Why Invest in the London Stock Exchange Despite No Growth in the Last 15 Years?

That is a unique question, Ozkan. For most investors, the stock market and the economy are inextricably linked. This idea can be forgiven because the financial news media goes to great lengths on a daily basis to tie the movements of the market to economic events. The economy is enormous, including thousands of companies, millions of workers, and billions of dollars. The factors that go into moving it forward or holding it back are numerous. However, a stock is dependent on one very specific micro factor -- supply and demand. For each publicly traded stock, there are only so many shares available to be traded. The more in demand those shares are, the higher the price of the stock. So you can easily get a situation where the economy as a whole is stagnant, yet the shares of a moderately successful company are in short supply, causing the stock to rise despite what is happening in the overall economy.

Understanding the London Stock Exchange's Growth

Now, regarding your question, the FTSE 100 has seen remarkable growth. Founded in 1984 at an index base level of 1000 points, the FTSE 100 today trades at 6500 plus points, aggregating an overall growth of 650%. That means the value of the stock of the top 100 companies has increased by more than seven times. The index, maintained by the FTSE Group, a subsidiary of the London Stock Market Group, shows that the overall growth extends beyond just the index as a whole.

Examples of Growth

Let's take a closer look at some specific examples. The share price of the London Stock Exchange Group (LSE) was 1222.08 pounds on February 22, 2013, and as of February 16, 2018, it is now 4050.00 pounds. This represents an increase of 3000 pounds in the span of five years! And most other companies listed on the London Stock Exchange exhibit similar growth patterns. Despite the FTSE 100 not increasing in value significantly, individual companies remain attractive investments for those who believe the company will grow, generate more profits, and issue higher dividends.

Why Investors Still Opt for the London Stock Exchange

Investors still flock to the London Stock Exchange for numerous reasons:

Investment in individual companies: While the FTSE 100 index may not show consistent growth, individual companies within it can show substantial growth. This diversity allows investors to focus on companies that may be thriving despite economic challenges. Capital growth potential: Despite general market conditions, some companies can still demonstrate strong performance, offering capital growth opportunities to investors. Income generation: Many companies on the London Stock Exchange pay dividends to their shareholders, providing a steady income stream, regardless of market conditions.

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