Wahey! It could be time to dig out the party balloons and paper hats!
Because if the pundits and experts – and their crystal balls and tarot cards – are correct…
…then 2014 could be the year the FTSE 100 crosses the 7,000 mark and sets a fresh all-time high.
I mean, there’s been a veritable herd of gurus queuing up to predict the FTSE will end the year beyond 7,000, including:
- Jonathan Sudaria at Capital Spreads – predicting 7,400
- Brenda Kelly at IG Index – forecasting 7,200
- Tim Drayson at Legal & General – estimating 7,200
- Paul Kavanagh at Killick Capital – projecting 7,400
- Guy Foster at Brewin Dolphin – guessing 7,400
In fact, such is the bullishness in City circles right now, even a doom-monger over at Moneyweek has seen the light and claimed this year will see the index “get above 7,000”!
Surely all those highly qualified, well-paid and vastly experienced City professionals can’t be wrong, can they…?
With the 2013 Collective award for Best Raving Mad Optimist Of The Year sitting proudly on my desk, I’m reluctant to give my own forecast.
But old habits do die hard…
Rest assured, I have not spent hours divining the future of QE or studying the economy to make this market guess.
Instead, I have simply taken the average growth rate of the FTSE 100 since it was established 30 years ago – and extrapolated it into 2014.
In short, the index has gained 6.4% a year since 1984, so another 6.4% during 2014 gives me a year-end figure of 7,182.
To be honest, I’d rather put my faith in projecting FTSE 100 dividends – rather than the index – growing by 6.4%.
As we all know, dividends are generally much steadier and predictable than share prices!
Anyway, we’ll find out everything within 12 months.
I could look like an idiot (or even more of an idiot) by the end of the year, but here goes…
Here are two more predictions for the year ahead.
1) Neil Woodford swaps income for growth
Britain’s most successful and popular fund manager leaves Invesco Perpetual in April, and I’m convinced he will ditch his large-cap dividend approach for a smaller-cap growth strategy.
I’ve given my reasons before, but in brief: i) nobody leaves an employer after 25 years to do the same thing elsewhere; ii) his income funds already include a bevy of smaller growth companies, and; iii) he has run out of decent large-cap income ideas.
If I’m right, I suspect a lot of impressionable investors could decide to follow suit.
2) AIM shares will surge higher from April
I can remember the Fool joining a “Stamp Out Stamp Duty” campaign way back in the 90s.
Sadly the campaign never swayed the Treasury and the nasty 0.5% tax on buying all UK shares has remained…
…until April this year, when AIM shares become exempt.
I dread to think how much me, you and everybody else has wasted on stamp duty over the years, and I for one will be looking a lot more at AIM shares to avoid the tax…
…especially now AIM shares can be held in tax-efficient ISAs.
I am sure I am not the only person thinking on these lines and I confidently predict many AIM shares will surge higher from April as we all pile in.
I’ll finish off today by stating the obvious – the year will be full of winners and losers
Less than a fortnight into 2014, and investors in Mothercare and Dialight have already seen their shares thumped badly.
Meanwhile, Tesco and William Morrison Supermarkets have not got off to the best of starts either.
But early leaders include Topps Tiles, Punch Taverns and Ocado, all of which have rallied 15% or more in just seven trading days.
Even if the herd of gurus are right and we do break out the party balloons and paper hats…
…you’ve still got to be in the right stocks!
