What Goes Down Must Come Up - Holdun


After stocks and just about everything else fell sharply in the last quarter, the stock market came roaring back in the first quarter not only in the US but around the globe. An about face by the Federal Reserve in January, shelving plans for a steady stream of rate increases in favour of a wait and see attitude, got much of the credit for this rally along with efforts by China to jump start a stalling economy and underlying optimism about prospects for an end to the USA- China trade fight. The European Central Bank, meanwhile moved in March to provide additional stimulus as the Eurozone economy continued to sputter along.

Global Asset Classes March & YTD

Source: Holdun Trestle Management Inc. , John MacDougall


The S&P 500 scored its biggest first quarter  gain since 1998, rising 13.1% while the NASDQ Composite advanced 16.5%, the biggest rise in 7 years.

Gains were broad based with all 11 S&P sectors ending higher for the first time since 2014. Tech shares extended a streak of gains that have made them the strongest performing sector in the S&P this year. Another standout was energy.

Domestic Sector Performance – As of March 31, 2019

Source: MorningStar Direct. https://content.rwbaird.com/RWB/Content/PDF/Insights/Quarterly-Market-Chart-Book.pdf


Pot gives Canadian stocks their best high in 19 years ad the S&P/TSX rose 12% in the quarter following a slump of 11% in the previous quarter.

Cannabis stocks led the Q1 gains, making up 6 of the benchmark’s 10 best performers.

Canada’s TSX TR Index & Sectors March & YTD

Source: Holdun Trestle Management Inc. , John MacDougall

Canada’s TSX Index and Sectors

The Canadian dollar rallied, making the loonie the best performing currency among developed nations this year, with a 2% gain.


In Canada, plunging bond yields boosted gains on Government and Corporate debt, with an aggregate index of Canadian bonds returning 5.4% in the quarter, compared with a 3% gain for a comparable US index.


Commodities had the best quarter in almost 3 years, driven by supply concerns and optimism over demand. Crude oil paced the advance, while nickel led gains in industrial metals.

Source: Bloomberg https://www.bloomberg.com/news/articles/2019-03-29/commodities-best-quarter-since-2016-may-be-tough-act-to-follow

How did we fare?

During the first quarter of the year, the Holdun Canadian Equity gained 13.6% (in local currency) and outperformed slightly the S&P TSX. Stock selection was a value add to our relative outperformance. During the same period, the Holdun U.S. Equity gained 15.2% (in local currency) and it outperformed its benchmark the S&P 500 Index. Stock selection was primarily a value add to our relative outperformance within the U.S. portfolio.

Outlook going forward

Given recovery seen in Q1/2019, we believe that global economic growth will lose steam; however, we also believe that a recession in 2019 remains an unlikely scenario. Nonetheless, uncertain monetary policy combined with heightened geo-political risk have recently increased equity volatility and will continue in 2019. We remain cautious on our asset allocation and believe a balanced portfolio still offers a compelling risk-reward profile. We will view any equity market correction as an opportunity to add further risk assets.

Returns by Strategy for the QTD




U.S. Equity


13.6% 1.6%

Canadian Equity (in USD)

16.2% 15.5% 0.7%

Canadian Equity (in CAD)