I’m going to tempt fate here. Today may be Friday the 13th, but I’m feeling lucky.
I mean, we’ve had glorious weather this week…
England are about to kick off another World Cup campaign…
And the FTSE 100 (FTSEINDICES: ^FTSE) is once again making headway towards 7,000 and a fresh all-time high…
Time I think to get out the sun lounger and enjoy a scorching summer of sizzling soccer and soaraway shares…
The harsh reality of soggy British weather and dismal World Cup exits
Of course, how long the super sunshine, England’s World Cup dreams and the FTSE flirting with 7,000 will last is anyone’s guess.
It could actually be a close run thing.
Just so you know as a form guide…
- I am on holiday in the West Country next week;
- I have drawn group D rivals Italy in the Fool office sweepstake, and;
- Every time I’ve been this excited about FTSE 7,000 the market has promptly slumped
So we could be talking days rather than weeks of everything going well…
Still, we should always savour moments like these…
Because the harsh all-too-familiar reality of soggy British weather, dismal World Cup exits and sudden market corrections could always be just around the corner.
My volcanology and seismology knowledge is a bit rusty at present
If this summer does disappoint on the weather and football fronts, at least the index has the whole year to mount further attempts on 7,000 and a fresh all-time peak.
Remember, there are quite a few pundits with 2014 predictions of 7,000-plus, 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
- Maynard Paton at Motley Fool – foretelling 7,182
Surely all these experts can’t be wrong, can they?
Either way, joining the bulls at the market punchbowl of late has been Tom Becket, chief investment officer at Psigma.
Mr Becket claimed to Trustnet:
“Part of the FTSE 100’s ability to reach its recent high has been triggered by the Pfizer bid for AstraZeneca and the knock-on positive effects it has had on the heavyweight healthcare sector.“
“That sector will continue to benefit from ongoing M&A activity which will be an ongoing force behind the FTSE 100 breaking through 7,000 this year.“
But then, like any good chief investment officer, he hedges his bet…
“We have been expecting a bigger market correction in this last couple of months, perhaps triggered by a geological event or by investors more concerned about high corporate equity valuations unjustified by corporate profits.“
Hold on, did he say geological event!? I must admit, my volcanology and seismology knowledge is a bit rusty at present…
Meanwhile, Chris Burvill, director of UK equities at Henderson, is going for 7,500 sometime this year. Speaking to Citywire, Mr Burvill said:
“If I have this right, in the autumn we will see an upturn in earnings, sterling weaken, and gilts weaken“
“A lot of this depends on everything going right, but I think [7,500] is absolutely achievable.“
Can everything ever go right? I’m not sure. But I will certainly take 7,500 in the autumn.
“Risk officers play down the danger of a big shock amid soaring market valuations”
Still, rising markets come with the obvious dangers. I mean, are us investors becoming a little too excited?
A quick glance at the Financial Times this week revealed a few headlines that might encourage any contrarians and bears.
“Hostile bids reach 14-year high“
“Resurgent confidence leads companies to resist friendly overtures and demand greater premiums”.
“US stocks soar as Wall St’s ‘fear gauge’ hits seven-year low“
“The VIX has hit levels last seen during the credit boom.”
“Financial confidence hits high as risk of shock played down“
“Risk officers play down the danger of a big shock amid soaring market valuations.”
And talking of contrarians and bears, it’s always worth double-checking what my favourite pessimists are up to at investment trust Personal Assets Trust.
You never know, one day gold, cash and bonds (and perhaps beans and shot guns as well) will be the order of the day.
But not yet it seems. Within its last financial year, PAT’s portfolio fell by 5% while the market gained 7%.
It’s one thing to make less money than a rising market, but it’s quite a feat to actually lose money in a rising market…
I dread to think what PAT’s ‘defensive’ shareholders thought of that performance.
Nonetheless, here are some choice PAT quotes to keep us all in check…
“We are in the midst of an extraordinary and unprecedented monetary experiment which is unlikely to end well.“
“We have yet to see the negative consequences of the US’s tapering of QE on markets which have grown addicted to this sweet poison“
“Those piling into equities today may well be locking in very low prospective returns with commensurate high volatility and downside risk“
“Stock market bubbles make investors look foolish either before or after the peak. The last year gives no doubt as to where we stand.“
One day PAT and the bears will be right. Although that day might be years away.
In the meantime, I’m standing firmly in the 7,000 camp and opposite to PAT and the other pessimists.
At some point I could look very foolish (small f).
But dare I say it, at least for today — a Friday the 13th no less — I think the luck is with the weather, England… and us market bulls!
