FTSE 100: why 10+ years under performance?

Racer

Senior member
2,666 30
Why do UK politicians say the country is doing well compared to other
countries?

The FTSE 100 doesn't say so.....

Facts:
..........................
Jan 1995
FTSE 100 3065.50
DAX 2106.58
Dow Jones 3849.24
.........................
July 2004
FTSE 100 4407.4
DAX 3998.77
Dow Jones 10282.80
.......................
Now tell me again which country was supposed to be doing better?!!!


So why has the FTSE under performed,over the
last decade and is continuing to do so?
 

2468steve

Experienced member
1,076 39
Seeing as the Dax is a clone of the US markets,it is perhaps no surprise to see it's performance.
With regards the FTSE,all I can suggest is the fact that UK traders haven't got their heads stuck so far up their own butts,as compared to their US counterparts..
And of course,more $$ than Andrex bog roll floating around the place helps....

cheers
Steve
 

JonnyT

Senior member
2,560 22
The performance of the FTSE 100 has little to do with Britains economy.

The rules of the index mean that it is heavily biased to the biggest stocks.

A fairer comparison would be to use the FTSE 250 over the same period.

In January 1995 this stood at 3500. Its now at 6200+

The market historically has tended to be a leading indicator for the economy. Maybe Britain is going to have some trouble next year. (I think its shaping up that way, too much debt, too high house prices, interest rate rises could cripple consumer confidence and crash the Housing market)

I see a lot of houses suddenly coming on the market as the Buy To Let brigade suddenly realise it isn't a one way street and they have borrowed too much.

JonnyT
 

chump

Senior member
2,212 274
My understanding (and it may be incorrect) is that the FT is more conservative in it's corporate makeup. Conservative here meaning it's compiled of 'lower risk' profile companies than say DOW etc. I understand from this that it does not therefore do so well in growth terms when the Bulls are running,but conversely does not fair has badly as it's counterparts when the bears are in charge. So for an explanation of comparative performance (if this is correct) we might look at whether the past 10 years was more bullish than bearish.
 

Mayfly

Established member
514 28
The DOW has consistently outperformed both UKX and MCX, as the attached charts show.

I think the performance of DEX and CAC will be far more interesting to watch in the months to come, particular in the light of the forecasts that growth in these economies will be derived from the growth in exports. It seems to me that something has to give if these expectations fail to be met?

Cheers

Mayfly
 

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minx

Well-known member
328 10
Part of the reason for the UK/US divergence can be explained by:
US Tax cuts Vs UK tax rises
US deregulation Vs UK over regulation
US pro-business environment Vs UK demonising company bosses
US deficit caused by tax cuts Vs UK deficit bu govt spending
US private sector productivity growth Vs UK public sector waste and falling productivity.....

Our current 'wonderful' government is so annoyed with everybody pointing out falling productivity in the NHS that they're 'adjusting' how it is to be measured.....hmmmmm, wonder what the new method is going show...........
 

Racer

Senior member
2,666 30
In 1980's GDP growth was 3%, now it is 2.5% since 1997

In 1998 UK was fourth in ranking, now it is 15th

UK government doesn't seem to mention that fact, rather it is always commenting on how well UK is doing?
 

keith_k2

Newbie
5 0
Racer said:
Why do UK politicians say the country is doing well compared to other
countries?

The FTSE 100 doesn't say so.....

Facts:
..........................
Jan 1995
FTSE 100 3065.50
DAX 2106.58
Dow Jones 3849.24
.........................
July 2004
FTSE 100 4407.4
DAX 3998.77
Dow Jones 10282.80
.......................
Now tell me again which country was supposed to be doing better?!!!


So why has the FTSE under performed,over the
last decade and is continuing to do so?

Look on the bright side,
at least it won't fall as hard as the Dow in the next few years.
 

Racer

Senior member
2,666 30
You think so?

In the last 3 weeks, the Dow has fallen 3.15% and the FTSE has fallen 4.2%
 

stevet

Established member
917 5
the ftse is just an index associated with a method of gambling - so the value is unimportant - just the profit or loss you can make by utilising this form of gambling
 

harryp

Member
50 0
stevet said:
the ftse is just an index associated with a method of gambling - so the value is unimportant - just the profit or loss you can make by utilising this form of gambling

I think theres a bit more to it than just being associated with a method of gambling
 

oatman

Senior member
2,879 22
the ftse is just an index associated with a method of gambling - so the value is unimportant - just the profit or loss you can make by utilising this form of gambling

So derivatives are a method of gambling?
 

Racer

Senior member
2,666 30
Quote:
Originally Posted by stevet
"the ftse is just an index associated with a method of gambling - so the value is unimportant - just the profit or loss you can make by utilising this form of gambling"

Fair enough, I can agree with that to a certain extent..

but... what about different fundamental viewpoints on how the different economies are performing in reality? Comparison of P/Es, divi yields, interest rates, inflation, employment, population growth rates, housing demand, the weather... taxes..... inheritance tax, stamp duty, tax on dividends, tax on this, tax on that...
Tax to sneeze tax....

A bit more than just 'the FTSE is going down so short it' to discuss surely/
 
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stevet

Established member
917 5
oatman

yes, derivatives are a method of gambling, either to profit or to protect assets

racer

indexes are a driven by bonds, and bonds are driven by sentiment associated with a number of economic factors
 
 
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