds or (dare I say it?) BTL to deliver over that time.

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That's where I am. Equities are the least overvalued of a number of investment options and do pay an OK yield. I'm looking at holding 10 years plus, and if I even just pick up a 3.5% yield that still beats what I expect cash, bonds or (dare I say it?) BTL to deliver over that time.

That's where I am. Equities are the least overvalued of a number of investment options and do pay an OK yield. I'm looking at holding 10 years plus, and if I even just pick up a 3.5% yield that still beats what I expect cash, bonds or (dare I say it?) BTL to deliver over that time.

+1 and if we have a sterling crisis I would rather hold international shares as a hedge.

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http://www.bbc.co.uk/news/business-30589031

Does this indicate the UK economy has been effectively in a recession for 15 years? The housing boom merely covering up the cracks of deeper problems within UK plc? Are we now going to have a triple dip? It appears it's recently been near breaking the old record and failed.

in a word,yes...on both counts.

mr market says the regulatory environment(both civic and commercial), has not been at all conducive to the growth of any business in the UK for the last 15 years, hence the inflation adjusted 40-50% drop in real value.(assuming inflation at 2.5-3% compound pa for the duration)

it indicates our illustrious leaders have done something seriously wrong to precipitate a drop of that magnitude...

well you can include pretty much everything from the smoking ban to the signing of the lisbon treay in that........time for a spot of soul-searching..especially when every man and his dog have been screaming at them for the past decade at least they are screwing things up.

Edited by oracle

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FTSE 100 will go to 7000 this year though

sorry I didn't see Silver Surfers post. Nothing I disagree with there

Edited by aSecureTenant

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Meanwhile, the FTSE 250 is 2-3 times its 1999/2000 levels.

Might just be the crappy performance of the top few companies. When companies like BP take up so much of the index and stuff like deepwater horizon happen, it can skew the index quite a bit.

Personally, given the global nature of the top 100 companies, I wouldn't read too much into it. The stock market should be viewed in comparison to other asset classes as much as anything, as funds rotate from there into bonds, into property and back again, as central bank policy dictates.

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Meanwhile, the FTSE 250 is 2-3 times its 1999/2000 levels.

Might just be the crappy performance of the top few companies. When companies like BP take up so much of the index and stuff like deepwater horizon happen, it can skew the index quite a bit.

Personally, given the global nature of the top 100 companies, I wouldn't read too much into it. The stock market should be viewed in comparison to other asset classes as much as anything, as funds rotate from there into bonds, into property and back again, as central bank policy dictates.

wouldn't disagree with that bit.

bonds are screaming "bubble"

if IR's go up even a little bit we'll see quite substantial sector rotation.

of course if the PTB are really looking to rinse people,they will make the holding of T bonds mandatory within pension funds, while the rest of them make for the exit.

I'm not quite on the same page as the conspiracy theorists claiming their will be an outright mugging, but the pump"n"dump of funds while the big boys remove themselves is not beyond the realms of possibility...its a bit more subtle...but i don't think it will be made into a complete blatant rip-off as it would be too obvious and raise too much suspicion.

that way in 15 years it can just be blamed on market conditions that the fund has made 15% when inflation compound has been 50%+

Edited by oracle

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http://www.bbc.co.uk/news/business-30589031

Does this indicate the UK economy has been effectively in a recession for 15 years? The housing boom merely covering up the cracks of deeper problems within UK plc? Are we now going to have a triple dip? It appears it's recently been near breaking the old record and failed.

Can the FTSE be used as an indicator over the long term about how healthy the economy is? Do we need some FED type action to boost it to new record highs?

The FTSE 100 is made up predominantly of large UK-based companies for whom the lions share of their earnings are made overseas. The FTSE 250 is more representative of the UK economy as a whole and has seen much better growth over the same period.

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taking inflation into account and the ftse took a pounding over the period.

Including dividends the return was around 50% nominal over the period. Not great, but keeping up with inflation (broadly) at least.

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At best it's a crude approximation. If you were to look at the underlying profitability of the constituent companies of the FTSE 100 you'd see that, at the 1999 high, the FTSE was extremely frothy, at the 2007 high the FTSE was frothy but not insanely so, and if you look at the price today relative to earnings, the FTSE is just a whisker above it's long term average.

So, a reasonably alarm free year in 2015 with a very small recovery in oil and commodity prices, should easily see the FTSE surge through the previous high and even an 8,000 FTSE wouldn't be induce too much vertigo. But an untidy Greek exit and further oil price falls might take the FTSE below 6,000.

I'm carrying a bit more of my investments than usual in very short term corporate bonds and cash, so I guess I'm expecting some shocks in 2015. But if the FTSE does start exploring 6000 or below I won't hesitate, I'll load up on equities and hold tight waiting for a FTSE at 10,000.

+1. Excellent post.

Indeed. I'm watching with interest. Things can happen quite fast here : i've got cash waiting for a home but things are just too volatile for me to scattergun.

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That's where I am. Equities are the least overvalued of a number of investment options and do pay an OK yield. I'm looking at holding 10 years plus, and if I even just pick up a 3.5% yield that still beats what I expect cash, bonds or (dare I say it?) BTL to deliver over that time.

I agree. Many people I speak to, still hate equities because they see them as risky (but of course think property has no risk). I think if you buy sound companies, it doesn't really matter what the main index does. Good companies will continue to make money and pay div's.

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I agree. Many people I speak to, still hate equities because they see them as risky (but of course think property has no risk). I think if you buy sound companies, it doesn't really matter what the main index does. Good companies will continue to make money and pay div's.

Well if you'd leveraged up on property in 1999 you'd have paid off the mortgage within 8 to 12 years on the rentals and now have a large pile to sell.

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Well if you'd leveraged up on property in 1999 you'd have paid off the mortgage within 8 to 12 years on the rentals and now have a large pile to sell.

That was 1999. I think that the entry valuation and outlook for BTL look a bit different in 2015.

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This graph is meaningless.

This covers a period with massive credit deregulation/expansion followed by QE which together have obscured and prevented any natural price discovery.

Anyone sagely proclaiming they see a pattern or can infer anything from it are ignoring the parameters and its always about the parameters. Sooner or later the third horseman of the apocalypse will make a showing on the Bond market and the next phase of the crisis will crank up. Nobody knows when, that's the bugger.

HPC :

The Bond Crisis is the key, it will kick the boomers off the pot they have been squatting on. Forced to sell to eat we will see affordable homes again, but it will be bloody. What I really worry about is what fool thing the central banks will do to try and stop it.

Edited by TwoWolves

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Equities = paper assets

BTL = Hard assets

Both have their place and perform differently depending on the cycle.

btl bought on loan= fictional wealth

btl bought with hard cash, paid in full= real wealth.

now how many people in this line of investment are leveraged?

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btl bought on loan= fictional wealth

btl bought with hard cash, paid in full= real wealth.

now how many people in this line of investment are leveraged?

My Landlady has eight properties, each was used as collateral for the last. The only one fully paid for is the original home that she occupied (the one I'm in). It is falling down due to years of neglect.

This is quite typical.

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Well everyone seems agreed "Stay away from long gilts". I'm heavily in USTs and was all 2014 too.

But I'm an idiot so posters keep telling me.

Risk Reward on 100/250 is not good.

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