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Last week the blue-chip FTSE 100 index hit a new all-time high.
That will no doubt have had many investors cheering. But others may be wondering whether it means the index is now overpriced and so primed for a tumble.
Here is my take — and what it means for my portfolio.
Lots of market uncertainty right now
Just as pride comes before a fall, a boom can come before a stock market crash.
However, that boom can last for years or even decades, with record after record potentially being set along the way.
So, a FTSE 100 record does not necessarily indicate that we are at the top of the market, or perhaps even anywhere near it.
That said, the current geopolitical and economic environment is resulting in a lot of market uncertainty in London and elsewhere.
Things could go either way from here
In practical investment terms, that means it is possible that the blue-chip index could keep moving upwards from here.
As poor performers risk getting relegated from it while fast-growing businesses take their place, I do think the index is not a good proxy for the market overall. Indeed, over the past five years the FTSE 100 has moved up 15% while the FTSE 250 has fallen 4%.
I think the blue-chip index might keep going up and the recent high suggests substantial confidence among at least some investors. However, I also fear that slow growth and economic uncertainty could mean that sooner or later we see a sharp reversal.
I’m largely ignoring the index
That might matter to me more if I was investing in the FTSE 100 overall.
Instead, I prefer to invest in individual shares. So the movements of the index as such are not that high on my radar.
Still, might not a high FTSE 100 price mean that individual shares are poor value?
In practice, not necessarily.
Within those 100 shares, at any given moment some may look overpriced to me but others could look undervalued. Indeed, that is how I see it at the moment.
An example is a share I have been buying more of in 2025, after it has fallen 10% since the start of the year: JD Sports (LSE: JD).
It is 49% lower now than it was five years ago. The sportswear retailer has clearly lost a lot of its shine in the City. It no longer has the big cash pile it used to. And it has issued multiple profit warnings and adding hundreds of new shops each year is eating into earnings.
But I also think that store opening programme could help fuel further growth. The big US acquisition that used up much of that big cash pile could too.
Even after the profit warnings, JD still expects to deliver profit before tax and adjusting items of £915—£935m. That makes its market capitalisation of £4.4bn look cheap to me.
