Why the Stock Exchange Might Not Matter to You

16/11/2011 16:26 GMT | Updated 14/01/2012 10:12 GMT

Around January this year experts on Wall Street and the City of London were convinced that the stockmarket was going to go boom.

The analysts and the traders, the chart nerds and the druids reading foxes entrails were in almost universal agreement: after a decade of shares going nowhere at best, 2011 was to be the year when they'd show the recession a clean pair of heels.

The FTSE 100 index of leading shares, around 6000 back then, would rocket to 7000 said the sages.

Boy were they wrong. But does it matter to you? Maybe not.

In the UK, the country I live in, the FTSE index used to be made up of solid British companies such as Halifax, Sainsbury, Marks & Spencer and Thomas Cook.

If those shares were going up on the back of rising profits, it indicated that the rest of us were taking out mortgages (not too big!) eating well (ish), looking dapper (kind of) and heading abroad on holiday (Spain perhaps?).

So the FTSE was a reasonable measure of whether we were all getting richer, or not.

Then a few years ago, as part of the drive to persuade us that London is the most important financial centre in the world (forget it, it's obviously New York), the London Stock Exchange made an effort to entice large foreign mining companies to list their shares here.

They did in droves -- utterly vast outfits with odd names such as Kazakhmys (copper mining) and Vedanta Resources (most metals) joined the FTSE.

So now when the stock market moves, it's quite often just because investors are taking a view on how much demand there's going to be for steel next year. That's telling you something about the global economy and about how many new factories the Chinese plan to build, but it

doesn't mean you should expect a pay rise.

In terms of your life, footsy has gone back to being a game you play with your secretary and don't discuss with the wife.

When the news says shares went down and the talking head on the box indicates that he thinks that must be terrible news, stay sceptical.

Unless you've bought a few of course...