FTSE 100 - Higher and Higher ?

#1
The FTSE 100 rose above 6000 but I see this pm that is back just under 6000. It has risen steadily over the past couple of years to the highest it has ever been. Any pundits from the city like to speculate as to the future ?

A crash, a gradual decline or will it continue the steady increase ?
 

oldbaldy

LE
Moderator
#2
Ramillies said:
The FTSE 100 rose above 6000 but I see this pm that is back just under 6000. It has risen steadily over the past couple of years to the highest it has ever been. Any pundits from the city like to speculate as to the future ?

A crash, a gradual decline or will it continue the steady increase ?
Not quite true. Highest since 30 December 1999 when it was 6930.2
http://news.bbc.co.uk/1/hi/business/4815954.stm

Where will it go?
If I knew I'd be a millionaire
 
#4
Ramillies said:
Not quite true. Highest since 30 December 1999 when it was 6930.2
Ah yes .... forgive me.. I had forgotten those great days. Worth investing on the probability of an increase ?
The time to invest was just before the bullets started flying 3 years ago. However, the market sulked through most of 2003 and the really big and safe profits have already gone to those who invested then.

As for now? Well, I note that the market is still relatively undervalued but it has increased of late a tad too quickly for my liking and I am selling into strength. I also note that the Icelandic currency was hammered by some 15% in a few days just recently, with other minor markets dropping by similar amounts. There is a degree of concern about the bubble in gilts, too, and about the amount of money in the derivative markets; when they all decide to rush for the exit, there will be a bloodbath.

However, if you see something you like, go for it, but on a long-term basis.

In terms of blue sky stuff, I like the idea of a cure for asthma and for eczema - but we are years and millions of pounds away from a product. Would I invest now? No! but it's on my watch list!

Litotes
 
#5
L,

Thanks - very interesting. You mention that most of the safe money has been made; I note that BAE have had an excellent end of year, plenty of contracts coming up, BAA probably has some way to go; go for the safe bet or..... something small, new to the market and on the rise. Which in the current climate and with a fair wind, should reap the benefit of the rise in stock market confidence.

Food for thought.
 
#6
Considered looking overseas? I've recently discovered the joys of IShares - a really easy way to invest in the equivalent of the FTSE 100 in China, Japan, India, Eastern Europe, etc. You buy and sell them like normal shares so really easy to deal as well. China did badly last year but is clearly the future .....
 
#7
Great to hear from you Ramillies!

Anyone thinking of dealing in shares should do their homework (or pay someone to do it for them) and only invest what you can afford to lose, especially overseas.

This piece might be helpful:

Shares have made a comeback and the stock market is once again an exciting place to invest your money.

Investors fled the market in terror in 2000 when the tech bubble spectacularly burst. Confidence was rocked again by the terrorist attack on the twin towers a year later. The FTSE 100 index of the biggest companies plunged from a high of well over 6,000 in early 2000 to a little over 3,000 in early 2003. No wonder people poured their money into property.

But the market started to rise again in 2003 and is up about 60% over the past three years. Of course, there have been some ups and downs along the way. Last Tuesday, for example, the Footsie suffered its worst day of the year. But it now stands at about 5,840, an increase of roughly 17% over the past 12 months.

“We have come out of an incredible year in 2005 when the Footsie gained about 20%,” says Richard Royds of Merrill Lynch Investment Managers. “ UK equity investors will have made a lot of money. They could have made 20% or more with a good fund manager, compared with about 3% from the bank.”

No wonder investors are keen to get back into shares. And they do seem to be keen. Sales of equity Isas in January more than doubled to £82m compared to last year, according to the Investment Management Association. Clara Furse, chief executive of the London Stock Exchange, says: “We have seen a marked increase in interest in equities from private investors. But private investors should also remember that if you are saving for the long term, historically there has never been a bad time to be in the equity market.”

The latest study by Barclays Capital would seem to add weight to her argument. Each year, the company compares the performance of shares with bonds and cash – and its data stretches as far back as 1899. The research shows that shares beat bonds and cash over most periods. The victory last year was comfortable. The return on shares was 18.9%, adjusted for inflation, compared with 9.8% for corporate bonds, 6% for government gilts and 2.7% for money held on cash deposit.

The market is now pretty much where it was before the dot com bubble burst. So you would at last be starting to recover those losses. The big question is whether shares can keep on going up. There are plenty of optimists – and they are gaining strength from the value of shares, as distinct from the price. Market analysts measure a stock's value in several ways, but the most common is the price/earnings ratio - the share price divided by the earnings per share.

Tony Dolphin, director of economics and strategy at Henderson Global Investors, calculates that the UK market is trading on a p/e of about 14, which is below Europe, America and Japan . He says: “ UK equities look reasonable value given the current economic climate of relatively low and stable inflation.”

Richard Buxton of Schroders Investment Management understands that investors might be getting a little bit nervous after a three-year bull run, but he also draws comfort from the p/e ratio. He says: “The market's latest rally has been driven entirely by profits growth. The market's p/e ratio remains similar to 2003.” He also points out that the UK market is unrepresentative of the wider economy so is not necessarily susceptible to a consumer slowdown.

The equity market also looks good value against the bond market. Theo Zemek of New Star Asset Management says: “The equity market is fabulous value when compared with the low yields in the bond market. It seems to me there is a glaring valuation difference between equities and bonds. You have to sit back and say: ‘Let's have some of those equities'.”

Chartists study technical data to try to predict the future movement of share prices. And one of the most respected chartists is Richard Lake , director of technical analysis at Brewin Dolphin. He believes the Footsie remains in “a strong uptrend and comfortably above its steeply rising 50-day and 200-day moving averages”. However, he is a little bit worried about the dominance of stocks such as BP and Royal Dutch Shell, which combined account for nearly 20% of the index.

High oil and gas prices have boosted the performance of energy stocks – and so the market. But Lake is nervous about the Footsie's reliance on such a narrow sector. He says: “In all, I would advise some caution and greater selectivity than usual when buying stocks.”

But does it make sense to buy an asset when the price has been rising steadily for three years? Surely if share prices have gone up they must eventually come back down. The study by Barclays Capital shows that if shares – or bonds – have done well over the previous 12 months they are unlikely to produce positive returns over the next few months.

Investors also have an unfortunate tendency to pile in at the top of the market. It was, for example, easy to persuade people to buy tech funds in 2000, but difficult to lure them into Isas in the spring of 2003. In other words, investors have extremely bad timing.

Anthony Bolton, Fidelity's investment guru, is getting nervous. He thinks we are in the late stages of this bull market. “There have been 12 bull markets over the past 40 years and the average has lasted 25 months. Only two have been longer than the current one,” he says. The crash of 2000 should have taught us at least one thing: it is fiendishly difficult – even foolhardy – to try and time the market. If you invest in equities, you should invest for the long haul. At least then you can ride out the market's inevitable ups and downs.
 
#8
F_S,

Thank you so much for your reply; pertinent, wise and informed as always.

Anthony Bolton, Fidelity's investment guru, is getting nervous. He thinks we are in the late stages of this bull market. “There have been 12 bull markets over the past 40 years and the average has lasted 25 months. Only two have been longer than the current one,” he says. The crash of 2000 should have taught us at least one thing: it is fiendishly difficult – even foolhardy – to try and time the market. If you invest in equities, you should invest for the long haul. At least then you can ride out the market's inevitable ups and downs.
This is what worries me. The start of the slippery slope is I fear - about to start. I have sympathy with the above view, bull marekts do not last long. In my opinion, stay with the blue chip companies for the long haul. Big firms like BAE with plenty of forthcoming contracts (as stated in the media) are the ones to go for along with utilities. ISA funds of various types continue to do well - especially the High Income ones. I have looked at ishares and need to do more research on them as these are new to me.

Nothing connected with this and I do not expect a reply, interesting to see that insider dealing is thought to be more rampant than ever in the city according to the broadsheets. Very difficult to prove and get a conviction but one never knows when one is getting advice from the City experts whether there is a bit 'inside' information in there as well. This is where us Army types are at a disadvantage. I use a well reknowned City stockbroker who generally is always along the right lines (to date !) and well worth paying the commission for. I always reserve the right to give direction as required rather than letting the broker do it who gains commission on the more dealing he/she does. I am one of the never trust anyone types ! Anyway - enough from me. R
 
#9
You're too kind, as ever.

