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.

As an aside there are 101 shares in the FTSE 100 index. Shell is represented twice, A&B.

Interestingly the smallest share, Glencore, weighs in at just £2,210,000,000 (£2,210 million or £2.2 billion) That is still 20 times larger than Nucleus, but a full 50 times smaller than AstraZeneca. In our portfolios we also own Abcam from the AIM index, which is the junior UK market. Abcam, one of its largest shares and stands at £2.8 billion, which is larger than many of the smallest FTSE 100 constituents.

Observations

These very large numbers show that we are not very good at estimating the meaning of very large numbers. How many zeros in a billion? How many zeros in a trillion?

When the manipulative media tells us “£billions wiped off the FTSE index”, relax, there are £billions more. Approximately 1,500 billion more!

The UK Government owing £2 trillion is a very big deal. It accounts for more than the valuation of every company on the FTSE 100. It can never be paid back. Globally debt is six times larger than every listed share on the planet!

If you buy a FTSE 100 tracker, expecting to have a meaningful ownership of 100 of the largest global shares in the UK, then in reality £65 out of every £100 will be held in just 15 shares. Some of which many of us would choose to avoid, even with limited investment knowledge but with a good understanding of current global events.

	In our portfolios?	Bad for the planet/people?
AstraZeneca	✅
BHP		✅ Mining child exploitation
GlaxoSmithKline	✅
HSBC		✅ China repression
Diageo	✅	Please drink responsibly
British American Tobacco		✅ Killing customers
Rio Tinto		✅ Mining child exploitation
Unilever	✅
BP		✅ Climate change
Reckitt Benckiser
Shell “A”		✅ Climate change
Shell “B”		✅ Climate change
RELX	✅
London Stock Exchange	✅
National Grid	✅

Relativity

The FTSE 100 index is £1,500 billion. Throw in the FTSE 250 and everything below it. Now some 600 odd shares make up the FTSE All Share index, which is about £1,950 billion (just below £2 Trillion)

£2 Trillion is an interesting amount of money. It is the amount the UK Government owes and the value of every share on the main UK Stockmarket.

It is also the current value of Apple. 😳