“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”.
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.
-
Why Trustpilot is a stock to watch for e-commerce exposureTrustpilot has built a defensible position in one of the most critical areas of the internet: the infrastructure of trust, says Jamie Ward
-
Tetragon Financial: An investment trust with stellar returnsTetragon Financial has performed very well, but it won't appeal to most investors – there are clear reasons for the huge discount, says Rupert Hargreaves
-
Why Trustpilot is a stock to watch for exposure to the e-commerce market
Trustpilot has built a defensible position in one of the most critical areas of the internet: the infrastructure of trust, says Jamie Ward
-
Tetragon Financial: An exotic investment trust producing stellar returns
Tetragon Financial has performed very well, but it won't appeal to most investors – there are clear reasons for the huge discount, says Rupert Hargreaves
-
How to capitalise on the pessimism around Britain's stock marketOpinion There was little in the Budget to prop up Britain's stock market, but opportunities are hiding in plain sight. Investors should take advantage while they can
-
London claims victory in the Brexit warsOpinion JPMorgan Chase's decision to build a new headquarters in London is a huge vote of confidence and a sign that the City will remain Europe's key financial hub
-
The consequences of the Autumn Budget – and what it means for the UK economyOpinion A directionless and floundering government has ducked the hard choices at the Autumn Budget, says Simon Wilson
-
Reinventing the high street – how to invest in the retailers driving the changeThe high street brands that can make shopping and leisure an enjoyable experience will thrive, says Maryam Cockar
-
8 of the best houses for sale with electric vehicle chargingThe best houses for sale with electric vehicle charging – from a converted World War II control tower in Scotland, to a Victorian country house in Cumbria
-
Big Short investor Michael Burry closes hedge fund Scion CapitalProfile Michael Burry rightly bet against the US mortgage market before the 2008 crisis. Now he is worried about the AI boom
