So, hot on the heels of my last blog, I thought I’d open with a discussion I was having with my boss today – why are we all so bothered about the FTSE?
You can hardly tune into a news bulletin these days without hearing about the FTSE doing something exciting – “dipping below 5000, woe is me”, or “huge rise, recovery back on track”. Yet look outside the window, we can all see businesses closing down (though thankfully not mine!!), services being cut back, so why does the fluctuations of the FTSE matter?
The FTSE is one indicator (among many) of how the overall stock exchange is performing. Anyone with any pensions or stocks ISAs should keep an eye on how the stock exchange performs, and yes, over recent years, it has dipped compared to the highs of a few years ago.
But the stock exchange is currently a crazy beast, rising on hopes that Greece will get a bailout and falling on fears that the Euro is going to go bust. It depends on emotions, more specifically the emotions of investors, who have to decide where to invest our retirement funds and rich people’s fortunes to ensure the money will keep growing – or at the very least, not lose value. Rich people tend to be upset if their investments go down in value, you know.
And maybe that’s the point. Movement in the stock market indicates how confident these investors are. But investors aren’t economists, they aren’t concerned overall with how an overarching economy is performing, just specifics such as currencies and companies. Where is the growth? That’s what drives them.
So the FTSE is just an easy indicator for a news editor to graphically demonstrate how an economy is performing. The problem is that more and more people are using the FTSE movements as a metaphor for economies. It isn’t. Just a symbol, a symptom among many, of how life is for us in this current age of austerity.
So should we care about the FTSE, is it really relevant? It’s a quick gauge of where the money is going, and currently, money isn’t really going anywhere. Including, unfortunately, not into our public services or pockets. Not enough, anyways.