FTSE 100 still unpopular

Thrugelmir

123mat123 said:

There are many posts on here saying how bad the FTSE 100 is....

Concern yourself less with indices and focus on what you are investing in. Capital markets have never been so open to investors. Strip out the exceptional performers of the S&P500 and there's plenty of laggards there as well.  Share buybacks have masked the poor financial performance of many. 

A way of holding FTSE shares in ones own portfolio is on an equally weighted basis. You've mentioned some quality names that would form a solid backbone to a portfolio. FTSE100 is to small a number of shares to be focussed in on. 

Oil and energy companies are transitioning. The global challenge of ESG is a long and expensive road. No need to write them off yet. 

FTSE 250 has provided UK investors with decent returns of the years. As provides a broad universe of equity stocks. With around 48% of income generated overseas. Well worth a look. 

Catch all would be the FTSE 350 that would dilute the impact of the major caps. 

[Deleted User]

Share buybacks have masked the poor financial performance of many.  That is an interesting theory Thrugelmir.
Which ones?

Thrugelmir

ZingPowZing said:

Share buybacks have masked the poor financial performance of many.  That is an interesting theory Thrugelmir.
Which ones?

Apple. Oracle, Home Depot. 

Prism

ZingPowZing said:

Share buybacks have masked the poor financial performance of many.  That is an interesting theory Thrugelmir.
Which ones?

Apple is a pretty good example.
Over the last 5 years Apple's 12 months earnings have increased from 53bn to 57bn. That is about an 8% rise over 5 years.
In the same timeframe their earnings per share has increased from 2.31 to 3.29 - about 40% up. That is because over those 5 years they have reduced the number of shares from 23bn to 17.5bn, which has been a massive help in pushing the share price up while also keeping the PE ratio reasonable. Nothing wrong with that at all but it can hide the fact from a casual observer that Apple have not been growing much for a long time now.
For reference the Apple share price has risen over 300% in that 5 years, while basically staying still. 

Kind of reminds me of a big FTSE dividend payer..

[Deleted User]

Prism said:

ZingPowZing said:

Share buybacks have masked the poor financial performance of many.  That is an interesting theory Thrugelmir.
Which ones?

Apple is a pretty good example.
Over the last 5 years Apple's 12 months earnings have increased from 53bn to 57bn. That is about an 8% rise over 5 years.
In the same timeframe their earnings per share has increased from 2.31 to 3.29 - about 40% up. That is because over those 5 years they have reduced the number of shares from 23bn to 17.5bn, which has been a massive help in pushing the share price up while also keeping the PE ratio reasonable. Nothing wrong with that at all but it can hide the fact from a casual observer that Apple have not been growing much for a long time now.
For reference the Apple share price has risen over 300% in that 5 years, while basically staying still. 

Since kicking off its repurchase program in 2013, Apple has spent $327 billion to buy back 2.5 billion shares at an average price of $131 per share.
Looks like a winning strategy.

Prism

ZingPowZing said:

Prism said:

ZingPowZing said:

Share buybacks have masked the poor financial performance of many.  That is an interesting theory Thrugelmir.
Which ones?

Apple is a pretty good example.
Over the last 5 years Apple's 12 months earnings have increased from 53bn to 57bn. That is about an 8% rise over 5 years.
In the same timeframe their earnings per share has increased from 2.31 to 3.29 - about 40% up. That is because over those 5 years they have reduced the number of shares from 23bn to 17.5bn, which has been a massive help in pushing the share price up while also keeping the PE ratio reasonable. Nothing wrong with that at all but it can hide the fact from a casual observer that Apple have not been growing much for a long time now.
For reference the Apple share price has risen over 300% in that 5 years, while basically staying still. 

Since kicking off its repurchase program in 2013, Apple has spent $327 billion to buy back 2.5 billion shares at an average price of $131 per share.
Looks like a winning strategy.

