It has been a rocky 12 months for the flagship FTSE 100 index of main blue-chip shares – however with some notable highs. Already this week, the index has come near breaking its all-time file excessive closing degree, set earlier this 12 months.

When inventory indexes attain a brand new excessive, it doesn’t essentially imply that they’re overvalued. Presumably they might hold pushing upwards for years (and even many years) earlier than the subsequent massive crash. However we do know from historical past that, eventually, the market will fall once more.

So, because the buoyant FTSE 100 flexes its muscle mass, here’s what I’m doing to attempt to keep away from getting burnt if issues abruptly transfer south.

Two important questions for each funding

I believe there are a few crucial questions good buyers want to contemplate when making any funding.

The primary is: does the enterprise through which they’re investing include wonderful long-term business prospects? We have no idea the long run, after all, so we have to make that judgement utilizing present information whereas pondering severely about potential dangers in addition to alternatives forward.

Secondly, an investor should ask themselves whether or not the price for the funding is a beautiful one. An excellent enterprise doesn’t at all times make for an excellent funding, as what you pay issues.

Looking for bargains in right now’s market

The FTSE 100 is made up of Britain’s largest listed firms. That doesn’t imply that they’re all nice companies — however dozens of them are for my part.

Whereas the index is driving excessive, completely different shares inside it aren’t all performing in the identical means.

That’s each a threat and a chance as I see it.

Some shares could also be overvalued – maybe badly overvalued. I’m cautious of being burnt if I purchase them now,solely to see their worth plummet in future. That helps clarify why I at all times do my research earlier than shopping for a share.

However the sturdy efficiency of the index general doesn’t imply that there won’t be some potential bargains nestling in it this summer season.

A FTSE share to contemplate

For instance, one share I believe buyers ought to contemplate is packaging distributor Bunzl (LSE: BNZL).

It is a excellent instance of a share not being the identical because the index of which it varieties one small half. Over the previous 12 months, the FTSE 100 is up 8%. Bunzl, against this, is down by 21% in that interval.

I had been eyeing the corporate for some time so used the price fall to purchase some shares.

A fall like that doesn’t come from nowhere, after all. Tariff issues are a threat to Bunzl’s multinational enterprise, however even with out them efficiency had been weakening (income slipped barely final 12 months, whereas web revenue fell 5%). There’s a threat that its glory days of progress by acquisition – and with it a heady valuation – are over.

However with numerous prospects who have to order usually, a time-tested enterprise mannequin and robust commerce status, I’m maintaining the religion on this FTSE 100 agency as a long-term investor.