UK Savings Ratio and FTSE 100 Index - The CROWD is WRONG !!!!!!!

Pls see chart below for UKX from 1984 to 86

Mkt was going up - ie trending up
The crowd gets sucked in and see chart below for UK Savings Ratio

This dropped from 12% to 4%
Then came the 87 crash and the crowd started to deleverage after taking the hit


They should have de-levered before 87 ie UKX had gone from 1000 to 2400


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Then from 92 to 2000 , the UKX went from 2500 to 7000


Please see UKX chart below

The crowd got sucked in and savings ratio went from 12% to 4% again

Pls see green line


They should have de levered but they did nt


Then came the 2000 crash and then got hit again


Then de levered later but then it was too late


Most of them suffered losses in the tech crash
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Then the index UKX went from 3500 to 6500 between 2003 and 2007


Pls see chart below

Pls look at savings ratio

People got sucked in again and the ratio went from 6% to less than 0%


Wow


This was a real extreme


-ve savings ratio


This was not seen since 1984


This was early 2008


This is a clear signal that it was time to get out of the eqty mkt


The crowd was too late


The crash of 2008 came and wiped them out


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Last point now - the UKX went from 3500 to 6000 again


The savings ratio peaked at 7% or so in 2009


Crowd is now again reducing the savings rate and this is now at 4-5%


If we see a fall here this year to 3% or below - this will be clear signal to dump stocks and stay in cash


Let us see if this real fwd looking indicator is right this time as well.


It has been right since 1984 - the data starts in 1984 as well