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Over latest years, there have been occasions when the FTSE 100 index of main UK shares has seemed low cost to me.
Throughout sudden market turbulence, like we noticed in 2020, the main share index has all of the sudden seemed like doubtlessly nice worth. Such a chance might solely come round as soon as a decade, and even much less typically.
This yr, the FTSE 100 has put in a robust efficiency. Certainly the blue-chip index has repeatedly set new all-time highs.
So, may the chance for some actual bargain-hunting have handed?
I proceed to see alternatives!
I don’t assume 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.
Somewhat, I evaluate a share worth with what I feel the enterprise shall be value many years for now, as soon as permitting for the chance value of tying up my cash within the interim.
On prime of that, I’m not shopping for the index, for instance, by investing in an index tracker fund.
As an alternative, 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 robust yr, that doesn’t imply all the businesses in it have had a very good 2025. Some have seen their share costs drop sharply.
Seeking to the long run
Take Diageo (LSE: DGE) for example.
For years I had preferred this enterprise. Proudly owning beers reminiscent of Kilkenny and a broad portfolio of premium spirits reminiscent of 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} sensible transfer? Solely time will inform.
I’m upbeat concerning the long-term outlook for the enterprise. However the share worth fall displays Diageo’s altering enterprise setting. Youthful customers are much less fascinated by alcohol, posing a threat to future gross sales volumes and revenues.
Extra instantly, Diageo is battling different dangers together with tariffs consuming into income and financial weak spot hurting demand for costly white spirits manufacturers.
Good alternatives within the inventory market can come up when completely different buyers 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 could possibly be that Diageo’s market has essentially modified and its glory days are behind it. In that case, my buy of the FTSE 100 share may not be the nice discount I feel it’s.
Hopefully, although, the drinks big can efficiently navigate a altering market. I plan to hold onto my Diageo shares for the long run on that foundation.
