FTSE 100 Financial Times Stock Exchange Index United Kingdom UK England Investment Trading concept … [+]
I like to joke that it is much harder to predict the future than the past. However, a future estimation is what you are looking for and if you read this in 2026 you will have an opportunity to marvel or laugh.
Let’s start by looking at the current picture from the Covid pandemic crash:
The FTSE 100 chart shows a steady rise from the Covid pandemic crash
It is a solid uptrend, if nowhere near the sort of bull run you would look at in the U.S. From the pre-Covid top until now it’s a very modest performance and anyone in value will have had a tough time from 2022 to mid-2023. Now, though, many sectors in the FTSE 100 are coming up roses, even though it cannot be clearly seen in the chart because the market is awash with non-U.K. conquistadors sweeping in and asset stripping the U.K. market because of its fundamental cheapness. Good news for value investors, bad news for the U.K.
So this is what I see next:
This chart predicts where the FTSE 100 could go next
The premise is that the U.K. market is trading slowly but surely upwards, to new pricing ranges where equilibrium is reached and where the market stews until a “catalysis” kicks the price up. This cycle if left uninterrupted should repeat.
If this process remains stable then we will see 9,000 next year, perhaps a 10% rise overall.
I don’t want to sink deeper into chart voodoo, but you can clearly see how that would work. Of course, charts do not price in the unknowable and the trend could run shorter or longer than the past. You can also see there is a volatility shrinkage in the recent chart:
The FTSE 100 chart shows diminishing volatility
Again, this is a trend not fate, but without something wild and unpredictable entering the picture, this volatility shrinkage is bullish. When the market feels the coast is clear, up she will go!
This is not what speculators want to see as it is far too pedestrian, but for long-term investors and for those who want diversification across currencies, the FTSE is a good place to go looking for diversification.
For those who want a bigger reason and perhaps with a more visceral reason to play, here is a chart to whet your appetite:
The FTSE 100 chart compared to the Dow Jones
Yes, it helps to be contrarian.
