It is interesting to note that the FTSE 100 has made a new all time high (yet another market doing better than our own). The FTSE presents an interesting lesson in how markets can behave and how long it can take for a market to recover. The FTSE made a new all time highest close in December 1999 but it didn’t breach that mark for another 15 years when it briefly flirted with new highs for a few weeks before falling again. It then took 9 months to recover to the new highest close. What is interesting is the amount of time it took to move beyond the 1999 mark. This has undoubted implications for index traders, particularly those who buy ETF’s. Index ETFs have a few strong selling points – you will generally always beat active managers over the long term and you will do so at very low cost. However, it can be a long time between drinks if the index decides to go nowhere for decades.
It will be interesting to see if participants hold their nerve.