The UK is the absolute runt of the stock market littler. Its not an accident. Its been wrecked up UK governance, regulations, directives, regulators, taxes. You might say it has had the accreting value sucked out of it since 2000. France has done something similar, meanwhile the US system has pumped value in, as has Germany, blowing a boom bubble rather that killing the host like the UK system.
The morale of the UK has never been lower at least since the 1970s and those dire disfunction socialist years and the FTSE is a summary of the last epoch since 2000 of ossification.
Yet as I have been predicting here the FTSE 100 is twitching into life, because extreme value has a value add: predation and rendering of the victim.
In market speak, that is takeovers.
Like Easyjet this week, a 9 p/e company with a fat dividend and fat profits and a brilliant business gets taken out for a song, by, well not a local outfit. There is no local outfit to do it as the local system in broken. It is no surprise the bidder will come from a market landscape overflowing with capital. Boom buys bust.
Oh well I made a packet out of the fall. I shall cry all the way to the bank.
So here is the chart.
If you look closely you might find it comical, in a bathetic kind of way.
When it breaks up its going to motor and here is a close up of that unfolding.
Its my guess there will be no change of dynamic in the UK, so the investment thesis is to sit on big value and await its takeover. While other markets get spicier and hotter they will drag up the FTSE 100 like stretcher bearers.
They are good returns to be had and you never know the UK could catch a scooby-doo and good things might happen. Every silver lining has a dark cloud.
…..oh wait…..