Here’s an interesting chart. It’s the FTSE 100.
Many, many years ago I was a ‘local’ (that is, I risked my own money) on the LIFFE floor. This was where various futures markets were traded in pits by ‘open outcry’. As LIFFE closed in November 2000, you can see how that dates me.
The FTSE 100 was notorious for being a fickle and difficult market to trade. So much so that when I finally passed my pit exams and was being interviewed by a panel of old hands to assess my suitability to trade, quite a few of them openly laughed when I said that this was where I wanted to trade.
Now, there were plenty of people making a good living in the FTSE pit, but I wasn’t one of them. I don’t think I’ve touched it since.
While the Dow, S&P, and NASDAQ have scorched to a succession of fresh all-time highs since the beginning of last year, the FTSE has been stuck in a range. It finally broke out of this earlier this year and subsequently stormed to its own record high earlier this month.
Source: TN Trader
At the same time, US stock indices were going nowhere. Of course, the FTSE index has few tech companies and not much (if anything) in the way of growth plays like the US ‘Magnificent Seven.’ But there’s been a fair amount of chatter over the last few months about overvalued US tech giants, which make many UK and European companies look comparatively cheap.
It looks as if there’s a bit of a switch going on, with investors broadening their horizons and looking for undervalued companies, especially if they pay a good dividend. There are quite a few of these in the FTSE.
Does that mean the UK index goes higher from here, or is this play a short-term fad? It’s too early to tell. But it’s something worth watching.
