The FTSE 100 could surge to an all-time high. This is what I’d do right now

Having gained around 6% since the start of the year, the FTSE 100 is now trading within 10% of its all-time high. If it continues to rise at its current pace, it could reach a record high within a matter of months.

Clearly, the index is unlikely to experience continued growth which is unchecked. After all, the world economy continues to face a number of risks which could hold back investor sentiment in the near term.

Now, though, could be an opportune moment to buy FTSE 100 shares which offer solid fundamentals, as well as wide margins of safety. Doing so could lead to impressive long-term total returns, in my opinion.

Potential threats

While the FTSE 100 may go on to reach a record high over a matter of weeks following a strong start to 2019, history suggests that it’s unlikely. No index ever moves higher in perpetuity, and investor sentiment can quickly change depending on news releases.

At the present time, threats to the FTSE 100’s near-term performance include challenges, such as a slowing Chinese economy, as well as the ongoing trade war between the US and China. While this may not yet be a full-scale trade war, the world economy is experiencing a period of increased protectionism. Further tariffs could reduce the world’s economic growth outlook, and this may have a negative impact on the performance of a number of blue-chip shares, as well as on investor sentiment.


As ever, though, falling share prices could prove to be a buying opportunity for long-term investors. Of course, with the FTSE 100 having a dividend yield of around 4.5%, it appears to offer good value for money at the present time. It has rarely had a dividend yield above 4% for a prolonged period of time, and it could be argued that the risks facing its prospects are not yet sufficient to warrant such a wide margin of safety.

As a result, buying a range of FTSE 100 stocks could be a shrewd move. There are numerous shares with yields well in excess of 4.5% which could offer income investing appeal. Similarly, growth investors may be able to find global growth shares which have not yet been able to attract the premium valuations that they may be worth. And with a number of stocks having sought to reduce debt in recent years in response to the threat of rising interest rates, their fundamentals may be stronger than the stock market is pricing in.

Therefore, with the potential for a new record high to be reached in future, the FTSE 100 could offer investing potential. Certainly, there are risks facing the world economy that may hurt its performance in the near term. But on valuation grounds, and from a fundamental perspective, there could be buying opportunities ahead, as well as at the present time.

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Peter Stephens has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.