It seems to me that a UK stock market investor just buying and holding the FTSE-All Share Index has put up with a lot of ups and downs, and a lot of stress, for pretty meagre returns on their money.
One of the most brutal lessons of the current downturn is how bad the performance of UK stock market indices have been. Bothe FTSE 100 and FTSE 250 have taken a real beating and have fared worse than the S&P 500 in the US. The FTSE 250 as of 25th March had fallen by 35.5 per cent since the start of the year, compared with 26.5 per cent for the FTSE 100 and 23.5 per cent for the S&P 500.
I know this flies in the face of current conventional wisdom, but what I think we have seen in both the upturn and now in the downturn is a good case for selective stock picking. It’s no guarantee of not suffering periods of painful performance but buying good companies, that have the capability to grow their profits at fair prices, is an approach that is likely to deliver the best returns going forward.
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