In 2019, in his first speech as Prime Minister, Boris Johnson said:
“The doubters, the doomsters, the gloomsters, they are going to get it wrong again. The people who bet against Britain are going to lose their shirts.”
What a masterful statement! The first six words are rather good, but I am especially impressed by the subtle insertion of the word “again”.
In the late nineteen-eighties, I moved from the public to the private sector. The salary seemed generous but the pension provision not so good. As I could no longer add to my so-called “gold plated” public sector scheme, I needed to make my own provision. I joined a private pension scheme and started to take an interest in stock markets.
In those days the global share indices were not dissimilar. In Britain the FTSE100 was at 2144, in America the Dow Jones Industrial was at 2679, and in Germany the DAX30 was 1366.
As I write this, the FTSE is 7138, the Dow 35,369 and the DAX 15,781.
In other words, since 1990, the value of the FTSE is now 3.3 times what it was in 1990, while the Dow has multiplied 13.2 times and the DAX 11.5 times.
So £5,000 invested in 1990 would now be worth about £16,500 in the FTSE, £65,000 in the Dow and £55,000 in the DAX.
In fact, the Dow Jones and DAX have done as well over the last ten years as the FTSE100 over the last thirty.
Here it is as a graph showing how they multiplied over the years:
This doesn’t tell the whole story. In 1990 the pound was worth 1.7 dollars. Today it is around 1.4, so the £65,000 would be worth more like £79,000 taking into account the exchange rate. Similar factors apply to the German stock market. When the Euro was introduced in 1999 it was worth £1.40 compared with £1.17 today.
You can argue about this until the cows come home – for example that it doesn’t take into account rip-off fund management fees, that the constituent companies in the indices have changed, that FTSE companies pay higher dividends and that the Dow Jones contains more technology stocks and fewer traditional industries – but the numbers must surely be indicative of the economic wealth, health and confidence of the three countries.
So much for “get it
wrong again.” Does it look as if those who waged bets against Britain lost their shirts?
Should we now be switching funds to Britain in readiness for the great catch up? I don’t think so.
Fortunately, I put a good chunk of pension into international funds. And as I later re-joined the public sector, I’ve had the best, and worst, of both worlds.