Private shareholders suffer big losses from quoted company investments

With all the focus of the new AS Business specifications on business start-ups and small businesses, it easy to forget the importance of larger quoted companies. Private shareholders who have invested some of their personal wealth in the stock market have had a tough time according to some new research…

If your students are participating in the various stock market-related challenges, then this article in The Times would be worth reading.

In total the value of private shareholdings has fallen by almost £50 billion since the peak in stock market prices in May 2007. Many of the biggest falls have occured in companies whose shares were distributed freely to former account holders (mainly the building society de-mutualisations) and also in household brand names - such as M&S and Tesco.

The £50 billion reduction in personal wealth doesn’t impact immediately on consumer spending. Most private investors hold shares for the long-term; they are not active traders like the pension funds and other institutional investors. Nevertheless, a reduction in share values won’t help consumer confidence - especially if one adds in the impact of the current dive in property prices. We have had more than a decade of rising house prices but now both stock and property markets are in the doldrums.