Investor Points of Few – The Weapons of Market Disruption

By Alan Steel

Credit to Martin Williams for the idea for today’s article, which was taken from his earlier Twitter post (above). 

Martin got me thinking about the many “weapons” out there used to disrupt our perception of the market and how financially damaging these “attacks” can be.

By example, take a look at this headline, quote and chart from today’s Yahoo Finance!:

The FTSE 100 is Treading Water…”Britain’s benchmark FTSE 100 is treading water on Thursday as investors take stock following two days of heavy losses since Prime Minister Theresa May called for a general election.”

Heavy losses?! Really?

The above has been couched like the FTSE is barely afloat. But the reality of this Index is different in both the short and long term.

What we’re seeing above in a very skewed way is essentially a 13-point movement in a 7,000 point (plus) index – that’s about 0.02%. And that somewhat minuscule reaction was likely a fear response to the announcement of a snap UK general election.

Put in perspective that’s really not much of a market response to a possible change of government, not to mention another Brexit deep-dive.

And this all becomes even more clear if you pull the looking glass back a bit, where you see the FTSE 100 is up 700 points (That’s 10%, folks) over the course of last 12 months…

And it’s up 1,400 points over the last five years…

Now, that’s not what I would call a market treading water. In fact, considering the Index is top heavy with big oil, gas and mining players, that looks far more like a rising trend, and a possible testament to the underlying strength of the market as it weathers multi-year political and economic upheavals. 

Don’t view market maths in short-term isolation. That’s a dangerous strategy.

Get some perspective and some good advice instead.

Because after all, it’s your money.

Alan Steel, Chairman, Alan Steel Asset Management

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