The FTSE 100 reached an all-time high in March breaching the 7000 mark, surpassing its previous peak achieved on the eve of the millennium when, fresh from university, I started working in the City of London. This illustrates that it can take a long time for the stock market to recover from a crash like the bursting of the tech bubble. But is it really representative of an investor’s experience since 1999 – have we been treading water for sixteen years? In short, the answer is no.
A more realistic measure of the investment return of UK’s largest listed companies is the total return, which includes the reinvestment of dividends. By that measure, £100 would have fallen in value after the dot.com crash but would have recovered its original £100 value by the end of 2005 and since then grown to c£168.