Why Footsie is not at 9000

Article Abstract:

Returns from UK stocks are higher than returns from UK government securities (gilts) and this is explained by the equity risk premium. Equities involve a higher risk, so returns are higher to compensate for this. Over a period of ten years or more, the risk appears to vanish, and returns from stocks have been more stable than returns from gilts in the two years to 1997. This does not mean that risk has vanished. Stock prices tend to drop more rapidly than they rise, and two years of stability does not mean that returns from stocks will be stable forever.

---

The Footsie can rise, but the ride won't be smooth

Article Abstract:

The domestic economy is slowing in the United Kingdom, while external demand is affected by the economic problems of Asia. The market could still be pulled higher by sectors such as telecoms, food retailers and financials, but this will invove no major setbacks in these fields. A narrow group of stocks has helped to push up the US S and P 500 index, and index funds follow. There are arguments for investing in mainland Europe, especially given that investment for pension funds is likely to increase in Europe.

Wall Street, Western Europe

---

The Footsie's quiet divorce

Article Abstract:

Stock prices and those of government securities have tended to be linked, but the correlation between both sets of prices has disappeared. This appears to be because dividend growth and the equity risk premium have come to have a more important impact on stock prices. This may be temporary since stock price crashes and rises thereafter are linked to swings affecting the equity risk premium. The low correlation may reflect a view that inflation will continue to be low.

United Kingdom, Securities

Similar abstracts:

• Abstracts: If Footsie falls.... Footsie's invisible defence
• Abstracts: Buying time in retirement. Waiting for the bubble to burst. Employees move into the driving seat
• Abstracts: The corporate skyline. Still on the drawing board
• Abstracts: High Street slowdown. The consumer dog that didn't bark. UK retailing: buying time
• Abstracts: Handle with care. Rewards for the grim reapers. 'Get big or get niche.'(niche management consultants in the UK)

This website is not affiliated with document authors or copyright owners. This page is provided for informational purposes only. Unintentional errors are possible.