I had a sense of disorientation when I saw the FTSE 100 flashing 6935 this morning.
I’ve got so used to noting that the index still hasn’t recovered its peak of 31 December 1999, when it topped out at 6930, that I was shocked to see that it had finally got there.
I reckon that’s understandable. We have been waiting for this moment for more than 15 years.
Mile High
I’m both surprised and delighted to see the FTSE 100 finally overtake that embarrassing milestone.
Or rather, millstone, because people who still believe in the power of equity investing have had to repeatedly explain why the benchmark UK index had suffered such an apparently rotten Millennium.
Some people wrongly assumed that because the headline number was lower than in 1999, investors had only lost money since then.
That clearly isn’t the case at all.
Yield Of Dreams
First, no investor will have thrown all their money in at the top of the stock market.
Most will have fed in money both before and after that date, when the index was trading at far lower levels.
Those who invested at market lows in the wake of the technology crash and credit crunch may have more than doubled their money.
The critics also neglect the power of dividends, which aren’t measured by the headline index figure, but will have delivered almost half your investment returns over the past 15 years if you reinvested them for growth.
The FTSE 100 total return index, which includes both share price growth in dividends, is up 66% over the Millennium. £10,000 invested on 31 December 1999 would be worth £16,694 today, with dividends reinvested.
So today’s apparent milestone isn’t anything of the sort.
But I’m still enjoying it, though.
Foolish But Fun
Motley Fool writers have a tendency of saying that investors shouldn’t be distracted by meaningless headline numbers, like today’s all-time high. And technically, of course, they are correct.
But on a human level, I find there is unquestionable emotional satisfaction in seeing the index break new ground.
It sheds the aura of stagnation (however misleading that was), and holds out the promise of further fun to come.
Next Stop 7000
So I promise to be equally surprised and delighted when the FTSE 100 breaks 7000, as it surely will. It may take time (the index has retreated slightly after hitting this morning’s high), but it will get there soon enough.
And when it does, those who still believe in the long-term power of stock market investing will have a fresh story to tell, and more people will be listening.