COMMENT
FTSE 6,000 Winners And Losers
By
Maynard Paton (TMFMayn)
March 21, 2006
Last week saw the FTSE 100 finally top the 6,000 mark for the first time since 8 March 2001. During the intervening five years, the blue-chip index essentially plunged 45% to 3,287 and then rebounded 80% to its present level. But many big-name shares have diverted significantly from the index over this time.
The following tables list the top ten FTSE 100 winners since 8 March 2001, in terms of both percentage change and FTSE points.
(*following promotion into index)
(*until acquisition)
The following tables list the top ten FTSE 100 losers since 8 March 2001, again in terms of both percentage change and FTSE points.
(*until demotion from index or acquisition)
(*until demotion from index or acquisition)
Here's what I found of interest within all this five-year data:
* More winners than losers: Of the 151 different shares that have enjoyed FTSE 100 status since 8 March 2001, 99 reported a capital gain during their stint. With two-in-three FTSE shares therefore doing well in what has essentially been a flat five-year market, I reckon a random equal-weighted portfolio should have beaten the index in that time.
* Losers concentrated in TMT: The largest losers were undoubtedly those directly exposed to the 2001/2 collapse of the technology, media and telecom bubble. Indeed, Vodafone's massive 250 points loss demonstrates how over-valued mega-caps can hamper the market's performance for years.
* Fresh blood brings big winners: Five of the top ten percentage winners were promoted to the FTSE 100 after March 2001. So it seems to me the index's promotion/demotion system is a key part to maintaining returns, whereby winning companies are left to run and struggling companies are cut loose.
* Old favourites still disappointing: Steady industries such as pharmaceuticals, banking and catering each had representatives among the largest losers since March 2001. Indeed, popular names such as AstraZeneca (LSE: AZN), J Sainsbury (LSE: SBRY), Lloyds TSB (LSE: LLOY) and what is now Royal Dutch Shell (LSE: RDSB) have not troubled capital gains calculators since the previous FTSE 6,000 either.
Now what?
Clearly buying individual blue chips could have provided you with a much better or a much worse performance since the last time the FTSE was seen above 6,000. However, for most people, collectively buying the market through a low-effort index tracker remains the easiest to way to harness the proven long-term rewards of the stock market. In the short- to medium-term though, there are plenty of upbeat forecasts for FTSE 7,000 and a visit to the Fool's index tracker centre will explain how you can prosper from today's bull run.
But if you want to try and beat this market, investigate Champion Shares free for a month. At the last count, the shares recommended by Champion Shares had averaged a 17%* gain in comparison to a 11%* market return. There is no obligation to subscribe to Champion Shares and, for a short time only, new subscribers will receive a free investment book and 20% off the usual annual price.
For more on the prospects of today's market, read:
"FTSE 100 Hits New All-Time High" by Maynard Paton
"Where Next For The FTSE?" by David Kuo
"Ten Facts About Booming Blue-Chip Dividends" by Maynard Paton
*Dated 20 March 2006, Champion Shares performance figures are based on mid-prices taken at the time of recommendation and include due dividends and exclude costs. Maynard owns shares in GlaxoSmithKline and contributes regularly to an index tracker.
