It’s different this time
That is what they said in the late 1990s amidst the euphoria of a rising market. But, of course, it wasn’t and the market after hitting 6,930 on 30 December 1999 crashed in January 2000. The fall was finally spent at 3,287 in March 2003. The damage was a fall of 52% peak to trough.
The Crash of 2000
This chart shows two years of the FTSE 100 January 1999 to December 2000. The highest point was 6,930 on 30th December 1999. Are there signs telling us that we are at the start of a crash?
It will never be so simple. Two years moving sideways and an unwillingness to drive the market higher left only one choice, the market had to fall. And it did.
The Crash of 2007
This is the FTSE 100 over two years July 2006 to June 2008. The highest point was 6,732 in June 2007 as the world enjoyed the excitement of almost unlimited credit which became a mirage.
This time the possibility of a crash following a change of trend was much clearer. The result was a fall of 47% to March 2009 and the regulators are still fighting those battles.
Not yet a Crash
Right up to date, two years of the FTSE 100 November 2012 until October 2014. 6,878 has been the peak in May and September 2014 but the market has not tried to push higher.
So What? A change is not easy to identify and don’t expect an easy answer to “What’s next?”
Disclaimer: This material is published by Raymond James Investment Services Limited (RJIS) for information purposes only and should not be regarded as providing any specific advice. Opinions constitute our judgement of this date and are subject to change without warning.