FTSE 100? Ready to fall again?

xnetco · 15 October 2006 at 10:24AM

The FTSE seems to be quite high again. What's the chances of it falling before the end of the year?

ReportInvestor · 15 October 2006 at 10:33AM

What is "quite high" ?

P/E ratios don't seem excessive. The yield isn't out of kilter - especially compared to low gilt yields or buy-to-let yields.

Sure it could fall it the US hits problems, or oil prices rise again or inflation / interest rates increase by more than expected.

Market_Oracle · 15 October 2006 at 3:39PM

The bull market is intact and doing what bull markets are required to do, which is to trend higher to new highs.

Yes the trend does move between overbought and oversold states, which gives profit taking and buying opportunities.

But the FTSE has done nothing to suggest that the MAIN trend is about to end.

flossy_splodge · 16 October 2006 at 12:05AM

The answer to your question really depends on what you're going to do with the information - let me explain. If you're looking to buy into individual stocks and shares you need to be looking at individual performance. If you're looking to buy something like a tracker, there's prob no 'best' time to invest. It's reckoned that the equities (stocks and shares) markets are for long term investment unless you're an expert. I've seen 'long term' defined as anything over 5 years and some say anything over 10 years.
If you're looking to predict some other event in the movement of money in its broadest sense:cool: if you find a good way to predict you could become the next Warren Buffet!!:rotfl:

dunstonh · 16 October 2006 at 8:09AM

I think the original poster was referring to the headline FTSE250 value? Am I right?

When I looked the other day it was about 6,200 so perhaps s/he was asking whether it is likely to fall to around 5,000 again any time soon.

The FTSE250 is at 10,365. The FTSE 100 is at 6153.

ReportInvestor · 16 October 2006 at 8:26AM

verdant_green wrote:

I think the original poster was referring to the headline FTSE250 value? Am I right?

When I looked the other day it was about 6,200 so perhaps s/he was asking whether it is likely to fall to around 5,000 again any time soon.

I'm afraid both your replies have blinded those of us who don't understand P/E ratios, yields etc etc and who just want to know likely headline values & whether the value of our portfolios is likely to be due for another fall.

The original poster did specifically say the FTSE100.

Sorry about mentioning P/Es without explanation, but no apologies for mentioning yields/income. Any investor needs to understand understand that shares values are about expectations of future dividend yields. Otherwise you are speculating rather than investing.

I was trying to suggest that on a couple of fairly standard measures traditionally used by analysts there's no need to panic yet.

You've also had some technical reassurance from a chartist - the Oracle. He concluded very clearly about the trend - which presumably is what people wanted who aren't experts?

However the market is just that - a market. Price is set by the relative number of buyers and sellers. And it's impossible to predict sentiment.

For a simple "genuine" prediction, Mystic Meg's your best gal.

Chrismaths · 16 October 2006 at 9:24AM

I've never worked out why P/E ratios (price/earnings) are quoted the way they are. A simpler way to look at it is to take the reciprocal (ie earnings/price) - which is the "earnings yield". So a company on a p/e of 12 has an earnings yield of 1/12 = 8.3%. If it has a dividend yield of 5%, then this means it is paying out 60% of its earnings in dividends. The usual caveats apply - it is easy to manipulate earnings through accounting skullduggery, but very hard to manipulate cash.

FTSE 100? Ready to fall again?

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