What private investors really think of FTSE 100's record high

At last, the FTSE 100 has made a new all-time high. It's been a tumultuous 17 months since the previous peak, but the post-referendum rally had just enough puff to get us over the line. Admittedly, it was unconvincing but, after another retreat, the debate about whether this is the market top rages on.

And there's been plenty of heated discussion here at Interactive Investor HQ. Stocks look pricey on traditional valuation metrics, we're agreed, although it's largely the big overseas earners that are acting like bonds - the so-called bond proxies - which trade on gobsmacking multiples.

There are obvious pockets of value around, but if the market is to keep rising, company profits must start growing faster than they are currently. Of course, the weak pound helps exporters, and chancellor Philip Hammond's autumn statement on 23 November is expected to flag measures to shore up the UK economy.

An increase in the oil price will give the industry a boost, too, sustaining both company dividends and investment.

Despite its rapid ascent, the blue-chip index still yields over 4%However, while further declines in sterling look odds-on, higher oil prices do not. Everything depends on next month's meeting of OPEC in Vienna and Vladimir Putin's continuing support of production cuts.

Even then there's no certainty any deal will last the distance. Be certain the Saudis will turn the taps back on if higher prices begin to benefit arch rivals in the US.

On the flipside, income investors have few options other than equities. Despite its rapid ascent, the blue-chip index still yields over 4%, and around a quarter of FTSE 250 constituents yield more than that. Cast your net further and generous, well-covered dividends are easy to find.

Momentum investors will also be keeping a close eye on the number of stocks making new 52-week highs. It's a trend both we and our friends at Stockopedia have been hot on recently.

Remember the words of American fund manager and momentum fan Richard Driehaus:

"One market paradigm that I take exception to is: buy low and sell high. I believe that far more money is made buying high and selling at even higher prices."

True, there have been fewer 52-week highs in the past few sessions, but the market has eased off a touch, so it's expected. And, incredibly, 20 FTSE 100 companies, among them Burberry, Johnson Matthey, Croda, Shell and HSBC, have made a one-year best this week.

Less than 4% of those who responded to our poll said they were selling up into cashTechnical analyst and regular ii contributor Alistair Strang still thinks the top 100 index can go higher, possibly up to 7,400, according to his software.

But investors will want to take notice of the downside potential, which Alistair spelled out to us earlier this week:

"Near-term, if we look for danger signals, apparently any weakness below 6,999 suggests travel to a non-threatening 6,968 points," he said.

"This, unfortunately, is where it starts to get a bit scary, due to any venture below 6,968 suggesting future travel to 6,880, capable of damaging the post-Brexit uptrend."

Our survey

That's food for thought. But we were interested to hear: what do our readers think will happen next?

Putting to bed concerns about a rush for the exit, less than 4% of those who responded to our poll said they were selling up and switching their portfolio to cash. Another 18% did admit to taking some money off the table in the belief that risks were building.

A full 17% of respondents to our poll are 'super bulls' who reckon the market will keep going up That's perfectly understandable. It's a typical human response to markets which reach a previous high, and there's a saying in the City about "leaving something for the next man".

However, almost half of those surveyed - 48% - said they were staying invested. True, they weren't buying more, implying they don't think the market will rise much from here, but there are few other asset classes which generate anything like the income offered by equities right now.

And that's clearly the explanation for many of the 31% of investors who are still buying shares at or near record highs. Over 14% of all respondents said they would keep buying equities for dividend income because they can't get this yield elsewhere.

Of course, this kind of income does not come cheap these days, unless you back Lloyds Bank and some of the housebuilders, which offer dividend yields to match their price/earnings (PE) multiples - stand up Taylor Wimpey!

The market has only fallen once in the final three months of the yearThe remaining 17% of buyers in our poll - the super bulls - just think the market is heading higher. The FTSE 100, 250 and even super-charged AIM have given up a little ground, but there really is no need to hit the panic button.

That the next few days and weeks will be interesting is not in doubt. There's a chart breakout situation in the US, discussed in depth by American money manager Lance Roberts here.

It's reporting season in the States, too, and traders will want to see strong growth in earnings to underpin markets and support a move higher.

Over here, we're in the seasonally stronger fourth quarter and, as I pointed out recently, since the financial crisis, the market has only fallen once in the final three months of the year. And stocks have always done well in Q4, not just during the post-crisis bull run. Even when they don't rise, they tend not to fall by very much.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.