FTSE 100 Analysis Year to Date; First three months data back to 1984.

On putting together this post I was actually quite surprised with the numbers it produced.  Being an avid market watcher (maybe not as good as I believe!), my initial reaction would have been that we have had quite a dreadful year to date on the FTSE 100.  The main reasoning behind this was the amount of doom and gloom that seems to have been generated in the media.  I recollect headlines of this being the worse start to the market in the past 30 years, etc., etc.  However, on crunching the numbers, all is not as bad as it first appeared.

The year started out at 6,242.3, and, as of Fridays close (04/03/16), the FTSE 100 was at 6199.4.  This means that the index for the year to date has fallen by 42.9 points equating to 0.69%.  This cannot now be considered to be the worst start to the year.  Indeed the table below shows other years where far more pain was inflicted, for example in 2009.  It must be a case where all the bad news is reported, but the good news gets pushed to the wayside.

In fairness to balance up the argument, the lowest point for the FTSE 100 in 2016 was reached on 11/02/16 at 5537.0.  At this time it represented a fall in the index for the year of 705.3 points equating to a loss of 11.3%.  This number is quite striking, and, is over the magic 10% correction territory; however, it shows how quickly the market can turn itself around to recover.  A good strategy would have been to buy when the magic 10% had been achieved.

With regards to the markets position in relation to the last all time high which was achieved on 27/04/15 at 7104.0, we are now 904.6 points below this which represents a 12.7% fall.  At the low point on 11/02/16, the FTSE 100 index stood at 22% lower than the previous all time high, thus representing heading into bear market territory.

I have provided below some data on how the market has performed I the first three months in previous years back to 1984.

Year January February March 1984 -1.20% -2.14% 6.94% 1985 3.94% -1.65% 1.37% 1986 1.59% 7.59% 8.09% 1987 7.70% 9.45% 0.93% 1988 4.49% -1.23% -1.49% 1989 14.43% -2.41% 3.63% 1990 -3.52% -3.50% -0.33% 1991 1.25% 9.70% 3.18% 1992 3.13% -0.35% -4.76% 1993 -1.38% 2.17% 0.37% 1994 2.15% -4.69% -7.26% 1995 -2.41% 0.59% 4.27% 1996 1.90% -0.84% -0.75% 1997 3.82% 0.76% 0.11% 1998 6.29% 5.66% 2.86% 1999 0.23% 4.73% 1.95% 2000 -9.55% -0.57% 4.94% 2001 1.21% -6.03% -4.80% 2002 -1.01% -1.24% 3.35% 2003 -9.47% 2.47% -1.16% 2004 -1.93% 2.31% -2.37% 2005 0.79% 2.39% -1.49% 2006 2.52% 0.54% 2.99% 2007 -0.28% -0.51% 2.21% 2008 -8.94% 0.08% -3.10% 2009 -6.42% -7.70% 2.51% 2010 -4.15% 3.20% 6.07% 2011 -0.63% 2.24% -1.42% 2012 1.96% 3.34% -1.75% 2013 6.43% 1.34% 0.80% 2014 -3.54% 4.60% -3.10% 2015 2.79% 2.92% -2.50% 2016 -2.54% 0.22% Rises 18 20 18 Falls 15 13 14

Due to the size of the recovery so far this year, it feels like there is the chance for another correction in the index.  Presently there appear to have been a number of profit warnings, with the resultant cut in the associated dividend.  Only time will tell, but another dip could provide a buying opportunity, but maybe only for part of any investment funds available.

At the end of the day we all make and take responsibility for our own investment decisions, and, as such I provide this data for information only as a means of debate.  It should not be used for any investment decisions you make.

As always I will be interested in your views and comments.

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