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How lengthy did it first take for the FTSE 100 to double? And with it passing 10,000 for the primary time in January 2026, how lengthy may we watch for it to double to twenty,000 and past?
From the primary days of the FTSE 100 (in 1984 when it started on 1,000), it took simply three years earlier than it hit the two,000 mark. Nevertheless it’s unlikely we’ll see London’s main index bounce 100% by 2029.
The long run is unpredictable, in fact. That’s why I roped in everybody’s favorite hallucinating chatbot, ChatGPT. I requested it: “When will the FTSE 100 hit 20,000?”
The reply
ChatGPT shortly responded that it was “far off” and {that a} date within the 2030s or later was on the playing cards. Right here was essentially the most related part of its reply: “Long-term statistical or algorithmic models (like those on some forecasting sites) show the index perhaps approaching 19,000 only by 2037, and even that depends on sustained, above-average returns every year.”
There was one thing lacking from all this evaluation – which but once more was a reminder that these AI instruments can’t be used as monetary recommendation – which was the whole absence of any point out of dividends.
The FTSE 100 is maybe the largest dividend-paying index on the earth. On prime of share value positive aspects, buyers have come to count on within the area of 4% a yr on common paid as as a dividend yield (though it’s somewhat decrease in the mean time).
The factors tally doesn’t take into consideration these dividends, in fact, solely share value strikes. Due to this fact, if we have been to issue within the chunky payouts from a few of the Footsie’s world-class dividend shares then enthusiastic buyers may make the 20,000 mark arrive so much sooner.
Cheapness
One other oversight from ChatGPT was the shortage of any point out of valuations. In comparison with indexes in different international locations, the FTSE 100 is filled with low price-to-earnings ratio shares. Take easyJet (LSE: EZJ) for instance, which trades at a P/E of solely 7.7. A shift in these sorts of valuations may deliver that 20,000 goal alongside a lot quicker.
In fact, one of the best ways to benefit from undervalued shares is to purchase shares in particular person corporations moderately than a whole index. Airways like easyJet are in a single space I consider could possibly be low cost in the mean time. Its share value remains to be 47% cheaper than it was earlier than the pandemic.
It’s price mentioning that the battered share value highlights a few of the dangers right here too. The knock to investor confidence from the pandemic period when planes have been grounded didn’t assist the low-cost airline. However since then, gasoline prices, wage prices and common inflation points have been squeezing margins too.
Nonetheless, single-digit P/E ratios are skinny on the bottom today. And with earnings forecast to rise and convey the P/E down to six in 2027, I’d say there could possibly be sufficient worth right here to make easyJet a inventory price contemplating.
The date
For a little bit of enjoyable (and to not be taken in any respect severely), I pushed ChatGPT for a date. It gave me a “pub-bet answer”. It mentioned: “FTSE 100 at 20,000? September 2043. If it happens earlier, drinks are on the bulls. If later… well, that’s the FTSE being the FTSE.”
