FTSE 100. The oncoming train is not all bad news.
“as soon as time or accident had removed the artificial supports, the stupendous fabric yielded to the pressure of its own weight.” Edward Gibbon.
There is no clearer picture of the sorry state of the UK than to look at its once mighty stock exchange.
We could look at the US v UK markets, the mighty Nasdaq v the enfeebled FTSE100, but most would say ‘that’s the US, what do you expect. Its not Apples for Apples.”
So lets look coser to how. Germany.
Lets face the truth, Germany is meant to be a basket case of decline, but if this is the case, what of the UK.
This chart is from the pit of the global financial crisis.
This is sobering and the UK population is waking up to the fact that it is being very poorly served indeed. The malaise seems to run extremely deep and as a consequence it seems that the only hope lays in the ballot box which is showing the peasants are revolting.
Will an eventual dramatic change of the political level make a difference?
I don’t care. My guess is that its systemic and as it was said of an expensive movie, it will be easier to lower the ocean that raise this titanic.
However what is there to do?
Invest I say.
Slowly but surely the UK market is being liquidated. Its members are terrifically underpriced by a crippled stock market operating in a retrograde marketplace. However the companies are often international, superb and only listed in the UK through inertia. They are vulnerable to takeover as has been seen time and again or some will even shift abroad.
The gravity it towards the US, where the Presidents boot can be clearly seen on the FTSE’s neck these last two springs.
The shift from London will draw valuations up for the top 300 or so companies and while there is no catching up with Germany let alone the SP500, the UK market will dissolve at a premium.
UK stocks threfore offer an escape hatch for those brave enough and clear-eyed enough to see what comes next.
There is hope of course, there always is, but the UK is no fixer-upper, it is fast falling into ruin, as the populace has woken up to. While the elite are busy trying to school the electorate on how stupid and hateful it is, the process of reversing the economic decline is probably past and will not occur in my lifetime. However the rendering of the once mighty stock market will offer many succulent opportunities, many of which will be irresistible to foreign predators.
So the light at the end of the tunnel is in fact a train coming the other way, but that wont be bad news for those invested in cheap UK stocks.