Forget FTSE 7,000… We’re On For FTSE 10,000

Let me promise you this: sooner or later the FTSE will cross 7,000…

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Now this is more like it.

The FINANCIAL APOCALYPSE has been averted, the FTSE 100 (FTSEINDICIES: ^FTSE) has rallied 400 points in three weeks to beyond 6,700…

…and I’m busy trying to remember where I put my paper hat and party balloons to celebrate FTSE 7,000.

Yes, we could still be on for that Fool office conga this year if the market carries on rising at its current rate.

Indeed, the FTSE is up about 15% for 2013 so far and the usual Christmas rally would be a great way to round off a vintage year for shares.

Let me promise you this: sooner or later the FTSE will cross 7,000

Now I have said many times in the past that it is only a matter of time before the blue-chip index breaches 7,000 and sets a new all-time high.

Sooner or later it will happen… I promise you that.

Maybe the Fool office conga won’t occur this year, and maybe it won’t occur next year either…

…but at some point the FTSE will surpass 7,000…just like it did when it breezed through 6,000, 5,000, 4,000, and so on.

It’s really very, very simple: long-term business history shows overall company profits going up, overall company dividends going up… and the overall stock market going up.

And I do not see that history changing.

Yes, there will be setbacks on the way – as there always have been.

But it makes total sense to me to invest right now before the market hits a new high…

…rather than wait on the sidelines until FTSE 7,000 or FTSE 8,000 or even FTSE 9,000 is plastered all over newsfeeds…

… and then be forced to pile in with Johnny Latecomer and Tailend Charlie and buy at much higher prices.

Impressive growth rates in what is fast becoming a solid bull market

If you are bearish on this market then you’ll have to fight some powerful forces. I mean, you’ll be up against:

  • The government: David Cameron seems determined to give away cash to support the electorate economy, not least through subsidies for house purchases and allowing voters investors to make a quick turn on Royal Mail.

And a fighting-fit feelgood factor should be good for shares.

  • The central bankers: Mark Carney, Mario Draghi and now Janet Yellen are paid-up fans of QE – and they’ve ruined the yields on cash to make shares look a lot more attractive.

Sure, you can bleat about rock-bottom interest rates being artificial and temporary, but they have been artificial and temporary for five years now and could well be the ‘new normal’…

  • The record dividends: New forecasts suggest company dividends will advance 6% this year and 7% during 2014. Plus a bumper special payout from Vodafone will take total dividends to beyond £100bn.

Just look at the bar chart below and feel the enormous power of those gigantic payouts being reinvested in this market:

 div

Source: Capita Asset Services

  • The impressive growth: Many blue chips continue to storm ahead. For example, recent statements showed sales at ARM up 26%, sales at Sports Direct up 15% and sales at Whitbread up 13%.

For such high-quality operators, there are no signs yet that expansion opportunities are slowing… which give every reason to hold onto such impressive growth rates in what is fast becoming a solid bull market.

Forget FTSE 7,000, this City market-beater is predicting FTSE 10,000

Now all this talk of feelgood factors, bull runs, growth rates and FTSE 7,000 may seem bonkers to the doom-mongers…

….but there is one professional investor out there who is actually forecasting FTSE 10,000.

Speaking to Investment Week, Martin Walker of Invesco Perpetual is on record as saying:

“Over the medium to long term, I am very bullish and believe the market could grind up from its current level to 10,000 in the next decade.”

He actually made that statement this time last year, when the FTSE traded at 5,800.

According to Investment Week, Mr Walker had become “less defensive on the portfolio, reducing tobacco and healthcare, the sectors much loved by his colleague Neil Woodford, in favour of more cyclical firms.”

In fact, a year ago Mr Walker was selling Neil Woodford dividend faves such as GlaxoSmithKline, AstraZeneca and Imperial Tobacco

…and buying names such as Dixons, Halfords and ITV

…in order to ride the market higher.

Here’s how those names have done during the last twelve months:

Share 1-year change
GlaxoSmithKine +16%
AstraZeneca +14%
Imperial Tobacco +0%
Dixons +139%
Halfords +16%
ITV +122%

Wow. I wish I had come across Mr Walker a year ago, as I could have done with one or two ‘doubles’ in my portfolio during 2013.

In fact, I wish I’d latched onto Mr Walker back in 2008. Here’s how his Invesco Perpetual UK Growth fund has performed against the wider market benchmark:

Fund 1 year 3 years 5 years
UK Growth +36% +66% +96%
Benchmark +22% +36% +71%

Not bad for a professional fund manager.

(And by the way, Mr Walker’s one-, three- and five-year records have thrashed those of his Invesco colleague and dividend maestro Neil Woodford).

Just imagine the money we could all make in this bull run

I say again, it is only a matter of time before the FTSE breaches 7,000 and heads towards even higher highs.

And in this type of market, über-bulls such as Mr Walker will be leading the pack as they lighten up on slow-growth income stalwarts…

…and position themselves into faster-growing dynamic names.

FTSE 10,000? One day it will happen. And just imagine the money we could all make on shares in the meantime.

I’m off to find my paper hat and party balloons.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

> Maynard does not own any share mentioned in this e-mail. The Motley Fool has recommended shares in GlaxoSmithKline and Vodafone.

More on Investing Articles

Passive income text with pin graph chart on business table
Investing Articles

Yields of up to 7%! I’d consider boosting my income with these FTSE dividend stocks

The London market has some decent-looking dividend stocks right now, and I’m tempted by these two for growing income streams.

Read more »

Young mixed-race couple sat on the beach looking out over the sea
Investing Articles

I’d put £20K in an ISA now to target a £1,900 monthly second income in future!

Christopher Ruane shares why he thinks a long-term approach to investing and careful selection of shares could help him build…

Read more »

Mature couple at the beach
Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »