No one really knows what theFTSE 100(INDEXFTSE: UKX) will do this year, although thishasnt stopped the Citys top analysts trying to put a number on the level at which they believe the index will finish the year.
All of the analysts forecasts are relativity upbeat. Most predict that the FTSE 100 will surge to a record high during 2015, charging through the key level of 7,000 and pushing towards 8,000.
Morgan Stanley has one of the most pessimistic targets. Its analysts believe that the FTSE 100 will end 2015 no higher than 7,200. The bank believes thatforeign exchange headwinds from the pound and US dollar, as well aspolitical risk around the general election, will cause buyers to think twice about putting their cash to work here in the UK.
Meanwhile,Barclayshas a more optimistic outlook, with a year-end FTSE target of 7,300. Citigrouphas the most positive outlook, predicting that the FTSE 100 will end the year at a record 7,700.
To come up with this figure, Citigroups analysts focused on the fact thatUK plc is expected to deliver 5-10% earnings growth in 2015-16. Additionally, Citigroups analysts have noted a global pick-up inmergers and acquisitions activity, which the FTSE 100 will benefit from.
Not to be trusted
However, while the Citys top analysts believe that the FTSE will end 2015 at a record high, there are plenty of reasons to be sceptical of these forecasts. These estimates should never be relied upon, as in the past they have turned out to be extremely unreliable!
For example, last year analysts were predicting that the FTSE 100 would end 2014 at similar levels to those predicted for this year. Specifically, Barclayswas expecting the FTSE 100 index to end2014at a record level of 7,400,Citigroupsanalysts had pencilled in a year-end level of8,000 and Morgan Stanleys figures suggested the index would end the year at 7,220.
All of these forecasts turned out to be wayoff the mark. The index ended the year at 6,566 thats a staggering 18% belowCitigroups target.
Whats more, there are signs that the FTSE 100 could actually be gearing up for a sudden move downward.
About to fall?
Last week, The Motley Fool publishedan article highlightingthe fact thatthe market seems to be in the final stages of a bull market, and that the warning signs of an impending market crash are starting to flash. These three signs included the sudden increase in volatility, following a period of calm, the falling price of copper and investors exceptionally high level of optimism.
But in reality, not even the worlds top economists or City analysts can accurately predict where the market will be in a years time.
There are many reasons why the market could suddenly decide to take a dive, or rally to a new high. Trying to time the market often results in failure and can cost you a lot of money.
That’s why the most successful investors look to the long-term. They build a portfolio of stocks that have reliable long-term outlooks,illustrious histories and dependable dividends.
The Motley Fool’s top analysts believe there are five such opportunities on offer right now.
If you’re intrigued and want to discover the fiveshares we’re recommending, all you need to do isclick hereto download our new free report.
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