FTSE 100 to 10,000?

We often see some bold bullish and bearish predictions about the future level of the FTSE 100 index of leading UK company shares.

None have been so bullish recently as the latest from Invesco Perpetual’s Martin Walker, who believes the FTSE 100 will rise to 10,000 during the next decade.

This would represent an average climb of 7% per year, less than the 9.2% it has risen from the low point last year (4,790 points) to the lowest point so far this year (5,230 points).

Describing his view as “very bullish”, Walker expects to see continued volatility over the next decade, although the index should ‘trough’ at a higher point in each year.

This very bullish prediction is despite the risks currently posed by the eurozone sovereign debt market and in the US.

Regardless of what the FTSE 100 does achieve over the next decade, investors would be unwise to bet their entire portfolios on this outcome.

The best investment portfolios tend to include exposure to a range of investment asset classes, including but not limited to UK equities. This allows investors to benefit from the negative correlation between asset classes and the risk reducing aspects of diversification.

It is however great to see some confidence returning to investment markets.

Photo credit: Flickr/24oranges.nl