What 327 Years Of British Equity History Can Teach Us About Investing

15th February 2019

I’m always banging on about how we need to look at the big picture and consider investment returns over a very long-term. Now, thanks to Global Financial Data, we can look at the return on UK investments all the way back to 1692!
The link at the bottom will take you to the long and technical (but fascinating…honest!) article that describes how they have measured this performance and what they have found. But, ever helpful, I have picked out some highlights that I thought were particularly interesting and can teach us so much about investing for the long-term.
  • The annualised return on UK equities over the last 327 years has been 6.72% – be realistic in your expectations
  • Of this total return only 2.00% is due to price increase and 4.63% is due to dividend payments – short-term fluctuations in value are really not that important
  • Equities have returned 2.29% p.a. more than bonds over this time period. Doesn’t sound much as a percentage, but on £1,000 invested in 1692 would be a difference of £1,642,288 now – small differences, compounded over many years, become BIG differences
  • The best period was between 1981 and 2000, when the UK market increased by 1125% – appreciate the good times…
  • In contrast, between 2000 and the end of 2018, the FTSE100 decreased in value – …but don’t get too used to them. Everything moves back towards the long-term average in the end (reversion to the mean)
  • There have been 26 bear markets in the last 327 years – on average one every 12.5 years – bear markets and corrections are perfectly normal functions of the market. Next time won’t be any different
  • The average decline during the bear markets has been 39%. The average increase during the bull markets has been 161% – equities returns go up a lot more than they go down

Table of returns

 

 

 

 

 

 

 

Stocks for the Very Long Run: The UK-100 and 327 Years of British Equity History

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