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Over latest years, there have been instances when the FTSE 100 index of main UK shares has regarded low cost to me.
Throughout sudden market turbulence, like we noticed in 2020, the main share index has out of the blue regarded like probably nice worth. Such a chance could solely come round as soon as a decade, and even much less typically.
This yr, the FTSE 100 has put in a powerful efficiency. Certainly the blue-chip index has repeatedly set new all-time highs.
So, would possibly the chance for some actual bargain-hunting have handed?
I proceed to see alternatives!
I don’t suppose so.
Partly that’s as a result of I take a long-term method to investing. So I’m not evaluating inventory costs in the present day with what they have been a month in the past or a yr in the past.
Moderately, I examine a share worth with what I feel the enterprise might be price many years for now, as soon as permitting for the chance price of tying up my cash within the interim.
On high of that, I’m not shopping for the index, for instance, by investing in an index tracker fund.
As a substitute, I personal a portfolio of particular person shares. I purchase or promote every primarily based on my evaluation of the long-term prospects for the enterprise involved.
Whereas the FTSE 100 index has had a powerful yr, that doesn’t imply all the businesses in it have had an excellent 2025. Some have seen their share costs drop sharply.
Trying to the long run
Take Diageo (LSE: DGE) for instance.
For years I had preferred this enterprise. Proudly owning beers similar to Kilkenny and a broad portfolio of premium spirits similar to Smirnoff, Diageo has had giant revenues, enticing revenue margins, and distinctive property.
That in flip helped it fund a rising dividend. Diageo’s monitor file of annual will increase in its dividend per share stretches again many years.
For a very long time, although, I preferred this FTSE 100 enterprise – however not its share worth.
That modified this yr. A falling Diageo share worth gave me a chance so as to add the corporate to my portfolio.
Was {that a} good transfer? Solely time will inform.
I’m upbeat in regards to the long-term outlook for the enterprise. However the share worth fall displays Diageo’s altering enterprise setting. Youthful shoppers are much less curious about alcohol, posing a danger to future gross sales volumes and revenues.
Extra instantly, Diageo is battling different dangers together with tariffs consuming into earnings and financial weak spot hurting demand for costly white spirits manufacturers.
Sensible alternatives within the inventory market can come up when completely different traders have a really completely different view a few enterprise’s long-term prospects. Crucially, that doesn’t imply that each such scenario is a superb alternative.
It may very well be that Diageo’s market has basically modified and its glory days are behind it. In that case, my buy of the FTSE 100 share may not be the good cut price I feel it’s.
Hopefully, although, the drinks large can efficiently navigate a altering market. I plan to hold onto my Diageo shares for the long run on that foundation.
