In December 2015 I wrote the first of what will hopefully be a very long series of annual forecasts for the FTSE 100, FTSE 250, S&P 500 and UK housing market.
That first article forecast the value of the FTSE 100 at the end of 2016 and – miracle of miracles –was just about spot on.
Continue reading “FTSE 100 forecast for 2017: Up, but not by much”
Most people I speak to think that UK house prices are ridiculously high, especially in London.
Admittedly, this is not a novel idea. However, as a very minor student of bubbles, I think it’s worth thinking through the possible implications.
So in the rest of this post, I want to outline a) why I think we’re in a house price bubble and b) what the implications might be for the future of house prices in the UK.
Continue reading “UK house price forecast: It’s not looking good”
The S&P 500 has produced fantastic results for investors since the Great Financial Crisis. However, largely because of those rapid gains the US large-cap index is more likely to produce below-average or even negative returns over the next few years.
Continue reading “S&P 500 Forecast: Medium-term returns are likely to be negative”
It would be fair to say that in the immediate aftermath of the Brexit referendum, the FTSE 250 crashed. It fell by more than 13%, taking the mid-cap index back to levels first reached in the middle of 2013.
That all sounds pretty gloomy, and it was. But it didn’t last, and by the time I’d written a post-Brexit market review, things were already looking up (for the FTSE 100 at least).
Continue reading “The FTSE 250’s CAPE ratio suggests the index is close to fair value”
By now I’m fairly sure that you’re suffering from Brexit fatigue; I know I am. So I’m going to keep this as short as possible and then, hopefully, avoid the topic for a while.
The initial impact of the vote to leave the EU was, perhaps unsurprisingly, to induce a state of almost blind panic. Of course, that was simply an emotional response; a knee-jerk overreaction that any good student of the markets should have expected.
However, investors have now had one full week to think through the implications of our collective decision to leave the EU, so I think now is a good time to pause and take a look at what the aggregate wisdom of investors has come up with.
Continue reading “Brexit: The investment impact one week on”
On Wednesday the FTSE 100 closed just above 6301 points, continuing a near-20-year tradition of failing to get much above that level.
For some investors that’s depressing news; after all an investment going nowhere for 20 years is not exactly a stunning success.
But for investors who are thinking about returns over the next 20 years rather than the last 20 years, this lengthy sideways market is in fact better news than it might at first appear.
Continue reading “The FTSE 100 is cheap, thanks to a 20-year sideways market”
UK housing market valuations are at record highs. That’s probably not much of a surprise to most people, but the negative implications for future house price growth could well be.
Continue reading “Why UK house prices are likely to fall over the next decade”
My latest FTSE 250 valuation and forecast could be a bit of a damp squib because neither the valuation nor the forecast capital gains are particularly exciting (how’s that for an enticing opening paragraph?).
As usual, I’m going to use Robert Shiller’s cyclically adjusted PE ratio (CAPE) as the valuation tool of choice, because it’s both easy to calculate and has a proven track record as a forecasting tool.
If you’re not familiar with it, CAPE is just the ratio between today’s price and the inflation-adjusted ten-year earnings average. It’s like the standard PE ratio, but better.
Continue reading “FTSE 250 Valuation and forecast”
The S&P 500 has had a much stronger post-financial crisis bull market than the FTSE 100. However, as a consequence, the US large-cap index is now much more expensive than its UK counterpart.
Continue reading “S&P 500 valuation and forecast: Still expensive despite a flat 2015”
This FTSE 250 forecast will be based on the same approach as the FTSE 100 forecast I published in December. In other words, it will be based on numbers and historic averages rather than gazing into an invisible crystal ball.
Continue reading “My FTSE 250 forecast for 2016”
In the past, I have generally stayed away from making stock market forecasts over a one-year period because, for the most part, they are little more than guesses.
However, this year I’m going to throw my hat into the forecasting ring in the hope that somebody, somewhere, will find it useful.
Continue reading “My FTSE 100 Forecast for 2016”
I’ll start this UK stock market forecast with the FTSE 100 as that’s the index most people think of when they think of the UK stock market.
But before I begin – a couple of points:
Continue reading “UK stock market forecast – Q3 2015”
- I only make long-term forecasts, so I’ll be talking about what the market might return over the next ten years rather than the next year or two.
- By “forecast” I mean the Expected Value of the market’s total return. In other words, an estimate of the average return the market would produce if we could run through the next ten years multiple times (which, according to the known laws of physics, we can’t).
FTSE 250 forecasts are pretty thin on the ground, despite it being something I get asked to do quite frequently. To fix that, I’m going to start a quarterly series of valuations and forecasts for the mid-cap index.
Continue reading “FTSE 250 Valuation and forecast for 2015 Q3”
In part one of this UK housing market valuation and forecast, I looked at the latest house price-to-earnings ratio in the context of historic norms (here’s a link to part one).
My conclusion was that the UK housing market appears to be at the “expensive” end of its valuation spectrum, with the house price to earnings ratio at 5.16, some 29% above its long-term average of 4 (where the average house price today is £196,067 and average earnings are £37,962).
At the end of the article, I mentioned that the house price-to-earnings ratio had been based on the earnings of the average home buyer rather than the average UK employee (including those who cannot afford to buy).
I wanted to re-do the housing market valuation and forecast using the broader UK average earnings figure as I thought it would produce a more accurate measure of how expensive the market really was.
However, now that I’ve looked at the data a second time, that doesn’t appear to be the case (largely because I misread some of the data the first time around).
Instead, whether house prices are compared to home buyer earnings or average UK earnings, both ratios seem to be saying the same thing, to almost exactly the same degree.
Continue reading “UK housing market valuation and forecast – June 2015 (part 2)”
The UK housing market has staged an incredible recovery since the financial crisis, so does that mean houses are now too expensive or can house prices just keep going up?
To do this UK housing market valuation and forecast I’m going to borrow a couple of visual tools from my work on stock market valuations and forecasts, namely my “fan chart” and “heat map”.
Continue reading “UK Housing market valuation and forecast – June 2015”
It’s time for another one of my semi-regular FTSE 100 valuation and forecast updates, using the latest data for both the index’s price and its earnings.
Continue reading “FTSE 100 forecast and valuation – June 2015”
Now that the FTSE 100 has broken through the 7,000 barrier investors can finally set their sights on something more interesting: The big 10,000.
Obviously, this isn’t going to happen overnight. From where the FTSE 100 is today it would take a 43% gain to reach that giant milestone and you just don’t get gains like that in a year or two unless the market is coming out of a bear market bottom, which it isn’t.
On the other hand, we could see another bear market if the global economy starts to deteriorate, or if something else gives investors the jitters.
So which is more likely in the next 5 years: A bull market to 10,000 or a bear market to 5,000?
Continue reading “The FTSE 100 at 5,000 or 10,000: Which is more likely in the next 5 years?”
Ever since the FTSE 100 reached a new high last month I’ve been meaning to write something about it. Well now I have, but as one of my semi-regular articles for BullBearings.co.uk.
Continue reading “The FTSE 100’s new high is not a bubble”
For my 2015 FTSE 100 forecast, I thought I would bend over backwards even more than usual to highlight just how uncertain the future really is, and how pointless most forecasts are (especially those that pick a single figure like 7,500 as a target for the end of the year).
Continue reading “FTSE 100 Forecast for 2015”
At the end of every year, investment pundits love to write about their forecasts for the following year. For 2014 the consensus view was that the FTSE 100 would finally break through the 7,000 barrier.
Continue reading “Can the FTSE 100 continue to grow beyond 7,000?”