Reviews. Commentaries. Opinions.

Is this time different?

Is this time different?

Q1 2021 Market Review

Our office is buzzing with activity again and it feels like pre-Covid. Restaurants are open, sports events and concerts with crowds are happening, and we are even sitting in traffic jams again… life in Israel is indeed returning to normal.

We are not out of the woods just yet, however with a virus reproduction rate of 0.49 in Israel it seems that the end is in sight. Unfortunately, we cannot say the same for the rest of the world. Globally, the reproduction rate is 1.08, which means the virus is still growing 6 months after the announcement of the first vaccine and with over 670 million doses administered. Even in the USA, where the vaccine roll out has been reasonably good for such a large population, the reproduction rate is above 1. This mean that virus issues will continue to plague the world for at least 6 months to a year or more.

Throughout the Corona period, we have hosted numerous webinars via Zoom and have found this to be a major positive consequence. We recently held a webinar focused on Q1 2021 and current investment issues and you may follow the link to view it. For those who prefer to read, we will summarize the main points of that webinar here for you.

Q1 Market Performance (31.3.2021)


USA Stocks


Global Stocks


Euro Stocks (in USD)


Emerging Market Index




USD (vs DXY)


Gold (XAU)


Global Bonds


High Yield Bonds


Hedge Fund Index


Listed USA REIT’s(Property)

Q1 performance across different asset classes was mixed. Most notably, stocks were positive and bonds were negative. Benchmark interest rates increased substantially from 0.9% to 1.7% and this hurt long bond positions. Therefore, conservative portfolios did worse than aggressive portfolios.

S&P 500 was positive 6.17% and the global bond benchmark was -4.7%.

It needs to be said that the market is high, many assets are expensive and the volatility is likely to continue, but we are optimistic for risk assets going forward.


We truly believe the link between gold and inflation is broken. This was proved again in Q1 2021, where the dominant story was higher than expected levels of inflation, which led to higher long-term rates. Gold finished the quarter -6%. From 2008 to date, where inflation has been a relatively stable between 1% and 2%, the price of gold has rallied from about $800 to $1700 back to $900 and then up to $2050 and now at $1745. This volatility has no bearing of inflation. We have long held the view that gold as a portfolio tool for inflation control does not work for the simple reason that if you think it will work you need to hold a lot of gold, and if you did your portfolio would be all over the place.


When we talk about inflation, we are not talking about hyperinflation. The developed world knows how to avoid hyperinflation through higher interest. It will be painful, but it can be done and is considered as a preferred option to letting inflation run out of control. However, the market is very sensitive to small changes in inflation. Gold, cash, bonds and growth stocks are all problematic asset classes to be in if inflation surprises on the upside so the natural question is what will work. We believe quality companies, value stocks, like Apple and Microsoft and other good companies that are part of the general S&P 500 index, should provide decent protection from inflation. Another area is higher yielding alternative investments. There is an asset class called TIPS, which could work but is very low yielding while owned and is somewhat debatable effectiveness on a portfolio level.

Positive Growth Environment

Our overall view for growth expectations is very positive. We have never had the level of government intervention we have today. Both monetary, through low interest rates and quantitative easing, and fiscal through incredibly large amounts of deficit spending. In the USA, we have not seen deficit spending like this since World War 2 and we have never seen the combination of aggressive monetary policy and fiscal policy. Therefore, we believe the macro picture is supportive of risk assets.

You are invited to watch the webinar to hear a little more about these and other subjects. In addition, you can watch our Israeli Market Q1 2021 Review webinar recording (Hebrew). If you have any questions please feel free to contact our investment team at


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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