From FT Alphaville:
How to play Footsie
Now the FTSE 100 has broken through to a new high, there are a lot of myths about what it means peddled by people who should know better – including the grand old BBC.
Myth 1: The Footsie’s been really slow to get back to its peak because British shares have done so much worse than those of other countries
The Footsie took 15 years to get back to its high last seen at the end of 1999, which is a long time. Germany’s Dax index, people keep pointing out, made a new post-Lehman high two years ago. The problem is the Dax includes dividends, while the FTSE 100 doesn’t. Calculate the Footsie on the same basis, and it made a new post-crisis high in December 2010.
Here’s what the FTSE 100 and the Dax look like when dividends are excluded: the Dax has recently made a new post-Lehman high, but is still about 10 per cent below its dotcom peak. I added in Japan’s Topix, to make British investors feel good.
Much more relevant for investors of course is how much they would have made including dividends, since over the long run it is reinvested dividends which provide most of the gain:
Even this is misleading, though. Currency moves have a huge impact, and can’t be ignored. For a British investor who didn’t hedge their currency risk, these are the (sterling-denominated) total returns. I’ve added in the US and France, for a broader comparison: Since the Footsie peaked, US blue-chip shares have done best, then German, British and French, with Japanese stocks almost back up to where they started, in sterling terms. But the US outperformance is really quite recent....MOREI think he's calling Americans upstarts.
Reminds one of the time Kinsley Amis said about F. Scott Fitzgerald:
"...brings a whiff of the parvenu."
Amis ended up living with his first wife's third husband.
Recently:
Amis ended up living with his first wife's third husband.
Recently:
