The theories that predict when the FTSE 100 will hit 10,000

Three respected academics at the London Business School have predicted the FTSE 100 has a 50pc chance of reaching the 10,000 point mark by 2022.

The professors, Dr Mike Staunton, Elroy Dimson and Paul Marsh, expect Britain’s leading share index to return 6pc a year on average over the next decade. Mr Dimson and Mr Marsh were part of the team that originally designed the FTSE 100.

The team have made the forecast after looking at a number of factors, including the FTSE 100’s valuation today and how British shares have historically performed in both bull and bear markets.

They also factored in the chances of a big event, such as another financial crisis, blowing the FTSE 100 off course.

Based on these assumptions the team say there is a 50pc chance of the FTSE 100 hitting 10,000 by the end of 2022, as the chart below shows.

The firm said with a more pessimistic 4pc return a year there is a 50pc chance of hitting 10,000 by 2030. But under a more optimistic scenario of 8pc returns a year there is a one in two chance the index will hit 10,000 by the end of 2020.

In 2002, when the FTSE 100 stood at stood at 3,858 after the tech bubble popped, the three academics predicted the index would surpass its 1999 peak in 2003.

It was not until earlier this week that the FTSE 100 set a new record.

“We went on to say that the market would not get there smoothly,” said Mr Dimson.

"With hindsight, that was something of an understatement. But at the time, we were regarded as raging pessimists, although we were just being realistic.

"As we said in 2002, do not expect a smooth ride. And these ‘probabilistic’ forecasts come with the usual health warnings."

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