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thoughtful post ripley. I have been pretty bullish on the ftse 100 for past 18 months. I mentioned in my last post that at 7800 the balance between ftse yield and bond yields is inverted for the first time in perhaps 15 years (Kwateng budget aside). We now have gilts at over 4% (perhaps likely to rise futher) and ftse under 3.5% and perhaps weakening as corporate results come in .
for me it feels like giving up investing in bonds but the returns are now better with less risk. I struggle to see a case to drive the ftse over 8k, so potential for capital returns is limited whilst having to accept a lower yield.
yes I'm glad I back the best performing market for the last 18 months. 7800 was hit 2 weeks after my prediction for last year. Word of caution as yield now better on some government bonds than on ftse100.
Level YTD
DOW [+] 34,194.06 -5.90%
NASDAQ [+] 11,285.32 -27.87%
S&P 500 [+] 4,027.26 -15.50%
STOXX 50 [+] 3,961.99 -7.83%
FTSE 100 [+] 7,466.60 1.11%
DAX [+] 14,539.56 -8.47%
CAC 40 [+] 6,707.32 -6.23%
NIKKEI [+] 28,283.03 -1.77%
As of 25/4 YTD Change
DOW [+] 34,049.46 -6.30%
NASDAQ [+] 13,004.85 -16.88%
S&P 500 [+] 4,296.12 -9.86%
STOXX 50 [+] 3,757.59 -12.58%
FTSE 100 [+] 7,380.54 -0.05%
DAX [+] 13,924.17 -12.34%
CAC 40 [+] 6,449.38 -9.84%
NIKKEI [+] 26,590.78 -7.64%
Hi Cheap
I hope you are well.
You have been pretty bullish on the footsie until recently? Why so glum about the prospects?
Miners/Oilers are raking in cash, banks benefit from interest rate rises, housebuilders still growing, consumer goods getting a boom in prices.
Interest in opinions!
KT
Happy new year all!
How about predictions for ftse100 by year end 2022?
I guessed 7200 for 2021 last year and undercooked it by 2.5%.
This year ive seen predictions of 8000, even up to 8850 and down to 6,800. The ftse is undervalued 30% against european peers but the long term average is 3%.
I’m going for 7820 my hope is 5.9% increase plus 4.1% dividends so 10% return overall.
for the last 18months with this index punters either made money buying it or lost selling or actually did neither and have no interest in it. the bears are the losers and the bulls the winners.
this could be why jp morgan has turned bullish on the ftse for the first time since brexit vote
https://www.cnbc.com/2021/11/10/jpmorgan-turns-bullish-on-uk-stocks-for-first-time-since-brexit-vote.html
I quite enjoy the bearish comments here as they normally proceed a rise in the market. So far this year we have 7 positive months and 3 negative. Overall rise is +12% to a 52 week high + all those pesky acquisitions and special dividends ignored by the bears. Could be a Santa rally to come if i've not jinxed it. Could still be a Q1 2022 correction for the bears.
I think we have broadly maintained the circa7000 I predicted in January but my y/e forecast of 7200 looks tricky. Q3 Corporate earnings should be good but with the predictable negative short term outlooks holding sway on prices. Yields are impressive and anyone on the side-lines is missing out on these and more acquisition premiums likely to come.
There was an interesting piece on Bloomberg this morning stating that the forward p/e for FTSE is 12.6 compared to 16 for Eurostoxx (implying a 24% premium for european equities). The median for FTSE is 16 and half the companies have 17+. What drags the ftse is the 35% weight of Banks, Consumer goods and miners which are all under 10. The view was that consumers goods are under cost pressure because of factory/raw material price inflation, for miners it may be that commodity prices have peaked and banks continue to under perform in low interest rate environments.
Still that's a big difference which hopefully will narrow in the next year.
I like Bank/Insurance sectors but the market doesnt. Trading is thin at this time of year. HSBC nice results but price hardly moved. NAV £8.69 Share price less that £4.00. Forward p/e just circa 5. I still dont see much upward movement before September.
Useful thoughts Kitty
I think the ftse has been held back by
1. GBP rebound strength
2. Special dividends (5 Companies returned £8bn)
3. Acquistions (2 Companies £10bn). Morrisons to come?
4. Lack of compelling forward guidance.
5. Better growth prospects elsewhere.
The ftse 100 started the year at 6460 so up almost 9% after last years 14% drop.
Earnings seasons may bring more positive forward guidance, increased dividends and more special dividends. So your 7200 estimate could be hit but I still think year end is more realistic.