It depends on your attitude to risk. Dealing in shares is risky and there is nothing to stop you losing all the cash you invest (unless you get into stop-loss etc). Blue chip can provide a comfort zone but you should aim to hold onto the shares for a while and ride out any bad times. Collective investments such as unit trusts, investment trusts or Oeics are the way forward if you want to give your money exposure to the stock market but face less risk because of pooled funds and investments which are spread and managed. Yes you pay a fee but it could make the difference between losing cash or gaining returns. You also need to be prepared to invest for a few years to iron out the fluctations of the market. Buying and selling shares over short periods in the hope that you can make a quick buck is a recipe for disaster.

Your point about insider dealing is interesting but I believe it is no more rampant than before (ie it has always been pretty rampant!). There is more scrutiny now and perhaps a clearer route to getting caught and getting into serious trouble but it's a bit like adultery, the temptation is always there and it depends how you respond to it. Many people are truly convinced that they will not be the ones to get caught!
 
#10
Quote:
Anthony Bolton, Fidelity's investment guru, is getting nervous. He thinks we are in the late stages of this bull market. “There have been 12 bull markets over the past 40 years and the average has lasted 25 months. Only two have been longer than the current one,” he says. The crash of 2000 should have taught us at least one thing: it is fiendishly difficult – even foolhardy – to try and time the market. If you invest in equities, you should invest for the long haul. At least then you can ride out the market's inevitable ups and downs.

This is what worries me.
I read the same thing. I am by no means any authority whatsoever on the stock markets etc. But my hunch/fealing/guess is that. Anthony Bolton like any other "business man" advises everyone else to do one thing, while planning himself to take advantage if they do :) , without a dip in the stock market stock pickers cant get a bargain
 
#12
ZX_SPEC said:
Quote:
Anthony Bolton, Fidelity's investment guru, is getting nervous. He thinks we are in the late stages of this bull market. “There have been 12 bull markets over the past 40 years and the average has lasted 25 months. Only two have been longer than the current one,” he says. The crash of 2000 should have taught us at least one thing: it is fiendishly difficult – even foolhardy – to try and time the market. If you invest in equities, you should invest for the long haul. At least then you can ride out the market's inevitable ups and downs.

This is what worries me.
I read the same thing. I am by no means any authority whatsoever on the stock markets etc. But my hunch/fealing/guess is that. Anthony Bolton like any other "business man" advises everyone else to do one thing, while planning himself to take advantage if they do :) , without a dip in the stock market stock pickers cant get a bargain
Not really. Bolton is one of the most successful fund managers ever, and for longevity and long term performance I think the most successful ever. Whilst he probably doesn't really need to put on the suit and go to work in the mornings anymore, he is paid to do well with your money. If he thinks the stock market is going to take a dip then he will be planning accordingly on his customers' behalf. I forget the figure but the amount £1000 invested with him would have turned into over the last 15 years or so is quite astonishing.

He is a wily old fox and has usually been right over the years.

He works for Fidelity and while starting to take a back seat still runs their "Special Situations" fund.
 
#13
clownbasher said:
ZX_SPEC said:
Quote
Anthony Bolton, Fidelity's investment guru, is getting nervous. He thinks we are in the late stages of this bull market. “There have been 12 bull markets over the past 40 years and the average has lasted 25 months. Only two have been longer than the current one,” he says. The crash of 2000 should have taught us at least one thing it is fiendishly difficult – even foolhardy – to try and time the market. If you invest in equities, you should invest for the long haul. At least then you can ride out the market's inevitable ups and downs.

This is what worries me.
I read the same thing. I am by no means any authority whatsoever on the stock markets etc. But my hunch/fealing/guess is that. Anthony Bolton like any other "business man" advises everyone else to do one thing, while planning himself to take advantage if they do ) , without a dip in the stock market stock pickers cant get a bargain
Not really. Bolton is one of the most successful fund managers ever, and for longevity and long term performance I think the most successful ever. Whilst he probably doesn't really need to put on the suit and go to work in the mornings anymore, he is paid to do well with your money. If he thinks the stock market is going to take a dip then he will be planning accordingly on his customers' behalf. I forget the figure but the amount £1000 invested with him would have turned into over the last 15 years or so is quite astonishing.

He is a wily old fox and has usually been right over the years.

