On the day that I sat down to write this article it was exactly 20 years since England played their first match in the Euro 96 football tournament, which was a rather inauspicious 1-1 draw against Switzerland.
The memories of this tournament are fresh in my mind having seen two documentaries about it aired on television in the last week, bringing back the enjoyment of beating Holland 4-1, Stuart Pearceâ€™s impassioned penalty against Spain and then the utter disappointment of losing on penalties (again) to the Germans (again).
The terrace anthem for England fans during that tournament was Three Lions â€™96, which included the line of â€œThirty years of hurtâ€ referencing the period since the 1966 World Cup win. Most football fans are used to periods with no trophies and England fans particularly so, with 50 years now having passed since Geoff Hurstâ€™s famous hat-trick. In comparison, for stockmarket investors, whilst short-term holding periods can prove unsuccessful, longer-term timescales, on average, prove to be profitable.
This is not always the case, however. Up until April last year, the FTSE 100 had famously failed to revisit the previous all-time high closing level of 6,930 seen back in December 1999, when the index was boosted by the inexorable rise of technology, media and telecoms stocks. In the years that followed, the blue-chip index tumbled, with the bursting of the tech dotcom bubble, the September 11th terrorist attacks and the conflict in Iraq, which all in all saw the index fall by some 40% in capital terms. The FTSE 100 then climbed steadily, helped in no small part by a mining sector boosted by Chinese demand, up until the credit crisis hit in the second half of 2008, which saw the index fall from a peak value of about 6,730 to a low of 3,512 in March 2009.
After the worldâ€™s central banks intervened, the FTSE 100 then saw a recovery (albeit a rocky one) and finally hit new all-time high levels in February last year, peaking at the end of April at a closing level of 7,104. The rise was driven by the long-awaited launch of quantitative easing by the European Central Bank and the consumer goods sector in particular, with well-known names such as Unilever and Reckitt Benckiser, had gained significantly.
A year on from this, the crash in commodity prices has seen both the mining and oil & gas sectors fall back sharply and, after the volatility seen at the start of this year, the FTSE 100 has been trading in a range of between 6000 and 6400 over the last few months.
So, returning to our football theme, are we more likely to see England win at Euro 2016, or the FTSE 100 reclaim its previous highs this year? Would you bet on HSBC, Royal Dutch Shell and Glaxo or Kane, Vardy and Rooney? Unfortunately, we would be inclined to say neither! A FTSE recovery would most likely require significant positive contributions from a banking sector still constrained by the reverberations of the credit crisis and the mining and oil & gas sectors which are still hampered by low commodities prices, so looks to be some way off currently. As for England, it seems likely that the route to the final would involve a penalty shoot-out at some stage, and we all know how that goes, donâ€™t we?
Cave & Sons are one of the oldest surviving firms of independent stockbrokers and investment managers in the UK and are currently celebrating their 110 year anniversary. If you wish to discuss your investment requirements, then please contact one of our investment management team on 01604 621421.
The value of an investment and the income from it could go down as well as up. You may not get back what you invest. This communication is for general information only and is not intended to be individual advice. Cave & Sons Ltd is authorised and regulated by the Financial Conduct Authority. Financial Services Register number 143715