Should you play bear or bull with markets?

The FTSE 100 reached a 13-year high this week, before falling back. What’s next?

At the start of the week it looked likely that the Footsie would reach a new all-time high, topping the 6930 record achieved at the height of the dot-com boom in 1999.

But a 2 per cent fall in the Blue Chip index on Thursday  put paid to that – at least for the moment. For investors who have enjoyed the near 100 per cent rise in the Footsie in the last four years the question rises: is it time to take profits?

No, says Mark Dampier of Hargreaves Lansdown, who writes our weekly The Analyst column. “I’m still bullish,” he said this week. “Even though the market came off strongly on Thursday, my view is that there’s a lot of cash waiting on the sidelines.

“I don’t think the UK equity market is overvalued. It can go further. The signs that I look for to show the current rally is coming to an end are things like wage rises, and we’re not seeing that.”

Brian Dennehy of Fund Expert has been a long-time bear, predicting that the Footsie would fall to 4000 rather than climb to record highs. This week he admitted he got that wrong.

“Our thesis for some time was that the UK stock market has been in a bear market since December 1999. That’s why we predicted falls in the Footsie,” he said.

“But we couldn’t anticipate several factors such as the Cyprus affair, and lots of money in banks flooding a range of asset classes.

“At any point we’re analysing markets to uncover a “most likely” path – and we always do this in such a way that if certain parameters are breached, we must be on another path. So as the facts changed, we’ve had to change our minds.”

But what now for markets? We’re into crystal-ball gazing territory, but Mr Dennehy has considered several scenarios including that there will be a continuing bear market, or even that a stronger bull market emerged in 2009 and is set to push the Footsie up to 10000 and beyond.

However, the most likely scenario, he now thinks, is that a new bull market began in March 2009 but is now nearing its end. “It could also represent the end of a much bigger stock market cycle stretching back decades that could lead to further 400 point upside in markets before the beginning of a new bear market.”

Other views? Patrick Connolly of Chase de Vere thinks taking some profits now could be a wise course. “While equity investors should remain in the market over the long term, there is a strong argument for taking some profits and rebalancing now,” he said.

“By doing this you are effectively selling at the top of the market and buying at the bottom. This is the holy grail of investing and something which very few investors achieve.”

Meanwhile Rebecca O’Keeffe of Interactive Investor favours a switch into emerging markets. She said: “It’s too early to be absolutely calling the top of the market, but for those who have made some healthy profits in the run up since the start of the year, a degree of redistribution into emerging markets may well prove to be rather astute.”

Chris Godding of Signia Wealth has a similar view. “Developed markets are due a correction of around 5 per cent, but the outlook looks good on a three-year time frame. Investors should look to emerging markets which offer a good entry point at current levels.

“Falling commodity prices may be bad for the top line in countries such as Brazil and Russia, but they relieve inflationary pressures for the emerging consumer in India, China and many other resource importers.”

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
peopleChildren leave in tears as Santa is caught smoking and drinking
Arts and Entertainment
A host of big name acts recorded 'Do They Know It's Christmas?' in London on Saturday
musicCharity single tops chart
Arts and Entertainment
Steve Backshall has become the eighth celebrity to leave Strictly Come Dancing
tv
News
people
PROMOTED VIDEO
Arts and Entertainment
tvStrictly presenter returns to screens after Halloween accident
News
peopleFormer civil rights activist who was jailed for smoking crack cocaine has died aged 78
News
i100
News
Boxing promoter Kellie Maloney, formerly known as Frank Maloney, entered the 2014 Celebrity Big Brother house
people
Sport
Dwight Gayle (left) celebrates making it 1-1 with Crystal Palace captain Mile Jedinak
premier leagueReds falter to humbling defeat
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Reach Volunteering: Trustee – PR& Marketing, Social Care, Commercial skills

    Voluntary Only - Expenses Reimbursed: Reach Volunteering: Age Concern Slough a...

    Reach Volunteering: Charity Treasurer

    Voluntary Only - Expenses Reimbursed: Reach Volunteering: Crossroads Care is s...

    SThree: Trainee Recruitment Consultant - Soho

    £20000 - £25000 per annum + OTE £35,000: SThree: We consistently strive to be ...

    Ampersand Consulting LLP: Markit EDM (CADIS) Developer

    £50000 - £90000 per annum + benefits: Ampersand Consulting LLP: Markit EDM (CA...

    Day In a Page

    Mau Mau uprising: Kenyans still waiting for justice join class action over Britain's role in the emergency

    Kenyans still waiting for justice over Mau Mau uprising

    Thousands join class action over Britain's role in the emergency
    Isis in Iraq: The trauma of the last six months has overwhelmed the remaining Christians in the country

    The last Christians in Iraq

    After 2,000 years, a community will try anything – including pretending to convert to Islam – to avoid losing everything, says Patrick Cockburn
    Black Friday: Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Helpful discounts for Christmas shoppers, or cynical marketing by desperate retailers?

    Britain braced for Black Friday
    Bill Cosby's persona goes from America's dad to date-rape drugs

    From America's dad to date-rape drugs

    Stories of Bill Cosby's alleged sexual assaults may have circulated widely in Hollywood, but they came as a shock to fans, says Rupert Cornwell
    Clare Balding: 'Women's sport is kicking off at last'

    Clare Balding: 'Women's sport is kicking off at last'

    As fans flock to see England women's Wembley debut against Germany, the TV presenter on an exciting 'sea change'
    Oh come, all ye multi-faithful: The Christmas jumper is in fashion, but should you wear your religion on your sleeve?

    Oh come, all ye multi-faithful

    The Christmas jumper is in fashion, but should you wear your religion on your sleeve?
    Dr Charles Heatley: The GP off to do battle in the war against Ebola

    The GP off to do battle in the war against Ebola

    Dr Charles Heatley on joining the NHS volunteers' team bound for Sierra Leone
    Flogging vlogging: First video bloggers conquered YouTube. Now they want us to buy their books

    Flogging vlogging

    First video bloggers conquered YouTube. Now they want us to buy their books
    Saturday Night Live vs The Daily Show: US channels wage comedy star wars

    Saturday Night Live vs The Daily Show

    US channels wage comedy star wars
    When is a wine made in Piedmont not a Piemonte wine? When EU rules make Italian vineyards invisible

    When is a wine made in Piedmont not a Piemonte wine?

    When EU rules make Italian vineyards invisible
    Look what's mushrooming now! Meat-free recipes and food scandals help one growing sector

    Look what's mushrooming now!

    Meat-free recipes and food scandals help one growing sector
    Neil Findlay is more a pink shrimp than a red firebrand

    More a pink shrimp than a red firebrand

    The vilification of the potential Scottish Labour leader Neil Findlay shows how one-note politics is today, says DJ Taylor
    Bill Granger recipes: Tenderstem broccoli omelette; Fried eggs with Mexican-style tomato and chilli sauce; Pan-fried cavolo nero with soft-boiled egg

    Oeuf quake

    Bill Granger's cracking egg recipes
    Terry Venables: Wayne Rooney is roaring again and the world knows that England are back

    Terry Venables column

    Wayne Rooney is roaring again and the world knows that England are back
    Michael Calvin: Abject leadership is allowing football’s age-old sores to fester

    Abject leadership is allowing football’s age-old sores to fester

    Those at the top are allowing the same issues to go unchallenged, says Michael Calvin