British stocks are due a bounce
The FTSE 100 has gone virtually nowhere since 2000. But it could be heading for happier years ahead.
“It is a truth universally acknowledged that equities will always go up in the long run,” says Philip Coggan in the Financial Times. Yet the FTSE 100 has gone virtually nowhere since 2000. Even when you count reinvested dividends, the annualised total return of 3.3% in the 20 years to the end of last year is underwhelming.
True, the dotcom bubble was at its height around the turn of the millennium. But US indices, which also experienced that boom, are up roughly threefold since then. The UK index lacks the kind of exciting tech companies that have set the world on fire over the last two decades.
Still, America’s tech-heavy-index can’t outperform forever, says Russ Mould of AJ Bell. If we are heading for higher inflation, then “history suggests that you want to own real assets, or shares in them – commodities, miners, oils and property… the UK marketis ideal”.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
British shares are also far cheaper than their US counterparts. Trading on a cyclically adjusted price/earnings (Cape) ratio of 15.2 as of the start of the current quarter, the UK market is on a discount not only to most developed markets, but also to emerging ones such as Thailand and Brazil. The US is more than twice as pricey on the Cape measure. After two decades of disappointment, the FTSE could be heading for happier years ahead.
-
Rightmove: Asking prices edge closer to record peak
Asking prices have been driven up by the top-end of the market, Rightmove has found. But how does the situation look in your area?
By Vaishali Varu Published
-
Coventry Building Society bids £780m for Co-operative Bank - what could it mean for customers?
Coventry Building Society has put in an offer of £780 million to buy Co-operative Bank. When will the potential deal happen and what could it mean for customers?
By Vaishali Varu Published
-
The industry at the heart of global technology
The semiconductor industry powers key trends such as artificial intelligence, says Rupert Hargreaves
By Rupert Hargreaves Published
-
Three emerging Asian markets to invest in
Professional investor Chetan Sehgal of Templeton Emerging Markets Investment Trust tells us where he’d put his money
By Chetan Sehgal Published
-
What to consider before investing in small-cap indexes
Small-cap index trackers show why your choice of benchmark can make a large difference to long-term returns
By Cris Sholto Heaton Published
-
Why space investments are the way to go for investors
Space investments will change our world beyond recognition, UK investors should take note
By Merryn Somerset Webb Published
-
Time to tap into Africa’s mobile money boom
Favourable demographics have put Africa on the path to growth when it comes to mobile money and digital banking
By Rupert Hargreaves Published
-
M&S is back in fashion: but how long can this success last?
M&S has exceeded expectations in the past few years, but can it keep up the momentum?
By Rupert Hargreaves Published
-
The end of China’s boom
Like the US, China too got fat on fake money. Now, China's doom is not far away.
By Bill Bonner Published
-
Magic mushrooms — an investment boom or doom?
Investing in these promising medical developments might see you embark on the trip of a lifetime.
By Bruce Packard Published