Where is the FTSE going?
Discussion
Hainey said:
It's still in the expansion phase and has been since 2009.
I'd go along with this.Although its at a historic high it was 7,100 ish in May 2015 and had that (over?) correction to 5,700 which bottomed this time last year.
If you rode that one you may be tempted to cash out a little but if you look back to 2013 there hasn't been enough annualised growth to make you worry about being overvalued.
I don't know if there have been any studies on the amounts involved but all the extra work place pension money needs to go somewhere.
CaptainSensib1e said:
P/E is currently around 15, which is close to the long term average. So the market looks neither cheap nor expensive.
Short-term - your guess is as good as mine
Long-term - should go up
I imagine if you adjusted those P/Es using a long-term average cost of debt the market would look a little bit more expensive.Short-term - your guess is as good as mine
Long-term - should go up
My point of view is that central bank balance policy is currently the single most important influence on the market.
z4RRSchris said:
Predictions and reasoning on a postcard...
Short term: 2017
Long term: 3 years
Depends on your prism. If we take into account the exchange rate and the fact that international investors are still not exactly FTSE heavy, it might have some legs yet.. who knows? Not even the people who trade it everyday, though.Short term: 2017
Long term: 3 years
Three years isn't long, it's short - especially these days!
NickCQ said:
CaptainSensib1e said:
P/E is currently around 15, which is close to the long term average. So the market looks neither cheap nor expensive.
Short-term - your guess is as good as mine
Long-term - should go up
I imagine if you adjusted those P/Es using a long-term average cost of debt the market would look a little bit more expensive.Short-term - your guess is as good as mine
Long-term - should go up
My point of view is that central bank balance policy is currently the single most important influence on the market.
Wage growth, consumer spending and inflation are also considerations. And of course any external effects on the Pound.
As we have seen the weaker Pound has fortified the 100 because of enhanced earnings, so should the interest rate need to be increased in the medium term to contain inflation that could have a strengthening effect on the Pound and an earnings decline (back to normal).
So while the P/Fs are saying all is well, those ratios are based on exchange rate with the Pound at 1.24ish.
The broader market will/should be less effected by the Pound strength or weakness than the FSTE 100, to that effect I think a decent managed fund could be a better place to be than a 100 index fund. I assume this thread is "should I invest in the FTSE 100"
The FTSE is where it is because of a substantial drop in the Pound, so unless you envisage another 15% those recent gains will not be repeated.
Of course a really bad Brexit settlement could do that, but I would hope that doesn't happen.
Even if it were poor deal, it would be spun as a good one and likely only be equal to the current uncertainty. Nil effect.
They say you can't time a market, but many new investors actually do (badly)....they see the news with the index hitting a high and get drawn in after comparing their building society returns with that of the market.
Since 1979 when capitalism was opened up to the masses and computers started tracking the value of the ftse has only dropped twice to the point where you'd lose money over more than a year or so, and companies still pay divvies in those periods.
One was the down turn in the late 90s and the dotcom bubble bursting, interest rates were high and the housing market was going bananas, the other was the global crash which was a once in a century event.
If you're in for more than a year you'll make money. It'll take something catastrophic to stop it.
One was the down turn in the late 90s and the dotcom bubble bursting, interest rates were high and the housing market was going bananas, the other was the global crash which was a once in a century event.
If you're in for more than a year you'll make money. It'll take something catastrophic to stop it.
jeff m2 said:
NickCQ said:
CaptainSensib1e said:
P/E is currently around 15, which is close to the long term average. So the market looks neither cheap nor expensive.
Short-term - your guess is as good as mine
Long-term - should go up
I imagine if you adjusted those P/Es using a long-term average cost of debt the market would look a little bit more expensive.Short-term - your guess is as good as mine
Long-term - should go up
My point of view is that central bank balance policy is currently the single most important influence on the market.
Wage growth, consumer spending and inflation are also considerations. And of course any external effects on the Pound.
But I think you can't discount the extent to which unprecedented QE/ asset purchases by central banks in the U.K., US and Eurozone have massively inflated asset prices and distorted the pricing of risk in capital markets.
And as you say yourself, exchange rates are hugely important for a relatively small, open country like the U.K. And as far as I am concerned, differences in interest rates and inflation between countries (i.e. Monetary policy) is a very important determinant of exchange rates.
So if the federal reserve keeps raising rates and at some point the ECB stops asset purchases, we should expect significant falls in global asset prices due to rising interest rates.
FredClogs said:
Since 1979 when capitalism was opened up to the masses and computers started tracking the value of the ftse has only dropped twice to the point where you'd lose money over more than a year or so, and companies still pay divvies in those periods.
One was the down turn in the late 90s and the dotcom bubble bursting, interest rates were high and the housing market was going bananas, the other was the global crash which was a once in a century event.
If you're in for more than a year you'll make money. It'll take something catastrophic to stop it.
Which index are you referring to?One was the down turn in the late 90s and the dotcom bubble bursting, interest rates were high and the housing market was going bananas, the other was the global crash which was a once in a century event.
If you're in for more than a year you'll make money. It'll take something catastrophic to stop it.
sidicks said:
FredClogs said:
Since 1979 when capitalism was opened up to the masses and computers started tracking the value of the ftse has only dropped twice to the point where you'd lose money over more than a year or so, and companies still pay divvies in those periods.
One was the down turn in the late 90s and the dotcom bubble bursting, interest rates were high and the housing market was going bananas, the other was the global crash which was a once in a century event.
If you're in for more than a year you'll make money. It'll take something catastrophic to stop it.
Which index are you referring to?One was the down turn in the late 90s and the dotcom bubble bursting, interest rates were high and the housing market was going bananas, the other was the global crash which was a once in a century event.
If you're in for more than a year you'll make money. It'll take something catastrophic to stop it.
Shorting any major index in the medium term seems like an odd thing to do, you might win over a week or two but its going to ride again soon. I bet £3 on Blackburn to beat United today so maybe I'm not the best judge on gambling.
FredClogs said:
I was referring to the ftse100 as I presumed the op was. But the same goes for most of the major whole market indices to a greater or lesser extent.
I beg to differ:http://www.1stock1.com/1stock1_764.htm
This shows 7 negative years in the last 20 (some considerable) purely on a calendar basis, so the risk is such higher than that.
FredClogs said:
Shorting any major index in the medium term seems like an odd thing to do, you might win over a week or two but its going to ride again soon. I bet £3 on Blackburn to beat United today so maybe I'm not the best judge on gambling.
1-year is very short term. Medium term is an entirely different question.Edited by sidicks on Sunday 19th February 19:59
Edited by sidicks on Sunday 19th February 20:01
z4RRSchris said:
my question is because i'm thinking of shorting the index, i think pound is bottomed out and 7300/7400 is toppy
the onlly hesistation is if trump massively lowers taxes we could see a banking/Fs led rise in the index.
I'm not convinced that the pound has found the bottom. There'll be enough negative Brexit news to scare people yet. the onlly hesistation is if trump massively lowers taxes we could see a banking/Fs led rise in the index.
I'd prefer to short the index but go long USD at the same time to hedge out the risk of further GBP falls. Then you get the 'pure' Uk macro exposure don't you? With a bit of positive carry on USD vs GBP rates.
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