It certainly has been. Huge company making huge profits and using those profits to return value to share holders. Sounds pretty much like Barclays or BP to me
However just like those companies have eventually had times when profits have fallen, buybacks slow and dividends get cut then unless Apple manage to innovate something and actually grow the same might happen. You don't really want to be still in there when they announce that - but until then, fill yer boots! 

[Deleted User]

Prism said:

ZingPowZing said:

Prism said:

ZingPowZing said:

Share buybacks have masked the poor financial performance of many.  That is an interesting theory Thrugelmir.
Which ones?

Apple is a pretty good example.
Over the last 5 years Apple's 12 months earnings have increased from 53bn to 57bn. That is about an 8% rise over 5 years.
In the same timeframe their earnings per share has increased from 2.31 to 3.29 - about 40% up. That is because over those 5 years they have reduced the number of shares from 23bn to 17.5bn, which has been a massive help in pushing the share price up while also keeping the PE ratio reasonable. Nothing wrong with that at all but it can hide the fact from a casual observer that Apple have not been growing much for a long time now.
For reference the Apple share price has risen over 300% in that 5 years, while basically staying still. 

Since kicking off its repurchase program in 2013, Apple has spent $327 billion to buy back 2.5 billion shares at an average price of $131 per share.
Looks like a winning strategy.

It certainly has been. Huge company making huge profits and using those profits to return value to share holders. Sounds pretty much like Barclays or BP to me
However just like those companies have eventually had times when profits have fallen, buybacks slow and dividends get cut then unless Apple manage to innovate something and actually grow the same might happen. You don't really want to be still in there when they announce that - but until then, fill yer boots! 

I thought there was an implication that Apple and others would be worth much less but for their share buyback strategy? 

Prism

ZingPowZing said:

Prism said:

ZingPowZing said:

Prism said:

ZingPowZing said:

Share buybacks have masked the poor financial performance of many.  That is an interesting theory Thrugelmir.
Which ones?

Apple is a pretty good example.
Over the last 5 years Apple's 12 months earnings have increased from 53bn to 57bn. That is about an 8% rise over 5 years.
In the same timeframe their earnings per share has increased from 2.31 to 3.29 - about 40% up. That is because over those 5 years they have reduced the number of shares from 23bn to 17.5bn, which has been a massive help in pushing the share price up while also keeping the PE ratio reasonable. Nothing wrong with that at all but it can hide the fact from a casual observer that Apple have not been growing much for a long time now.
For reference the Apple share price has risen over 300% in that 5 years, while basically staying still. 

Since kicking off its repurchase program in 2013, Apple has spent $327 billion to buy back 2.5 billion shares at an average price of $131 per share.
Looks like a winning strategy.

It certainly has been. Huge company making huge profits and using those profits to return value to share holders. Sounds pretty much like Barclays or BP to me
However just like those companies have eventually had times when profits have fallen, buybacks slow and dividends get cut then unless Apple manage to innovate something and actually grow the same might happen. You don't really want to be still in there when they announce that - but until then, fill yer boots! 

I thought there was an implication that Apple and others would be worth much less but for their share buyback strategy? 

Its hard to say for sure as they could have done something else with that cash. If they hadn't announced the large buybacks would as many people jumped in to get the benefit of the increasing stock price? In the same way would as many people buy BP shares if they didn't pay a decent dividend? Unlikely.

The point really is understand what it is you are buying and why. In Apples case you are currently buying an ex growth company that commits large amounts of its profits to dividends and buybacks. Maybe Apple will follow in Microsoft's footprints and find a new source of growth. Maybe it will be the next Sony.

[Deleted User]

So, all in all, neither good nor bad and not a spur to buy nor sell?

Prism

ZingPowZing said:

So, all in all, neither good nor bad and not a spur to buy nor sell?

Yeah pretty neutral. I think Thrugelmirs point though is people should look a bit deeper to see how a company is doing. Past financial performance is not a predictor of the future but it gives you an idea. It goes some way to explain why the Baillie Gifford funds, Fundsmith, Lindsell Train and the like don't invest in Apple. Still doesn't mean its a bad investment, if just for the big profits and big buy backs. Its not as if companies have to grow all the time.