FTSE 100 still unpopular

Thrugelmir

Another_Saver said:

Linton said:

In my view the FTSE suffers from a major systemic failure, its poor recent performance is not something from which it will recover as part of the normal rises and falls in the markets.

This major systemic failure is that there is a complete absence of companies that could replace the dinosaurs and become world leading multinationals. The potential world class companies are bought out long before they could reach that stage by entities that don’t trade on the LSE.

But all is not gloom and doom. Whilst the FTSE100 stagnates FTSE250 investors benefit as buyouts are generally made at well above the market price. And the removal of companies near the top of the index gives room for more potential winners to enter at the bottom.

Why do we assume old co's are dinosaurs?
Survivorship is the best indicator of survivorship.

All the major German companies still in existance today. Contributed to their war effort. 

Another_Saver

Thrugelmir said:

Another_Saver said:

Linton said:

In my view the FTSE suffers from a major systemic failure, its poor recent performance is not something from which it will recover as part of the normal rises and falls in the markets.

This major systemic failure is that there is a complete absence of companies that could replace the dinosaurs and become world leading multinationals. The potential world class companies are bought out long before they could reach that stage by entities that don’t trade on the LSE.

But all is not gloom and doom. Whilst the FTSE100 stagnates FTSE250 investors benefit as buyouts are generally made at well above the market price. And the removal of companies near the top of the index gives room for more potential winners to enter at the bottom.

Why do we assume old co's are dinosaurs?
Survivorship is the best indicator of survivorship.

All the major German companies still in existance today. Contributed to their war effort. 

...
British history: hold my imperialist beer

AnotherJoe

Another_Saver said:

I'm at the point now that I just want to refer people to my earlier posts on UK equity rather than repeat myself every time...
I still expect, whether you measure from 31/12/19-31/12/29, or from March, or from now, that over the next decade or so the UK will outperform the global market. The forum has been around longer than that so hopefully will still around then for me to gloat. Sooner or later sentiment will drift the other way, the US will have a period of relative undervaluation, sensible value investors will buy in while the (EM?, Eastern Europe, Asia Pacific, Africa?, UK?) Hype train pockets money from the growth investors.

And I'll refer people to my previous posts pointing out that its a mistake to think that investing in UK equity means you are significantly investing in the UK economy.

Another_Saver

AnotherJoe said:

Another_Saver said:

I'm at the point now that I just want to refer people to my earlier posts on UK equity rather than repeat myself every time...
I still expect, whether you measure from 31/12/19-31/12/29, or from March, or from now, that over the next decade or so the UK will outperform the global market. The forum has been around longer than that so hopefully will still around then for me to gloat. Sooner or later sentiment will drift the other way, the US will have a period of relative undervaluation, sensible value investors will buy in while the (EM?, Eastern Europe, Asia Pacific, Africa?, UK?) Hype train pockets money from the growth investors.

And I'll refer people to my previous posts pointing out that its a mistake to think that investing in UK equity means you are significantly investing in the UK economy.

Already covered above

Linton

Another_Saver said:

Linton said:

In my view the FTSE suffers from a major systemic failure, its poor recent performance is not something from which it will recover as part of the normal rises and falls in the markets.

This major systemic failure is that there is a complete absence of companies that could replace the dinosaurs and become world leading multinationals. The potential world class companies are bought out long before they could reach that stage by entities that don’t trade on the LSE.

But all is not gloom and doom. Whilst the FTSE100 stagnates FTSE250 investors benefit as buyouts are generally made at well above the market price. And the removal of companies near the top of the index gives room for more potential winners to enter at the bottom.

Why do we assume old co's are dinosaurs?
Survivorship is the best indicator of survivorship.
The 100 is not stagnating, as I said it behaves very, very similarly to the 250.

I do not assume all old companies are dinosaurs. Some may well be well worth investing in as a small part of a large portfolio. 

What I mean by stagnation can be demonstrated by a simple statistic - of the largest 15 companies in the FTSE100, 9 were in the FTSE100 when the index first started 36 years ago. Of the remaining 6, 2 were formed out of companies that were in the 1984 Index, 2 are privatisations and only 1 is genuinely "new" - Vodafone. The sixth, BHP, I dont know about. It may have been in the 1984 Index as Billiton.

Let me set you a challenge - can you suggest say 6 FTS100 companies that could reasonably hope to grow to become globally significant and play a major part in a future recovery of the FTSE100?

Flutter Entertainment (Paddy Power etc)? B&M?  Rightmove? Experian? Compass? Just Eat? St James Place?

Thrugelmir

Linton said:

Another_Saver said:

Linton said:

In my view the FTSE suffers from a major systemic failure, its poor recent performance is not something from which it will recover as part of the normal rises and falls in the markets.

This major systemic failure is that there is a complete absence of companies that could replace the dinosaurs and become world leading multinationals. The potential world class companies are bought out long before they could reach that stage by entities that don’t trade on the LSE.

But all is not gloom and doom. Whilst the FTSE100 stagnates FTSE250 investors benefit as buyouts are generally made at well above the market price. And the removal of companies near the top of the index gives room for more potential winners to enter at the bottom.

Why do we assume old co's are dinosaurs?
Survivorship is the best indicator of survivorship.
The 100 is not stagnating, as I said it behaves very, very similarly to the 250.

Experian? 

The main office of Experian is based in Ireland. UK listing is a brass plate job. Primarily a US business. 

Another_Saver

Linton said:

Another_Saver said:

Linton said:

In my view the FTSE suffers from a major systemic failure, its poor recent performance is not something from which it will recover as part of the normal rises and falls in the markets.

This major systemic failure is that there is a complete absence of companies that could replace the dinosaurs and become world leading multinationals. The potential world class companies are bought out long before they could reach that stage by entities that don’t trade on the LSE.

But all is not gloom and doom. Whilst the FTSE100 stagnates FTSE250 investors benefit as buyouts are generally made at well above the market price. And the removal of companies near the top of the index gives room for more potential winners to enter at the bottom.

Why do we assume old co's are dinosaurs?
Survivorship is the best indicator of survivorship.
The 100 is not stagnating, as I said it behaves very, very similarly to the 250.

I do not assume all old companies are dinosaurs. Some may well be well worth investing in as a small part of a large portfolio. 
I didn't say all, I challenged this popular assumption that some/many 100 cos are dinosaurs.
What I mean by stagnation can be demonstrated by a simple statistic - of the largest 15 companies in the FTSE100, 9 were in the FTSE100 when the index first started 36 years ago. Of the remaining 6, 2 were formed out of companies that were in the 1984 Index, 2 are privatisations and only 1 is genuinely "new" - Vodafone. The sixth, BHP, I dont know about. It may have been in the 1984 Index as Billiton.
This is normal. This has always happened everywhere.

Let me set you a challenge - can you suggest say 6 FTS100 companies that could reasonably hope to grow to become globally significant and play a major part in a future recovery of the FTSE100?
Flutter Entertainment (Paddy Power etc)? B&M?  Rightmove? Experian? Compass? Just Eat? St James Place?

Flutter - I hope not
B&M probably, but I'd like to see their stores become less cheap and nasty. In
Rightmove - don't see why not
Compass - I would prefer to see a return to insourcing catering.
Just Eat - maybe
Experian - probably, now that they've made their service free and become a credit broker rather than an information seller (but still plenty of that in b2b).

SJP - there will always be rich people either lazy or unknowledgeable enough to use SJP, so definitely.

But I am indexer. I do not try to pick winning stocks, I buy the haystack to guarantee I own the future winners. No one knows what the future holds. No one expected Monster Beverage Corp or Domino's Pizza Inc to do so well since the Dot Com Bubble. Anyone over the last half century would be forgiven for thinking tobacco had had its day.

...

Linton

Another_Saver said:

Linton said:

Another_Saver said:

Linton said:

In my view the FTSE suffers from a major systemic failure, its poor recent performance is not something from which it will recover as part of the normal rises and falls in the markets.

This major systemic failure is that there is a complete absence of companies that could replace the dinosaurs and become world leading multinationals. The potential world class companies are bought out long before they could reach that stage by entities that don’t trade on the LSE.

But all is not gloom and doom. Whilst the FTSE100 stagnates FTSE250 investors benefit as buyouts are generally made at well above the market price. And the removal of companies near the top of the index gives room for more potential winners to enter at the bottom.

Why do we assume old co's are dinosaurs?
Survivorship is the best indicator of survivorship.
The 100 is not stagnating, as I said it behaves very, very similarly to the 250.

I do not assume all old companies are dinosaurs. Some may well be well worth investing in as a small part of a large portfolio. 
I didn't say all, I challenged this popular assumption that some/many 100 cos are dinosaurs.
What I mean by stagnation can be demonstrated by a simple statistic - of the largest 15 companies in the FTSE100, 9 were in the FTSE100 when the index first started 36 years ago. Of the remaining 6, 2 were formed out of companies that were in the 1984 Index, 2 are privatisations and only 1 is genuinely "new" - Vodafone. The sixth, BHP, I dont know about. It may have been in the 1984 Index as Billiton.
This is normal. This has always happened everywhere.

Let me set you a challenge - can you suggest say 6 FTS100 companies that could reasonably hope to grow to become globally significant and play a major part in a future recovery of the FTSE100?
Flutter Entertainment (Paddy Power etc)? B&M?  Rightmove? Experian? Compass? Just Eat? St James Place?

...Flutter - I hope not

B&M maybe
Rightmove - don't see why not
Compass - I would prefer to see a return to insourcing catering.
Just Eat - maybe

SJP - there will always be rich people either lazy or unknowledgeable enough to use SJP, so definitely.
But I am indexer. I do not try to pick winning stocks, I buy the haystack to guarantee I own the future winners. No one knows what the future holds. No one expected Monster Beverage Corp or Domino's Pizza Inc to do so well since the Dot Com Bubble. Anyone over the last half century would be forgiven for thinking tobacco had had its day.

As an index investor your holdings in these companies would only be a very small part of your investment, or do you expect them to conceivably overtake HSBC, Glaxo etal at the top of the FTSE100?  Currently they are all examples of niche companies in relatively small markets.

My argument is not against investing in certain FTSE100 companies but rather investing in the Index.  It is in the index where the problems lie.

Audaxer

Linton said:

My argument is not against investing in certain FTSE100 companies but rather investing in the Index.  It is in the index where the problems lie.

As well as a FTSE100 company, do you think it's better investing in an active UK Equity Income fund or IT like CTY rather than a FTSE100 tracker? 

Linton

Audaxer said:

Linton said:

My argument is not against investing in certain FTSE100 companies but rather investing in the Index.  It is in the index where the problems lie.

As well as a FTSE100 company, do you think it's better investing in an active UK Equity Income fund or IT like CTY rather than a FTSE100 tracker? 

If you objective is dividend income then I would see CTY or several similar funds as reasonable choices.  If you are a general investor looking for long term growth I would choose the FTSE250 area with preferably a specialist small companies fund and see no reason to think very much about the FTSE100.  If it's covered by your global index tracker at its proper % , fair enough, but otherwise  not something to go out of one's way to invest in.