Reviews. Commentaries. Opinions.

Q1 2019 Global Market Review

Q1 2019 Global Market Review

Markets are strong: sell down and take profits or remain loyal to your asset allocation?

When markets are going up strongly as they did in Q1 2019, no one asks tough questions and most investors focus on other aspects of their lives. Strong markets make our jobs as wealth managers easier. The main question being posed on a daily basis is should we sell down and take profits or remain loyal to our long-term plans and beliefs. This is a valid and serious question, which is worth the debate. Last year, January 2018 was a strong month and the rest of the year was negative, particularly February and the 4th quarter. One has to ask the question if the gains from Q1 2019 are likely to be given up later in the year or not.

Hindsight is 20-20. Looking back at the drastic sell off now, it is clear that the market panicked and negative sentiment snowballed. In December we did not know if the negative sentiment would continue, however as you will see in our year-end commentary, we were optimistic looking into 2019.


Q1 2019

Last 15 months

US Equities (S&P 500)



TA 125 equities



MSCI World Equities



Eurostox 50






US Corporate Bonds



Global Bonds



The table shows Q1 2019 main indices returns compared to the last 15 months (i.e. from 1 Jan 2018). The second column is interesting because it includes the 2 negative periods of February 2018 and 2018 4th quarter. It must be noted that had investors lost their nerve at any time during 2018 they would have most likely missed the rebounds. Staying invested ensured reasonable returns, trying to go in and out of the market would most likely have missed the positive periods. This is history repeating itself.

If we look at the 15 month returns, we can see that the profit figures are more modest and the desire to take short-term profits is tempered. Our long-term reward assumption for equity is in the 6% to 8% range and this is an average – one needs to be constantly invested over the long-term to achieve this average.

Looking forward now for the remainder of 2019, we feel that the likelihood of a sustained bear market is low. We will probably still face bouts of volatility, meaning losses, however it would be futile to try time these.  There is still a lot of support for USA equities; however we are more concerned about longer corporate bonds. The long-term interest rates simply do not justify it. Direct single names bonds are ok because we can manage expectations much better, however the longer term funds and ETF’s are a concern and we have reduced our exposure there. The bounce back in Europe has surprised many. The economic prognosis for European growth is poor given the structural problems, however as I write this commentary the UK parliament finally did something sensible and stopped the possibility of a hard Brexit. We think this will be positive for Europe and the Sterling. As we said in December commentary – if the UK cannot leave, no one can leave.

The political front looks relatively positive with no trade wars with China and Brexit delayed. In Israel, we have elections next week; however, we do not expect a major market impact regardless of the result. South Africa, which is relevant for many of our clients, also face a crucial step with their elections in which the ANC are expected to win by a lesser margin and then Ramaphosa’s real challenge of cleaning house of corruption will begin. It is challenging to be overly optimistic there.

Our job is to make money for our clients while managing their risk. If we take all the risk off the table then the client may as well sit in cash in the bank (and the performance will be very low, accordingly). We will make minor adjustments to the portfolios where relevant; however, we will largely remain committed to longer-term views as this is our DNA.


The aforementioned information is not a substitute for personal Investment marketing, which takes into account the particular circumstances and special needs of each person. The views expressed in this Review should be considered as market comment for the short term for information purposes only. As such the views herein may be subject to frequent change, are indicative only and no reliance should be placed thereon. This Review does not constitute legal, tax or accounting advice, or any investment recommendation, or any offer to buy or sell financial instruments of any kind, and does not take into account the investment objectives or needs of specific investors. Although this Review has been produced with all reasonable care, based on sources believed to be reliable, reflecting opinions at the time of its writing and subject to change at any time without prior notice, neither Pioneer Wealth Management nor any other entity or segment within the Pioneer International Group makes any representations or warranties as to the accuracy or completeness hereof and accepts no liability for any loss or damage which may arise from its use. The writer and the company are unaware of any conflict of interest at the time of publishing the above commentary.


About the Author

Mike Ellis

Mike Ellis

Director and Chief Investment Officer

Mike Ellis, originally from South Africa, joined Pioneer in March 2000 after working in the Private Banking & Trust industry in the UK. At Pioneer he was the group CFO for the better part of the last decade. Today Mike serves as a director and is the CIO.

Mike is a Chartered Accountant, a CFA charter holder and received his MBA from Tel Aviv University & Kellogg Business School. Mike is also an Oxford University Alumni having participated in the Said Business School's Global Investment Risk Management Program. In addition, Mike is a licensed Portfolio manager by the Israel Securities Authority.

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