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High-flying FTSE 100 could hit 8,000 by Christmas!

High-flying FTSE 100 could hit 8,000 by Christmas!

Author: Harvey Jones

Published by
Motley Fool

3m read

7 November 8.01am

Hargreaves Lansdown is not responsible for this article's content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest. Article originally published by Motley Fool.

The benchmark FTSE 100 index is nudging all-time highs once again and naturally, everybody is starting to panic. Well, not everybody, but the usual fear-mongers.

Crashing bores

I am still trembling after reading a harrowing piece telling me that markets are set to crash from their record highs as valuations hit levels last seen in the dotcom bubble and Wall Street Crash. A separate article warns that volatility is set to increase as Trump starts sabre rattling over North Korea. Others say higher interest rates and the end of quantitative easing will deal the death blow.

They might even be right. Who knows? You can always find reasons to call a stock market crash. The higher markets climb, the more shrill those warnings become. This always happens when the FTSE 100 is buzzing around its all-time high.

-0.08%

FTSE 100

7380.68 -6.26

Stay calm, be cool

Personally, I think the FTSE 100 at 7,555 is something to celebrate, rather than dread. It manoeuvred the tricky months of September and October with relative aplomb. November is often a good month and over the last 20 years the US stock market, for instance, has posted average gains of 1.9%, making it the third best month. Then we may have the seasonal excitement of yet another Santa rally. For the FTSE 100 to hit that 8,000 mark, the index only needs to rise 6% from here and there are good reasons why that could happen. 

First, China, the world’s second-largest economy, is still booming. Latest trade figures show imports surging by a remarkable 18.7% to September, which suggests Chinese factories continue to see strong demand for their products. The news drove the MSCI’s All-Country World Share index to a new peak of 494.84 points. London isn’t the only market booming.

The IMF reports that the global recovery is continuing, and at a faster pace. “We see an accelerating cyclical upswing boosting Europe, China, Japan, and the United States, as well as emerging Asia,” it said last month, and upgraded its growth projections by 0.1% to 3.6% for this year and 3.7% in 2018.

Look beyond Christmas

The global economic backdrop looks relatively benign: robust growth, falling unemployment, subdued inflation, stable foreign exchange markets, and to top it all, buoyant share prices. You can still make a million on this market.

Naturally, a black swan event could sink us in a moment. The future is not ours to see but that also applies to the doom-mongers who have been calling a stock market crash for the last five or six years, and called it wrong every time.

To 10,000 and beyond

While seeing the FTSE 100 hit 8,000 by would be a lovely Christmas present, in the longer run it is neither here nor there. Markets do not run to a set timetable. They go up and down, and none of us can predict when. History shows the only thing you can say with any certainty is that if you put money into the market and leave it there for the long-term, while reinvesting your dividends for growth, you will end up a lot, lot richer than you started off.

One day the FTSE will break through 9,000, 10,000 and beyond. You should start investing for that day now.

The FTSE 100 has shaken off Brexit uncertainty so far but that could swiftly change if we crash out of the EU without a deal.

This article was written by Harvey Jones from The Motley Fool UK and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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  • 7 November 8.01am
  • 3m read

  • AAA

Article originally published by Motley Fool. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

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