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FTSE to hit 10,000 by 2020?

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Academics from London Business School have predicted there to be a 50 per cent chance of the FTSE 100 reaching the 10,000 point mark in the next seven years.

Professors Elroy Dimson and Paul Marsh, part of the team that originally designed Britain’s premier share index, forecast it will return 6 per cent annually over the next decade, on average.

The duo have base their projection on consideration of a number of factors, including the FTSE 100’s valuation today, how UK shares have performed in ‘bear’ and ‘bull’ markets, and the prospect of another financial crisis. The pair note that, in the event of a 4 per cent annual return, there was a 50 per cent chance of hitting 10,000 by 2030; in the event of an 8 percent return, there is a one in two chance of hitting 10,000 by 2020. The chart below details the three separate scenarios.

However, the pair’s previous predictions have proved wide of the mark: In 2002, they predicted that the FTSE 100 would surpass its 1999 zenith in 2003; it wasn’t until earlier this week that this was achieved.

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