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.”
Derek Pain: I'm cautious, but remain one of the few bulls in the market
Donald MacInnes: Who would want to be a Barbie girl in a non-Barbie world?
Mark Dampier: How to get an income now that savings are past the 'use by' date
Thousands of UK investors could lose out following collapse of Secured Energy Bonds
Bargain Hunter: Fly off for a winter break in France or Portugal for well under £100
- 1 Venezuela Expo Tattoo 2015: Extreme body art from 'Vampire Woman' to 109mm earlobes
- 2 Saudi preacher who 'raped and tortured' his five -year-old daughter to death is released after paying 'blood money'
- 3 Ball pool for adults opens in London
- 4 Amal Clooney gives excellent response to fashion question at European Court of Human Rights
- 5 Rashida Jones speaks out against male-centric porn saying 'women should have sex and feel good about it'
9 reasons Greece's experiment with the radical left is doomed to failure
Have we reached 'peak food'? Shortages loom as global production rates slow
Greece elections: Syriza and EU on collision course after election win for left-wing party
British grandmother Lindsay Sandiford faces execution by firing squad in Indonesia
Liberal Democrat minister defends comments suggesting immigration causes pub closures
King Abdullah dead: We can't afford not to hold Saudi Arabia's royals to account
iJobs Money & Business
£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...
£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...
£13000 per annum: Recruitment Genius: This Pension Specialist was established ...
£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...
Day In a Page
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion