- ^FTSE
- LGEN.L
The FTSE 100 just hit a record high, so I decided to ask ChatGPT whether investors should be worried. Here’s what it said, and why I think it missed the point.
What ChatGPT actually said
I asked ChatGPT directly: will the FTSE 100 crash before the end of 2026?
Its response was measured rather than alarming. It noted that the index is currently near record highs, and that geopolitical shocks, stretched asset valuations, and rising market leverage could trigger a sharp correction.
Its conclusion: investors should prepare for volatility rather than attempt to predict a crash with certainty.
But ‘prepare for volatility’ isn’t a strategy. Here’s what I’d actually do.
Why I’m not as worried as ChatGPT
The Footsie is trading on a price-to-earnings (P/E) ratio of 13 to 14 times forward earnings. That’s not a stretched valuation by any historical measure.
Second, the dividend income the Footsie pays is real and substantial with the index yielding around 3.5%. Having real cash in the hand can help to soften the blow even if prices fall during a correction.
Third, and most practically: stock market corrections are impossible to time reliably.
I think the right response to crash anxiety is rarely to exit, but rather identify what you’d buy in a crash and position accordingly.
So what would I actually buy if the Footsie did fall 10% to 15% from here?
The stock I’d buy in a FTSE 100 correction
The answer for me comes back to income. Legal & General(LSE: LGEN) currently offers a dividend yield of 7.2% – one of the most generous in the Footsie.
The business is a leader in the pension risk transfer, asset management, and retirement solutions markets, having paid a dividend for 25 consecutive years.
Our priority now is to accelerate this momentum, maintaining discipline and delivering enhanced shareholder returns.
António Simões, Chief Executive, Legal & General – Full Year 2025 Results
Some of the key metrics as I write on Monday afternoon (3 August) are:
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52-week range: 217.2p – 302.3p
The stock has also managed to climb 15.5% higher year to date to a 52-week high, on top of the already impressive cash yield it’s paying to investors.
Income stocks with durable cash generation tend to outperform when growth-oriented stocks fall hardest. A 7.2% yield provides a meaningful cushion and doesn’t require share price growth to still deliver strong returns.
The risks worth naming
ChatGPT is right to be cautious. Dividends are never guaranteed, and a severe downturn could pressure even a well-capitalised insurer.
