FTSE 100 Long Term Share Price chart

Pick the right period and you can "prove" your argument

The FTSE 100 has Trippled Since 1990

FTSE 100 Share Price Graph
Source - Google

On the 30 December 1999 the FTSE 100 index was sitting at 6,930 since then it has peaked at 7780 (as of 29 Aug 2019).

Assuming that you had been in a FTSE 100 tracker over this period you would have seen a 10% growth over the last 20 years, which is less than a building society account would have given you.

If you were lucky and started investing in the two big dips in 2003 or 2008 then you can say long term holding has worked well for you.

As a private individual it is unlikely that you would have managed your investments in such a way as to plan to buy shares when the next big crash came.

How could you as the timing of big crashes is unpredictable?

Clealry dividends would have averaged out at around 4% pa on top of this, but remember that the losses you fund incurred when shares dropped out of the FTSE 100 and were sold as well as dealing fees for buying new entrents into the FTSE 100.

Long Term Share Trading Example - Barclays

Alternatively we can look at Barclays Bank over the long term, buying in during 2002 when the share price was around 500p which is about two thirds of its peak price of around 720p.

In this example we are reinvesting the dividends in more Barclays shares.

As you can see apart form a short period after purchase the shares are showing a continual loss.

BARC Share Price Graph

For more details on the above chart.

Broker Views They Will Protect Me From A "Carillion"

As a cautious trader you may be in the habit of looking at Broker Views, after all brokers spend a lot of time constructing them.

As you can see there was no hint that the brokers covering Carillion were terribly concerned.

Clearly it was possible that this was a short term blip and in a few months everything would have been back to normal.

The drop was caused by an unexpected reporting of an expected reduction in revenue of £875m, this was not just jitters by spooked traders this was something fundamentally wrong.

If you hadn't got out before the drop and closure:
  • If you had split your share holdings into five different companies then you would have lost 20% of your total capital.

  • If you had split your share holdings into ten different companies then you would have lost 10% of your total capital.
If you have been following conventional thinking, holding long term and reinvesting your dividends then you have lost all of your dividend income as well.

Date	Broker	                Recommendation	New target price
26-Jun	Liberum Capital	        Hold	        180
25-Apr	JP Morgan Cazenove      Overweight      292
10-Apr	Liberum Capital	        Hold	        200
29-Mar	Liberum Capital	        Hold	        200
28-Mar	Jefferies International	Hold	        230
14-Mar	Peel Hunt               Reduce	        200
07-Mar	Liberum Capital	        Hold	        200
02-Mar	JP Morgan Cazenove      Neutral	        231
01-Mar	Peel Hunt               Reduce	        200
01-Mar	Liberum Capital	        Hold	        200
09-Feb	Berenberg               Hold	        260
02-Feb	Liberum Capital	        Hold	        200
24-Jan	Peel Hunt               Reduce	        225