The FTSE 100 - question

fimonkey

Only dipping my toe in to investing recently (last 10 months) during which time the FTSE 100 has just bounced along around the 6000 points mark, sometimes below, sometimes above - but none of the ups and downs of individual companies.

Some possible stupid questions about to come up:
Why is this? Is this a sign of 'stagflation'? Strikes me that anyone with a FTSE 100 tracker over the past 10 months hasn't really made or lost money - is that normal?

I just don't really get it, you hear financial advertisements saying "remember the value of your investment can go up or down" - but with the FTSE recently its more a case of 'bumble along'

Thanks for explaining this to me, or even just giving your opinion.

westy22

I think that the situation over the past year is indicative of everyone's uncertainty about where the markets should (will) go. One day some good news - the next day some bad news! 'Bumbling along' is a good description. If you were to look at the FTSE 100 today and compared it to a year ago you would conclude that nothing much has happened whereas, in fact, the market has been quite volatile over the period.

It's worth remembering that FTSE 100 companies are very large and cumbersome - minor adjustments to the tiller take a long time to translate into meaningful alterations of direction.

Linton

Stagnation is normal, rapid rises are normal, rapid falls are normal. You need to be thinking long term and not be too concerned on transient events.

CLAPTON

fimonkey wrote: »

Only dipping my toe in to investing recently (last 10 months) during which time the FTSE 100 has just bounced along around the 6000 points mark, sometimes below, sometimes above - but none of the ups and downs of individual companies.

Some possible stupid questions about to come up:
Why is this? Is this a sign of 'stagflation'? Strikes me that anyone with a FTSE 100 tracker over the past 10 months hasn't really made or lost money - is that normal?

I just don't really get it, you hear financial advertisements saying "remember the value of your investment can go up or down" - but with the FTSE recently its more a case of 'bumble along'

Thanks for explaining this to me, or even just giving your opinion.

what exactly were you expecting ?

large loses? if every one expected that then the price would have fallen long ago

large gains? if everyone expected that then the price would have risen long ago

if you are considering large aggregrates then slow small movements are what you would expect.

its only in exceptional times (global financial meltdown, natural disasters, major political change that one would expect large changes over a small amount of time

Linton

fimonkey wrote: »

....Strikes me that anyone with a FTSE 100 tracker over the past 10 months hasn't really made or lost money - is that normal?
....

Just looked at the numbers - the FTSE100 has risen by about 15% in the past 10 months, and then add perhaps 3% for dividends. Seems pretty good to me.

Loughton_Monkey

A clue as to where your thinking is maybe muddled is your reference to "over the past 10 months hasn't really made or lost money".

If you close your eyes, and think of a number. Any number between -35% and plus 35% - and someone will find a period of 10 months during which FTSE has risen (or fallen) by that amount.

People invest in equities (including FTSE companies) to obtain growth over 10 years or more.

Furthermore, if you want to educate yourself a bit more about Stock Markets and Investing, you might try a little bit of 'Googling' will help. Just to get you started, try.....

Recession.
Northern Rock.
World Banking Crisis.
Credit Crunch.
Global Financial Market meldown.
Euro Bailouts - Greece - Ireland - Portugal.

jimjames

Also remember that the index measures the performance of the 100 biggest companies in the UK; it is also skewed far more to the performance of the biggest companies out of that 100.

If you look at the performance of different sectors and companies you will see that some have done very well over that time and others less so, by chosing a managed fund over a tracker your manager "may" have been able to take advantage of those trends.

fimonkey

Thanks,

OK I was a bit vague with my 10 month mark, I know the FTSE was much lower last July for example, and that investment is for the long term blah blah... But indeed with the recession, northern rock, credit crunch (all of which happened more than a year ago) and all the other buzz words and accronymns, I thought there would be MORE volatility (ups and downs) of the main index, but an overall view is that since Jan 2011 it seems to hug the 6000 mark (Japanese earthquake excluded). For little investors just learning about these things and putting £100 pm away in a tracker for example it does seem to be quite static at the moment. a 1.5% up or down is neither here nor there when you take in selling/buying costs.

If I focus my original quesiton down a bit, it would be "what's happened since Jan to make it so?"

free4440273

tbh/ the news -- very often -- does not matter/ it's all technicals/ look at charts of Dow and FTSE -- after the Japan earthquake , look at the move upwards back to near highs. Dax on track for 8000 i think ... the news does not matter /

jimjames

I think if you look more closely it has varied by a lot more than 1.5%, over the last year I'd think it had been at least 10% variation ie between about 5400 and 6100 from recollection.

fimonkey

Thanks, but I am now talking specifically about the index since Jan 2011, excluding the dip when the Japanese earthquake struck, it has bumped up and down about the 6000 mark. For someone investing 100pm into a tracker its not exactly making/loosing them money by one day being up a few percent and the next day down by a few percent.

Don't get your point about the news not mattering, the news merely reports what is happening, and that is that the FTSE is up or down by some points here and there,.. but always about the 6000 mark.