Extending our count to the rest of the year, it was the best quarter since 2009, when markets were busy recovering from the global financial crisis. (You didn't sell in December, did you?)
Luckily, if that's a fitting designation, Wall Street was no exception. Identical records were set by the MSCI World Index. And fixed income displayed a similar pattern, with a notable contraction in spreads and a corresponding rise in bond prices. US high yield spreads fell by almost 1.3 percentage points – the biggest fall since 2009 and the biggest first quarter fall ever, or at least since the Fed started keeping score in 1996.
Tweets suggesting a trade deal between the US and China? More accomodative monetary policies? Or simply a rebound after a lousy fourth quarter of 2018?
All of the above – and then some. Above all, it's a reminder that you shouldn't be fixated on quarterly figures, let alone months or days. As for the S&P 500, the previous quarter delivered a loss of 13.5 per cent, meaning that the past half year came far short of anything remarkable.
By all means, do enjoy the good first quarter returns. Just remember that the daily news flow is probably as close to random walk as you'll ever get. When, on top of that, it is magnified by a market prone to overreaction, you see why every single day, month or quarter brings about a persistent, but unstable deviation from the long-term trend.
That trend is a different story – and, I may add, more profitable.
Finn Øystein Bergh
Chief Economist & Strategist
Historical returns are no guarantee for future returns. Future returns will depend, inter alia, on, market developments, the portfolio manager’s skill, the fund’s risk profile, as well as fees for subscription, management and redemption. Returns may become negative as a result of negative price developments. This is marketing communication.