The FTSE 100 is down 20% in 20 years, so why invest for the long-term?

https://www.thisismoney.co.uk/money/diyinvesting/article-8101459/The-FTSE-100-15-20-years-invest-long-term.html

by ZeljkoS • 6 years ago

6 9 6 years ago

thisismoney.co.uk

Of course the comparison is taken with exactly the peak of the dot com bubble.

The insight should thus to be very careful about stock market bubbles, and that long term investment can also offset some of that risk.

david-gpu• 6 years ago

The insight should thus to be very careful about stock market bubbles

Can you provide some actionable pointers for how to achieve that? For example, how do you suggest to identify/quantify a bubble before it pops?

krueger71• 6 years ago

Monitor successful mutual fund managers that receive unsolicited advice on how to invest from dentists at cocktail parties

looping__lui• 6 years ago

Maybe this also reflects some of the structural problems the UK industry has. Hence, it’s less about “investing long-term is not great”, but rather “investing long-term in structurally uncompetitive landscapes is a bad idea”.

londons_explore• 6 years ago

The UK is still on a 100 year slow decline after its empire collapsed. The empire made it very rich. But without the empire, it will eventually stabilize to a value based on its internal productivity, which is perhaps only 10% of the empire wealth.

I therefore expect the UK economy to continue to shrink for the next hundred years compared to its Western European peers.

petercooper• 6 years ago

I'm British and I broadly agree with your sentiment even if not the specifics. While the UK has a lot of fantastic resources to hand, a lot of its current wealth is built around innovations and capital built up through past glory and privilege than any current day innovation or progress.

Even when the British do come up with something amazing (Arm came from here, after all) it often ends up getting acquired by some overseas company, the talent disappears to the US, or it fizzles out as an overseas alternative takes it to the next level. The US doesn't seem to suffer from such "drains" on its talent and successes.

Despite this, I'm pretty bullish about the English speaking world in general, but the UK is going to struggle to find a place in it in the short term. Canada and the US have NAFTA, Australia and New Zealand are in the new Pacific trading bloc, and the UK is.. well, floating outside the EU with a total idiot in charge, and it's just as well we have that past glory and privilege to ride out a little longer(!)

taffer2• 6 years ago

Since WWII, the British economy has developed at a similar pace to the French economy.

Also, was it not more that the industrial revolution made the United Kingdom rich enough to finance the entire military and navy than the other way around?

If Britain falls behind in the next few years, it is more likely due to Brexit and not because it lost some colonies 70 years ago.

taffer2• 6 years ago

TLDR:

- We are comparing the dot-com bubble with post-brexit and post-corona.

- Though taking dividends into account we are still 77% up.

jfengel• 6 years ago

The latter is a huge difference. 77% in 20 years isn't exactly a great return (about 3%, around one point ahead of inflation in the UK), but that's not unreasonable for what's supposed to be a safe investment.

The US stock market gives us all unreasonable expections, with decades of irrational exuberance. FTSE100 is more traditionally blue-chip, returning its profits via dividends rather than constantly expanding.

The FTSE 100 is down 20% in 20 years, so why invest for the long-term?

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