Since reading the Financial Times the other week I have come over all financially-minded and so I present the above graph to you for your consideration. I was very surprised when I came across it on the FT website – it shows a perspective on recent stock market turmoil which I have never seen on the BBC News. It shows approximately 27 years of data for the FTSE100 Share Index – a general measure of stock market prices for UK companies. Also shown is a line which follows the trend of the index from 1984 to 1994 showing roughly 7% growth year-after-year for a decade. I have just three things to say.
- Whatever process the data represents made sense up until the mid-1990’s. Since then it doesn’t look there is any kind of consistent trend for more than a few years.
- Based on this data, it would be rash IMHO to place a bet – perhaps using all the money in one’s pension fund – on the value of the index in (say) 20 years.
- Shares can go up as well as down. Or up and down as well as down and up. I am not a registered Financial Advisor