He works for Fidelity and while starting to take a back seat still runs their "Special Situations" fund.
I know who he is and what he does, infact his abilitys have made me money over the years. But he/the company charges people for this advice, they dont give it away for free. The best way to improve your gains on the stock market is to have an effect on it direction. Maybe Bolton is like the Alex Ferguson of the stock market, in that he knows a few choice words at the right time for free, is worth a few free points to his team in a full season?? lol. Just offering a diffrent (some what crazy) view on things.
 
#14
ZX_SPEC said:
clownbasher said:
ZX_SPEC said:
Quote
Anthony Bolton, Fidelity's investment guru, is getting nervous. He thinks we are in the late stages of this bull market. “There have been 12 bull markets over the past 40 years and the average has lasted 25 months. Only two have been longer than the current one,” he says. The crash of 2000 should have taught us at least one thing it is fiendishly difficult – even foolhardy – to try and time the market. If you invest in equities, you should invest for the long haul. At least then you can ride out the market's inevitable ups and downs.

This is what worries me.
I read the same thing. I am by no means any authority whatsoever on the stock markets etc. But my hunch/fealing/guess is that. Anthony Bolton like any other "business man" advises everyone else to do one thing, while planning himself to take advantage if they do ) , without a dip in the stock market stock pickers cant get a bargain
Not really. Bolton is one of the most successful fund managers ever, and for longevity and long term performance I think the most successful ever. Whilst he probably doesn't really need to put on the suit and go to work in the mornings anymore, he is paid to do well with your money. If he thinks the stock market is going to take a dip then he will be planning accordingly on his customers' behalf. I forget the figure but the amount £1000 invested with him would have turned into over the last 15 years or so is quite astonishing.

He is a wily old fox and has usually been right over the years.

He works for Fidelity and while starting to take a back seat still runs their "Special Situations" fund.
I know who he is and what he does, infact his abilitys have made me money over the years. But he/the company charges people for this advice, they dont give it away for free. The best way to improve your gains on the stock market is to have an effect on it direction. Maybe Bolton is like the Alex Ferguson of the stock market, in that he knows a few choice words at the right time for free, is worth a few free points to his team in a full season?? lol. Just offering a diffrent (some what crazy) view on things.
He's made me quite a bit over the past year too. I don't bedgrudge (or even notice) the fee of 1.5% when he's made me 30+% and you don't get owt for nowt - he's not the CAB. I did wonder if that was what you meant; perhaps it is a case then of "do what he does" rather than "do as he says"! Cynical eh?

I do trust him with (some of) my dosh though so following the lines of that possibility above am not unduly concerned.
 
#15
Ref my last on the subject of iShares, might be worth reading the following article from today's Telegraph

Feeling underexposed?
(Filed: 25/03/2006)

If you like tracker funds, you'll love these, says Nina Montagu-Smith

Exchange-traded funds (ETFs) can offer investors a cheap and transparent way to invest in stock markets around the world for a fraction of the cost of a unit trust.

ETFs were first introduced in America in 1993 and appeared in the UK in 2000, launched by fund manager Barclays Global Investors, which is still the only provider in this country.

They are investment funds that can be traded on the stock market in the same way as shares or investment trusts, but are open-ended, like unit trusts. This means there is an unlimited number of shares, which are issued on demand.

One of the advantages of this is that, unlike investment trusts, shares in ETFs will not tend to trade at a premium or discount to the net asset value of the fund, thereby removing some of the risk to investors.

ETFs offer investors exposure to a set index of shares. When you buy a share in an ETF, you gain access to all the stocks listed on the exchange it is linked to and you receive the same dividend income.

Barclays Global Investors manages 28 ETFs, called iShares. There is no minimum investment - in theory it is possible to buy just one share - and there is no initial charge. However, stockbrokers' minimum commissions - not to mention sneaky "exit" fees for closing your account with some of them - mean dealing in small amounts will be worth more to the broker than it is to the investor.

ETFs offer investors access to areas of the world that might otherwise be difficult to trade in. Barclays Global Investors recently launched iShares in indices including MSCI Taiwan, MSCI Brazil and MSCI Korea. It also offers iShares in eastern Europe and emerging markets.

Although iShares, which are bought and sold via stockbrokers, trade on the stock market in the same way as shares, there is no stamp duty to pay. Stamp duty on purchases of shares or investment trusts is normally 0.5 per cent.

You will have to pay stockbroker fees to trade iShares; however, Paul Ilott of Bates Investment Services, an independent financial adviser (IFA), said: "Online trading costs can be as little as around £15, so this doesn't have to be significant."

