Crash Protection
One of the most common mistakes made by investors is to remain invested in an overpriced market and to suffer the capital destruction which occurs when prices revert to reality.
ShareMaestro has a very strong track record in identifying when the the FTSE 100 is overvalued. This track record is based on standard ShareMaestro valuations of the FTSE 100, using default values for the two judgement-based inputs - Risk Premium (10%) and Real Dividend Growth (2% p.a.). A valuation less than 100% indicates that the market is overpriced; the greater the shortfall below 100%, the more the market is overpriced. A FTSE 100 valuation of less than 80% indicates that a bubble has formed.
Since the start of the FTSE 100 in 1984, there have been five major FTSE 100 price crashes of at least 25%, without an intervening price rise of at least 10%. ShareMaestro has signalled all of these crashes:
| FTSE 100 Peak Price |
Date |
ShareMaestro Valuation as % of price |
% Price crash from peak |
| 2443.4 | 16/07/87 | 70% | 36% |
| 6930.2 | 30/12/99 | 57% | 53% |
| 5967.0 | 30/04/01 | 73% | 26% |
| 5369.8 | 06/12/01 | 81% | 39% |
| 6732.4 | 15/06/07 | 88% | 46% |
