So, is there something exceptional about the recent new “all time highs” recorded by the FTSE 100?

It is always interesting to look over the longer term. This data feed doesn’t go back to the 1987 crash but what tends to happen is self-feeding exuberance and a steepening of the rate of rise in the run-up to a crash, and then something causes confidence to seep and the “bears” come out and we have a collapse in confidence. I remember the 1987 crash very well, as I had just settled in to Robert Fleming in 1986, and everything just kept going up, and had done from the early 80’s. To come in to work by foot through the wreckage of a storm and then day after day seeing red on the screens and potentially my job at risk was very sobering.

However, looking at the two recent “corrections” on the longer term graph is interesting. The “dot-com” crash from 1999 onwards, bottoming in 2003, was a series of downs and corrections over quite a long period – 3 years of progressive reductions.

The 2008 crash looks quite different. The indication of “trouble ahead” was probably the Northern Rock liquidity problems in August 2007 but it still took almost a year after that for the crash proper to take hold. At Vtesse, we heard rumours at one bank that all orders for consumables – pencils and biros – had been stopped. Clearly a “bear” sign.

Looking now to the current peak, it doesn’t look all that much higher than the previous 2000 peak, given that that is over 17 years ago.

So, time to take some cash out of the market? Probably wise. We may have a 2016 style correction, but as Lance Corporal Jones said “Don’t panic”.

By Published On: January 11, 2018Categories: News