On top of this, annual management charges for iShares range from 0.2 per cent to 0.75 per cent, depending on the fund. Barclays Global Investors' FTSE 100 iShare and FTSE 250 iShare, for example, have a 0.4 per cent annual management charge, while its MSCI World fund charges 0.5 per cent. The MSCI Emerging Markets iShare costs 0.75 per cent a year.

This compares favourably with unit trusts, which typically levy initial fees of three per cent to five per cent, and annual fees of one per cent to 1.5 per cent. Although tracker funds are usually cheaper, they still have higher fees than most iShares. Virgin's FTSE tracker fund, for example, charges one per cent per year.

Brian Dennehy, of IFA Dennehy Weller & Co, said: "The easiest way to think of an ETF is as a cheaper and more flexible index tracker. So any private investor who does not ordinarily take advice and favours index trackers should be getting to know ETFs."

Chris Sutton, chief executive of iShares, said: "iShares give good access to new markets, for example China. They suit people who would like access to these markets but find it hard to get the right information about funds and fund managers.

"One of the most appealing aspects of iShares is that they are totally transparent. You can see exactly what is in the portfolio you have bought on any day by looking it up on www.ishares.net. That gives a lot of comfort to investors."

Mr Sutton said both retail and institutional investors are offered the same product, with the same price, whether they are investing £1,000 or £1 million. He said: "Retail and institutional investors are getting the same deal, which is pretty unusual for investment funds."

Meera Patel, analyst at Hargreaves Lansdown, an IFA, said: "ETFs are slowly gathering momentum in the UK. You can track specialist markets like emerging markets and Japan. They are cheap, transparent and easy to deal with and you can hold them in an individual savings account (Isa).

"In general I am not a huge fan of index trackers. However, if investors were to buy a tracker fund, I believe iShares are the way forward compared with ordinary unit trust tracker funds."

Mr Ilott added: "ETFs have an edge over conventional index trackers. Apart from lower charges, they allow active investors to trade their investments at any time during the opening hours of a recognised stock exchange.

"But perhaps the most significant difference is the sheer range of investments covered by ETFs. Conventional tracker funds tend to cover only mainstream regional stock-market indices, such as the FTSE All-Share for example, but ETFs can even offer exposure to particular industry sectors and asset classes as well as broader equity markets."
 
#16
Bad CO,

Thank you for the article and very interesting. Just a personal view, but with ishares I do not feel in control (not that I am a control freak !) It is just that you are at the whim of whether the market moves one way or the other. At least with stocks and shares, you invest in a company and depending on how they do, which might be in the opposite way to the FTSE, you win or lose accordingly.

If you haven't a decent stocks and shares programme try Sharescope. You can find it through Google and it works well for me. Kind regards
 
#17
Hi All,

Was looking for a general equity / market forum but only found this rather antiquated one. Anyone else want to develop a thread on investment strategy / market opinion / portfolio management?

Interesting to note the view that the FTSE is overdue a fall (Bolton) and that all the safe money has been made. Reminds me of the denial so many people are in about the value of property.

Would that my meagre services wage could buy what Halifax reckon is the average house at £189k.....
 
#18
Very interesting thread as I am presently a student of such things. Can anyone explain Portfolio Theory and CAPM without too much algebra? What are the little umbrella-shaped things on the graphs?
 
#19
Hi guys

A little more recent discussion here. It will be interesting to see if there is an appetite more and I am happy to help where I can. If it does develop, I will keeping close tabs on it to ensure we keep on the right side of the FSA.

VM, it sounds like you are just the chap to give us a teach-in on CAPM and MPT to start the ball rolling.......

FS
 
#20
Best stategy is buy when the canons are roaring and sell when the sun is shining. The market is artificially high at the moment. There are a few bargains but I would not put much money into any equity at the moment. I can see trends and who is lending what to whom and more importantly what sectors of industry are showing the strongest growth rates. Interest rates are up. B&DD (Bad & Doubtful Debt) is increasing on the consumer/general public side of the house. We are due a market correction by Easter next year (in my humble opinion). When it nosedives just have a steady nerve and keep pumping money in as others get out. In six years I have turned £10K into £60K on UK/US/European listed stocks.

Edited by Moderator: Sorry guys but no share tipping please.
 

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