Image source: Getty Images
He FTSE 100 The index was launched in January 1984 at the 1,000 point level. But in August 1997, the index exceeded 5,000. And that means that over a period of just 13 years and seven months, it increased to five times the initial value.
Some of those huge gains were driven by telecommunications, media and technology companies. And many of those companies achieved high valuations due to speculation tied to the early years of the Internet.
However, the ‘dotcom boom’ ended badly. And on the first day of trading in 2000, the bull market began to falter. The fall in stock prices accelerated. And by the spring of 2003, Footsie was close to 4,000.
But going from 1,000 to 4,000 continued to be a good performance for the index over the period. And I think there are reasons to believe that equally large moves could occur from the current level.
the great reset
For example, it looks like we’re in the early stages of a bull market for stocks right now. And it could turn out to be a multi-year event. So I’m bullish because the last three years have been traumatic for both companies and stocks. And, in many cases, company valuations have fallen due to bear markets.
The way I see it, the pandemic, the war in Ukraine, and the price shocks caused by high commodity prices have helped bring about a general readjustment. People have reevaluated their lives and lifestyles. Companies have examined their core businesses in great detail. Investors have priced in stock valuations. And nations have scrutinized their supply chains and security arrangements.
So it is from this new, potentially firmer base that the bullish phase of stocks has begun. However, when I look at the companies within the FTSE 100 right now, it’s hard to imagine some of them growing very much. But they don’t have to.
The dynamic configuration of the FTSE 100
The composition of the current index is very different from that of 1984. Companies have come and left the index often over the years. We sometimes lose names due to M&A activity. And underperforming companies can drop off the index and fall into the FTSE 250 or other indices.
But the process works both ways with the fastest growing companies joining the FTSE 100 to replace laggards. And that makes Footsie a dynamic setup that’s capable of regular refreshment and renewal.
In fact, it’s the index’s ability to regenerate itself and adapt to the next fast-growing companies that keeps me bullish. But it’s not certain that the Footsie will hit anywhere near 39,000 by 2036. There’s even a chance it could be lower than it is today.
However, I am happy to regularly invest in a FTSE 100 index tracking fund to position myself for the possibility of a big rally over time. I consider the index a potentially decent long-term investment for me anyway due to its dividend yield. Right now, it’s close to 3.5%. And my accumulation tracker reinvests all dividend income back into my investment with the goal of accumulating profit.
var config = {
apiKey: ‘1ed121d592e04642d57912bb369ef696621661a3’,
product: ‘PRO_MULTISITE’,
logConsent: false,
notifyOnce: false,
initialState: ‘NOTIFY’,
position: ‘LEFT’,
theme: ‘DARK’,
layout: ‘SLIDEOUT’,
toggleType: ‘slider’,
iabCMP: false,
closeStyle: ‘button’,
consentCookieExpiry: 90,
subDomains : true,
rejectButton: false,
settingsStyle : ‘button’,
encodeCookie : false,
accessibility: {
accessKey: ‘C’,
highlightFocus: false },
onLoad: function () { // hide Cookie Control recommended settings button.
var recommendedSettingsButton = document.getElementById(‘ccc-recommended-settings’);
if (recommendedSettingsButton) {
recommendedSettingsButton.classList.add(‘hide’);
} },
text: {
title: ‘Privacy Notice’,
intro: ‘This site uses cookies, pixels, and other similar technologies to improve your web site experience and to deliver you personalised ads about our own and third party products and services. Please read more about how we collect and use data about you in this way in our Cookies Statement in our Privacy Policy. You can change your cookie settings in your browser at any time. ‘,
necessaryTitle: ”,
necessaryDescription: ”,
thirdPartyTitle: ‘Warning: Some cookies require your attention’,
thirdPartyDescription: ‘Consent for the following cookies could not be automatically revoked. Please follow the link(s) below to opt out manually.’,
on: ‘On’,
off: ‘Off’,
accept: ‘Accept’,
settings: ‘Cookie Preferences’,
acceptRecommended: ‘Accept Recommended Settings’,
notifyTitle: ‘Privacy Notice’,
notifyDescription: ‘This site uses cookies, pixels, and other similar technologies to improve your web site experience and to deliver you personalised ads about our own and third party products and services. Please read more about how we collect and use data about you in this way in our Cookies Statement in our Privacy Policy. You can change your cookie settings in your browser at any time. ‘,
closeLabel: ‘Save Preferences and Close’,
accessibilityAlert: ‘This site uses cookies to store information. Press accesskey C to learn more about your options.’,
rejectSettings: ‘Reject All’,
reject: ‘Reject’,
},
branding: {
fontColor: ‘#fff’,
fontFamily: ‘Arial,sans-serif’,
fontSizeTitle: ‘1.2em’,
fontSizeHeaders: ‘1em’,
fontSize: ‘1em’,
backgroundColor: ‘#313147’,
toggleText: ‘#fff’,
toggleColor: ‘#2f2f5f’,
toggleBackground: ‘#111125’,
alertText: ‘#fff’,
alertBackground: ‘#111125’,
acceptText: ‘#ffffff’,
acceptBackground: ‘#111125′,
buttonIcon: null,
buttonIconWidth: ’64px’,
buttonIconHeight: ’64px’,
removeIcon: false,
removeAbout: false },
necessaryCookies: ( ‘wordpress_*’,’wordpress_logged_in_*’,’CookieControl’,’PHPSESSID’,’fivc’,’fivs’,’fivp’,’Ookie’,’Fool_subinfo’,’_gads’,’_gid’,’_gat’,’_ga’,’__utma’ ),
optionalCookies: (
{
name: ‘Sharing’,
label: ‘I would like content tailored to my personal preferences.’,
description: ‘We work with advertising partners to show you ads of products and services you may be interested in. You can choose whether or not to have ads delivered in a personalised way by setting this option. You can return to review this setting at any time by clicking the "C" logo in the bottom left corner of any page.’,
cookies: ( ‘_ga’, ‘_gid’, ‘_gat’, ‘__utma’, ‘_gads’ ),
onAccept: function () {
// Add Facebook Pixel
!function(f,b,e,v,n,t,s)
{if(f.fbq)return;n=f.fbq=function(){n.callMethod?
n.callMethod.apply(n,arguments):n.queue.push(arguments)};
if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version=’2.0′;
n.queue=();t=b.createElement(e);t.async=!0;
t.src=v;s=b.getElementsByTagName(e)(0);
s.parentNode.insertBefore(t,s)}(window,document,’script’,
‘https://connect.facebook.net/en_US/fbevents.js’);
fbq(‘init’, ‘901682110316659’);
fbq(‘track’, ‘PageView’);
fbq(‘consent’, ‘grant’);
// End Facebook Pixel
// Enable Google ad personalization
// gtag (‘set’, ‘allow_ad_personalization_signals’, true ) ;
},
onRevoke: function () {
fbq(‘consent’, ‘revoke’);
// Enable Google ad personalization
// gtag (‘set’, ‘allow_ad_personalization_signals’, false ) ;
},
recommendedState: ‘on’,
lawfulBasis: ‘consent’,
},
),
statement: {
description: ”,
name: ”,
url: ‘https://www.fool.co.uk/help/privacy-and-cookie-statement/’,
updated: ”
},
};
CookieControl.load(config);