Footsie Index

Picture of Footsie Index.

The Footsie Index officially known today as FTSE 100 Index is a share index that contains 100 highly capitalized companies in the United Kingdom. This index started with a base of 1000 in 1984 and reached its highest level of 6950.6 in 1999. The footsie index is frequently reported in news bulletins and is a measure of business prosperity. This index is managed by an independent company known as the FTSE group.

Footsie Index is a result of a joint venture between the London Stock Exchange and Financial Times. It is published every 15 seconds and calculated in real time. These 100 companies are used to indicate the status of UK’s market.

When they go down especially in times of economic crisis, you can know that the country is facing challenging economic times. The Footsie index also comprises of the FTSE 250 companies which follow the first 100, and then we have the FTSE 350 which is an aggregation of the first 100 and the 250 companies. FT 30, is the oldest index in the UK which started in 1935. The companies under this index are from industrial and commercial sectors. Of all the companies in the list, Imperial Tobacco has been a top performer.

The largest constituents of the Footsie index as of December 2008 were Royal Dutch Shell, Vodafone Group, HSBC Holding and BP. These indexed companies were valued at more than 60 billion pounds. Before a company can join the FTSE it must first pass the requirements set by FTSE group. After passing this, they will be asked to add the initials ‘PLC’ at the end of their name which stands for public limited company.

If you keep track of the stocks during the last 18 months you will be astonished at what is happening. Stock markets in almost all countries have been battling the credit crunch while western countries have faced major recession. Companies that have been known to stand out have watched their share prices crumble. If you take a look at the Dow Jones in the United States for instance you will notice it is trading at the lowest level ever since 1997. Currently the Footsie Index in the United Kingdom is at a six year low.

At this point, people are wondering if things will improve and when will that happen. A low Footsie Index affects every citizen and therefore when is help coming? Some of the most intelligent investors today, seem not to have a real answer. All we can do is speculate when the economy and the Footsie index will come up. One writer who invests in funds from different regions in the world rather than single shares speculates the following;

‘If you are investing in for example the Latina American Fund, Indian Fund, Emerging markets Fund, China Fund, Russian Fund and smaller UK Companies Fund you have the option of taking advantage of pound cost averaging’. A term used frequently in the United Kingdom when you invest on a monthly basis.
When the funds unit prices are low like it is right now, your monthly premiums will purchase twice as many units every month compared to last year.

Therefore when the prices rise sometime in the future, you will benefit. From someone who is not a ‘financial advisor’ and is wondering what next, I would say there is hope that the Footsie index and Dow Jones will come up in the next few years.

Currently, investors and financial advisors predict that the Dow will fall as low as 5800 while the FTSE 100 will fall to 2950 before we can see improvement in the world economy. When markets fall this low, the common citizen will not be able to afford gas, fast foods and buying luxury items like top of the range cars. Whether you invest in the stock markets or not, have an idea of what takes place there.

This way you can predict when to save money and when to indulge in spending.Although the economic downturn has affected the stock markets, you can still invest in some companies that are starting to progress. Best Buys stock markets have doubled in the last few months, Master Card on the other hand has a limited credit risk, and Dollar Tree has successfully battled the recession.