Buyers usually consider the blue-chip FTSE 100 index of main shares as staid, if not boring.

However over the previous 5 years, the index has moved up by 60%.

That’s fairly racy development for a group of companies a few of which – like Authorized & Normal – have been in operation earlier than Queen Victoria ascended to the throne.

What’s going on?

Mature markets will not be at all times calm

Should you solid your thoughts again to the place you have been and what you have been doing 5 years in the past, then issues might change into extra apparent.

That March, markets had crashed as the worldwide pandemic took maintain. So trying on the previous 5 years flatters the long-term efficiency of the FTSE 100 on account of an abnormally low baseline.

If we prolonged the timeframe simply a few months longer, to January 2020, the expansion would have been solely 13% till now. That’s nonetheless development – however a great distance wanting 60%!

Nonetheless, I believe there’s a worthwhile lesson right here from which an investor can presumably revenue. Even a staid-seeming index of mature companies can see its price swing wildly inside a reasonably small timeframe.

Shopping for when the market is racked with doubt

It takes a courageous investor to wade into markets when hordes of individuals are promoting.

Generally, a crash could be overdone. However for some shares, a price crash is extremely rational, because the market is assessing the potential future affect on its enterprise of no matter has precipitated a sudden market downturn.

Take Saga for example. Its share price started 2020 at over £7. Because the market realised that pandemic-inspired journey restrictions may very well be catastrophic for an organization promoting cruises to pensioners, the share fell nearer to £2 in March 2020. At this time, although, it’s even decrease.

So, shopping for in a market crash could be like attempting to catch a falling knife. Regardless of how low a share price (any share price) goes, it might probably at all times go decrease.

However moments of market frenzy can even throw up nice bargains.

18%+ yield from a FTSE share

At this time, FTSE 100 asset supervisor M&G (LSE: MNG) has a yield of 9.2%. That could be very interesting to me — among the many highest within the index.

Just below 5 years in the past, although, the M&G share price had collapsed to round 51% of its present stage. Not solely does that imply that somebody investing then would now virtually have doubled their cash (on paper), however they might even be incomes an annual dividend yield of over 18%.

For a blue-chip FTSE agency that has a coverage of sustaining or elevating its dividend per share yearly, an 18% yield is wonderful.

After all, dividends are by no means assured and we’ll discover out this Wednesday (19 March), when M&G releases its 2024 outcomes, whether or not the dividend has grown additional.

Simply as in 2020, there are dangers for the asset supervisor. Within the first half, purchasers withdrew extra funds from the core enterprise than they put in. If that continues, it may damage earnings.

Nonetheless, for a confirmed enterprise with thousands and thousands of consumers, M&G’s share price 5 years in the past appears like a cut price at this time!

Sure, that’s the good thing about hindsight.

But it surely additionally explains why I’m making a listing of FTSE shares now I want to snap up if one other market crash sends them sinking!