Size Matters

We invest in shares of many different sizes. Nucleus for instance is worth about £110,000,000 (£110 million). Together we own £1,250,000 worth of shares (£1.25 million). We therefore own about 1% of their shares. Together we could buy 75% of Nucleus, but that would be putting all of our eggs in one basket.

The largest share in the UK right now is Astra Zeneca at £110,000,000,000 (£110,000 million or £110 billion). So Astra Zeneca is 110,000 times larger than Nucleus. Together we own £2,100,000 of their shares (£2.1 million). Thankfully they have many more drugs in their pipeline, other than the recently stalled Covid-19 vaccine. We own only an infinitesimal amount of their shares between us.

Astra Zeneca is the largest component of the FTSE 100 index. It accounts for 7.2% of the index which in turn tells us the overall size of all 100 shares. The FTSE 100 index currently stands at £1,527,778,000,000 (£1,527,778 million or £1,527 billion or £1.5 trillion)

Comparisons

These numbers tell us something about market indices. If you have been a client for sometime you will remember that the FTSE 100 index is a market weighted index. In simple terms it means that although there are 100 companies on the index, every company is not represented with an equal 1% holding. If you buy the index, £7 in every £100 invested is in AstraZeneca. In fact £24 in every £100 invested would be in AstraZeneca, BHP, GlaxoSmithKline, HSBC and Diageo. One quarter of your investment in just 5 shares alone.

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Chip papers

My younger clients won’t remember collecting our fish and chips wrapped in only newspaper. I’m not old but I do feel it sometimes, such has been the increasing pace of food hygiene legislation. I even remember my mushy peas and my gravy soaking right through the paper before I reached home. I hasten to add, I never had gravy on a fish; I’m not a barbarian. Initially a single sheet of greaseproof paper and more recently cellophane got added to hold back the surplus chip fat and later still did the mushy peas and gravy come in separate containers. Plastic forks replaced wooden chip forks, now we need huge landfill sites to dispose of all the food packaging that comes out of the vast array of takeaway meals. But I digress.

recession and brexit

A client has suggested I give my thoughts to a couple of questions he has.

  • Are we all headed into recession and will that cause our investments to reduce further?
  • What’s happening with Brexit? It’s all gone very quiet.
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