Why the UK Stock Market Has Gone Nowhere for 24 Years

An analysis of the Diamond Strategy's performance on the FTSE 100 Index from 2002 to 2023 reveals the following results:

England, the leading nation in the United Kingdom, has a long history of being a trailblazer. It’s the origin of liberalism, the industrial revolution, trains, standardized time, the abolition of slavery, and soccer, among many other world-changing ideas. Yet, for a country that championed global engagement, its recent decision to disconnect from its main economic partners feels like a sharp turn. Since the 2016 Brexit vote, the UK’s economy has largely flatlined, with most indicators trending downward. The long-term consequences of this self-imposed isolation are still unfolding.

This economic uncertainty has created a grim picture for . It's disheartening to see the world's sixth-largest economy post such disappointing returns. As of June 30, 2023, the FTSE 100 index was at 7,531.5 points. That’s only an 8.5% increase from its peak of 6,950 points way back in 1999. It’s genuinely puzzling that after twenty-four years, the country’s biggest companies are valued at roughly the same level on the . When you factor in inflation, their value has actually decreased, which should raise a few eyebrows for anyone in the region.

The pandemic-era buying signal tells an even starker story. Out of 14 global indices analyzed, the UK signal produced the weakest positive return. This points to a severe lack of investor confidence in the country's ability to thrive outside the European Union. For comparison, Greece—a country that fought to stay in the EU—saw its generate an annual return of 26.2% from a similar pandemic signal. The UK’s return was a meager 6.4%. For those looking into , this contrast is a powerful lesson in how political decisions impact market sentiment.

Overall, our strategy in the UK yielded an average annual return of just 2.64%, the second-lowest among all 14 indices studied. Despite this weak performance, the investment still grew by 47.6% overall. It’s a positive result, but it's far from stellar and highlights the challenges of in a stagnant market. It reminds us that at its core, is about navigating these very challenges to find growth.

The performance of markets like the UK's sends a clear message: many European stock markets are in desperate need of a new approach. The old strategies simply aren't delivering the kind of growth investors are looking for, and no economy demonstrates this better than the United Kingdom.