We all thought that it was the FTSE 100 index that was the laggard. While the Dow and S&P indices in New York and those for medium and smaller quoted companies in London set new records more than a year ago, the Footsie took until last month to beat its closing peak at the end of 1999.
However, the real slouch was the Nasdaq. That is not surprising, as this stock market is all about technology companies, the sector that created the boom and bust around the millennium. Only this week has the Nasdaq index reached a new high.
It is a symbolic moment. At last we can put the crashes of 2000 and 2008/9 behind us. Once again we can see the merits of stock market investing. To rub in the message, gold has again fallen below $1,200 an ounce.
The London stock market is holding up well despite the uncertainties of the General Election and the continuing travails in Greece. We can look forward to more records all round.
We shall soon be hearing the annual nonsense about sell in May. If shares do fall next month, that will be a buying opportunity. The spring trends tend to continue through summer. The FTSE 100 index will be higher come St Leger day than it is now.
Lloyds has its Limits
So 80p continues to be the limit as far as Lloyds (LLOY) shares are concerned. Once again the government has taken the opportunity of a small rise in the bank’s share price to dump another load of shares, this time 742 million at about 78p.
On the negative side for shareholders like myself, we are likely to see further sales every time the shares nudge higher, whatever the outcome of the General Election. So we will not get above 80p for several months at best.
On the positive side, another 1% has gone, taking the government stake down to just under 21%. Almost half the original 41% holding is back in private hands. Better still, the appetite among financial institutions for Lloyds shares is undiminished. Buyers are prepared to come out of the woodwork despite the overhang.
The shares have been going sideways around 75p for the past two years and will probably continue to bump around just below 80p for some months. However, if you are thinking of buying, don’t leave it too long. The upward whoosh, when it comes, will be quite dramatic.
Clothing Retailer has French Dis-connection
It’s best part of 20 years since French Connection (FCCN) hit on the jolly wheeze of putting what looked like a naughty word across the front of its T shirts. Sales soared and so did the shares.
Then we all grew up and put juvenile humour behind us. All, that is, except French Connection itself. The retail chain stuck with the “joke” long after anyone else thought it was funny and it has never since come up with anything to catch the public attention.
In today’s highly competitive High Street, few people take any notice of a brand that has had its day. The company in November that sales were down but shareholders reading the full year results issued in March could be forgiven for thinking that the business was improving. There was even a hint that the dividend could be restored soon.
Now the board says that the challenging conditions reported at year end continued through Easter and profits will be materially below market expectations. In my view the board failed dismally to convey how bad things were just five weeks ago.
The shares fell 8p to 45p on the warning. They were 20p three years ago and are heading back below that some time soon.
Rodney Hobson is a long-term investor commenting on his own portfolio; his comments are for informational purposes only and should not be construed as investment advice. His views are not necessarily the views of Morningstar UK.
