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What's in store for the FTSE 100 in the coming year?

Predictions are always wrong!

Every year financial experts are asked to produce their predictions for where the FTSE 100 will end the year - and they are almost always wrong! - so why bother?

When it comes to making a specific prediction, the lack of any real accuracy makes the exercise fruitless but that shouldn't stop us from looking ahead.

It's true that the FTSE has too much short term volatility to make specific investment predictions but, history suggests that in the longer term, the UK stock market has been steadily growing over a 35+ year period and that this growth is very predictable.

As shown here, the overall ratio of FTSE 100 to UK GDP has remained flat over a 35 year period - albeit with the dramatic tech bubble, the likes of which investors would be wise to be very wary of if it were to be repeated in the future. This makes possible a detailed statistical analysis the fluctuations in the FTSE 100.

Statistical analysis can provide some clarity

This real-time view of the UK stock market is not only a helpful measure of the over or under valuation of the market but, more importantly, it allows us to assess the individual prospects and risks of the many thousands of investment funds whose performance is linked to this market.

These prospects and risks can be fully explored in our Fund Ratings

Notes:

  1. GDP growth assumed at 3.5% (gross - includes inflation).
  2. Return at modal value is based on the FTSE ending the year at its 'most likely' value.
  3. Figures also include dividend payments.
  4. All data is inherently subject to statistical variation and returns are not guaranteed.