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The FTSE was just under 7000 when Blair took power in 1997, today October 2020 it is 5600


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So someone please explain to me that for most of the time since it was under 7000 with a short period above  that and with it now only 5500 with gossip that it may will even go into the 4000's, so where has all this wealth and cash and endless partying come from?

I always thought the FTSE was a good indicator of the economy and future prospects of our economy, am I missing something

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Just now, haroldshand said:

So someone please explain to me that for most of the time since it was under 7000 with a short period above  that and with it now only 5500 with gossip that it may will even go into the 4000's, so where has all this wealth and cash and endless partying come from?

I always thought the FTSE was a good indicator of the economy and future prospects of our economy, am I missing something

The market has become bloody awful at raising capital for productive new ventures.

The country has become an awfully expensive place for those with the get up and go to do the same without capital, even the idea of starting from a garage is out  for many. You are looking at best part of £10K year for a few square feet with light and power / no noise restrictions. Not the sort of thing you can take on when being bled dry for rent, private housing,

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50 minutes ago, onlyme said:

The market has become bloody awful at raising capital for productive new ventures.

The country has become an awfully expensive place for those with the get up and go to do the same without capital, even the idea of starting from a garage is out  for many. You are looking at best part of £10K year for a few square feet with light and power / no noise restrictions. Not the sort of thing you can take on when being bled dry for rent, private housing,

 

Because I'm independent, I know quite a few similar people doing cutting edge but low demand albeit globally sought after research or manufacturing sought after kit, and from what they produce you would imagine they have all singing all dancing premises, and outside the UK they propably would. Here, they are renting places with buckets under holes in the roof.

Edited by Hopeful
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1 minute ago, Hopeful said:

 

Because I'm independent, I know quite a few similar people doing cutting edge but low demand albeit globally sought after kit, and from what they produce you would imagine they have all singing all dancing premises, and outside the UK they peopably would. Here, they are renting places with buckets under holes in the roof.

Two ways to read that. 

1) Where there is a will there is a way.

2) It proves my point that SUITABLE premises are priced at a point where cutting edge companies are having to revert to leaking shacks to operate. 

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2 minutes ago, Frank Hovis said:

Yep.  I have noted this about mining.

I have seen in the last ten years alone the wolfram / tungsten mine on Dartmoor close after a very short existence, yet another venture to restart tin mining at South Crofty go pop (I knew someone who was working there when it did), and now there is pie in the sky lithium mining down near Redruth.  Such ventures are simply black holes for capital.

Anything like this is doomed to fail in this country because of high labour costs - forced high by housing costs - planning restrictions and delay, and health and safety regulations. 

Add all that up and any sensible person will do their mining, manufacturing, assembly whatever in a third world country where because housing costs are low wages are low and regulation light touch.

The only growth is in the imputed rent as house prices rise whilst people sit and watch them go.

Had first visit to a mine (closed unfortunately) last year, Geevor, was fascinating. Surprised it is has a relatively low key exposure for the area.

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10 minutes ago, haroldshand said:

House prices have probably trebled in value since 1997 and in a low inflation world, it just does not make sense

* House prices are primarily bought on leverage, stocks are not. Therefore there has been scope to 'pump up' house prices by forever lowering rates and offering more generous mortgage terms. Psychology/ media has played its role.

 

* Adversely the FTSE better represents the real economy. The UK has produced very little 'growth stocks' and maintained them. Any firms with goods prospects are harvested out to private equity or bought out by larger foreign companies . So the FTSE still represents many "old' industries which just plod along creating no new value. Having said all that with the dividends paid since 1997 ou would be well up despite a fall in value, but not as impressive as property.

Edited by desertorchid
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The only thing I have positive to write are that the dividends need to be taken into account over the period 1997--2020 in order to know whether an absolute loss has been made. Does anyone have the chart?

I read on another thread that B&M, who are selling plastic halloween ornaments, have a greater valuation than Britain's supposed flagship engineering company!

A trick the FTSE uses is to never correct the market valuations for inflation, so a rising index time history could be a falling one.

Another flattering bias (I think, I'm not certain) is to not consistently track the same collection of companies, but to periodically boot out the weak ones and replace them.  A holder of the real underlying companies would have to sell the one whose share price had fallen, and buy another one that is more expensive. The index sees no such penalty.

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52 minutes ago, haroldshand said:

So someone please explain to me that for most of the time since it was under 7000 with a short period above  that and with it now only 5500 with gossip that it may will even go into the 4000's, so where has all this wealth and cash and endless partying come from?

I always thought the FTSE was a good indicator of the economy and future prospects of our economy, am I missing something

No it wasnt.

~5000

FTSE is an indication of the equity value of UK top 100 companies.

 

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32 minutes ago, desertorchid said:

* House prices are primarily bought on leverage, stocks are not. Therefore there has been scope to 'pump up' house prices by forever lowering rates and offering more generous mortgage terms. Psychology/ media has played its role.

 

* Adversely the FTSE better represents the real economy. The UK has produced very little 'growth stocks' and maintained them. Any firms with goods prospects are harvested out to private equity or bought out by larger foreign companies . So the FTSE still represents many "old' industries which just plod along creating no new value. Having said all that with the dividends paid since 1997 ou would be well up despite a fall in value, but not as impressive as property.

From ~2002 the UK wealth creating sector was overwhelmed by the wealth destroying sector public sector and benefits.

The UK has still not rolled backed Labour.

 

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2 minutes ago, Nippy said:

The only thing I have positive to write are that the dividends need to be taken into account over the period 1997--2020 in order to know whether an absolute loss has been made. Does anyone have the chart?

I read on another thread that B&M, who are selling plastic halloween ornaments, have a greater valuation than Britain's supposed flagship engineering company!

A trick the FTSE uses is to never correct the market valuations for inflation, so a rising index time history could be a falling one.

Another flattering bias (I think, I'm not certain) is to not consistently track the same collection of companies, but to periodically boot out the weak ones and replace them.  A holder of the real underlying companies would have to sell the one whose share price had fallen, and buy another one that is more expensive. The index sees no such penalty.

To 2015.

It makes a huge difference to reinvest dividends and the effect of this amplifies the longer you have them as you get dividends upon dividends upon dividends.

I've always reinvested the dividends. I happen to hold income trackers rather than accumulators because then I have an automatic rebalance of my holdings through what I buy with that years dividends.

FTSE-100-total-return.jpg

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55 minutes ago, haroldshand said:

so where has all this wealth and cash and endless partying come from?

The market goes up for a bit, everyone has parties.

The market goes down for a bit, government steps in with lower interest rates and cash-handouts to keep the party ticking over.

And repeat, repeat, repeat.

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Apple, Amazon and Google are all reporting after hours in the US this evening. Depending on what they report the markets will either rally hugely or collapse tomorrow.

I read a report overnight speculating that the markets crashed yesterday because the big boys know that Trump is going to win. That the markets do not care about the rising virus stories in Europe and the US. They want the market crashed so that they can buy up the shares on the cheap before the result of the election next Tuesday.
 

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Now, regarding the FTSE.

It does nothing because most of the money in the FTSE comes from UK pension funds. Those UK pension funds play a clever game of manipulation on the British public. Some might call it something else. When you learn what it is your eyes will be opened.

Let's imagine a pension provider called DOSBODS. It has several funds that you can stick your pension into. Among them is the DOSBODS US TECH FUND. Sounds wonderful. You read about the massive gains in US Tech shares and want a piece of it.

Hence you give your money to the DOSBODS US TECH FUND, it invests in Apple, Amazon, Roku, Square, etc, etc, and you sit back expecting enormous gains. But you don't get them. You get only a tiny percentage of those gains. Why?

When you invest your money in the DOSBODS US TECH FUND you were buying shares in IT - in the fund. We have our costs - salaries, operating costs, bonuses to be paid, the yacht, the hookers, etc. The DOSBODS US TECH FUND shares rise or fall but we ensure that you only see a small amount of the gain from all those Apple, Amazon, Google, etc, stocks that the fund bought with your money.

It is the same with the DOSBODS CHINA FUND, the DOSBODS BIOTECH FUND, the everything we do fund - an occasionally we buy some FTSE names for their dividends. Not for their growth but for their dividends.

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1 hour ago, Frank Hovis said:

Yep.  I have noted this about mining.

I have seen in the last ten years alone the wolfram / tungsten mine on Dartmoor close after a very short existence, yet another venture to restart tin mining at South Crofty go pop (I knew someone who was working there when it did), and now there is pie in the sky lithium mining down near Redruth.  Such ventures are simply black holes for capital.

Anything like this is doomed to fail in this country because of high labour costs - forced high by housing costs - planning restrictions and delay, and health and safety regulations. 

Add all that up and any sensible person will do their mining, manufacturing, assembly whatever in a third world country where because housing costs are low wages are low and regulation light touch.

The only growth is in the imputed rent as house prices rise whilst people sit and watch them go.

Housing costs are the elephant in the room. 

Health and safety isn't because the regulatory burden is an extremely cost effective way of reducing employee & public liability claims. Employee liability insurance is basically a loan scheme to cover claims. In the USA statistically you have about a 6 fold chance of dying at work compared to the UK which in part maybe due to their light touch approach to safety and health. Similar ratios with significant injuries. Consequently insurance costs are astronomical. 

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51 minutes ago, The Masked Tulip said:

Apple, Amazon and Google are all reporting after hours in the US this evening. Depending on what they report the markets will either rally hugely or collapse tomorrow.

I read a report overnight speculating that the markets crashed yesterday because the big boys know that Trump is going to win. That the markets do not care about the rising virus stories in Europe and the US. They want the market crashed so that they can buy up the shares on the cheap before the result of the election next Tuesday.
 

It's October. The month to make a killing (or lose your shirt). 

https://en.m.wikipedia.org/wiki/List_of_largest_daily_changes_in_the_Dow_Jones_Industrial_Average

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3 hours ago, Frank Hovis said:

Yep.  I have noted this about mining.

I have seen in the last ten years alone the wolfram / tungsten mine on Dartmoor close after a very short existence, yet another venture to restart tin mining at South Crofty go pop (I knew someone who was working there when it did), and now there is pie in the sky lithium mining down near Redruth.  Such ventures are simply black holes for capital.

 

I see what you did there.

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1 hour ago, The Masked Tulip said:

Apple, Amazon and Google are all reporting after hours in the US this evening. Depending on what they report the markets will either rally hugely or collapse tomorrow.

I read a report overnight speculating that the markets crashed yesterday because the big boys know that Trump is going to win. That the markets do not care about the rising virus stories in Europe and the US. They want the market crashed so that they can buy up the shares on the cheap before the result of the election next Tuesday.
 

Big tech are where the money is now. No cash no bonds. Its all in big tech. It has nothing to do with the economy.  That's all that's propping up the US markets. 

The UK doesn't have big tech. It has miners, cyclical etc. As I've said before the UK isn't an ecomony. It's a ponzi based on Importing unskilled labour who have nothing and consume. The average UK millennium genz has min stuff cause he wastes his money on a shit box flat in the city. The squeezed middle consume when the gov reduces their mortgage payment or credit card bill by dropping rates and giving free equity on housing. The boomer already has everything. Hence the best way to increase growth is import migrants who have nothing and will consume. 

 

 

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