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

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:


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.

Foolish final thought

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