Will FTSE take off quicker than expected?

boralas

Despite the depth of the recession, I wonder whether the FTSE may take off and exceed the previous pre-recession high sooner than expected.

Without trying to diminish the severity of the downturn, I wonder whether the medium-term result is that companies trim back costs, cut the workforce, streamline, and come out of the recession fitter and leaner with lower overheads. So when we come out of recession, companies will start to post bigger than anticipated profits, sooner than expected.

Is my corporate 'Darwinian shake-out' theory rubbish, or does anyone else hold the view that this may indeed be what happens.

For arguments sake, the FTSE above 7,000 within 4 years from now? Agree or disagree.

Reaper

Yes, every recession means the most inefficient companies get killed off first and those that survive have to cut away the fat.

No, because growth is limited by the state of a fragile market which is outside the control of the companies, regardless of how efficient they are.

CLAPTON

surely 'anticipated' profits will reflect the cost cutting/streamlining etc so will not be unexpected.

also remember that the stock market highs of 2008 never reached the highs of 2000

tradetime

Yes, every recession means the most inefficient companies get killed off first and those that survive have to cut away the fat.

Unless the government props them up , sorry just couldn't resist that.

In many ways it should work like that, as Reaper says, however how fast this works is another thing since much of the "fat they cut" namely jobs, will be someones consumer, maybe even their own. In pure nominal terms I suspect due to inflation the level that stock market indices achieve may surprise many, certainly has so far.

Stavros_3

I think we are going see a fall back this summer to the level of 4000

chopperharris

ftse 5000 by january , ive been right so far over the last 18 months , including the sub 3400 on ftse and the "experts" bauked.I was right about 4400 summer this year too.

Gold though isnt going to go up forever , down to 780 as bank interest rates creep up and other investments are about to hit a good growth pattern.

Oil is the biggest impacter , then weather and civil unrest.Oils stocks are finite , and 165 a barrel will be cheap memories in 7 years.

Micro bubbles happening in asian markets, bad thing reminiscent of the 20s in america when joe q bought into everything and thats what is happening.However chiina managaes its markets and may just well deflate rather than allow runaaway inflation.

Banking stocks , which the british tax payer is heavilly invested into are the growth medium of choice over the next 3-5 years.UKFI and rbs will work to create biggest profit for HMG to lessen debt burden.The eu, tories and greedy mm folk will prefer the ones part owned by the tax payer to be dismantled to make the few better off financially rather than the masses profitting , no surprise there then the rich gettign richer off our taxes.

uk_steve

it was going to happen but i am shocked how fast its blasted off personly