From: "Norman Wells" 
Newsgroups: uk.finance
Subject: Re: maxi-ISAs with online share dealing facilities - which?
Date: Wed, 12 Sep 2007 15:07:16 +0100
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"John Boyle"  wrote in message 
news:MAnH2TCvK65GFwKL@johnboyle1.demon.co.uk...
> In message , Norman Wells 
>  writes
>
>>> Now, perhaps you can tell us how the FTS100 statistic is relevant to the 
>>> point?
>>
>>For the very simple reason that, if you own or invest in a range of UK 
>>shares, they will on average tend to perform in line with the FTSE 100 
>>index.  The more different shares you or your fund manager invests in, the 
>>closer your portfolio's performance will be to that index.  And most fund 
>>managers, being scared of returning a poor result, will invest in a range 
>>of shares, and they will all return very similar performances, close to 
>>the index, as a result.  The herd instinct protects them all.
>>
>>The only way of significantly outperforming the index is to invest in just 
>>one or two shares, and hope they outperform.  However, that carries the 
>>obvious risk that they will underperform, and you lose out big time. 
>>That's too risky for nearly all fund managers and individual investors who 
>>see it as gambling, pure and simple.
>>
>>So, an average investor in most UK funds since the end of 1999 will have 
>>seen the capital value of his portfolio fall by about 10%.
>>
>>It's not good, is it?
>>
> Your theory would be more accurate if you had chosen the FTSE All Share, 
> or even the FTSE 250, but not the FTSE100.

Since the FTSE 100 amounts on its own to about 80% of the market 
capitalisation of the whole UK stock exchange, and is the index most 
commonly used, it's quite good enough.

There's no getting away from it, the performance of the stock market over 
the last 8 years or so has been pitiful, and investment in it, apart from by 
the lucky few, has been a surefire way to lose money.