Pecunia Causa Aandelenmarkt in 2018

Pecunia Causa, Aandelenmarkt in 2018

The end of 2018 has passed and we are already a week into 2019. As you may see more often, this seems an optimal moment for some reflection on the past year. Hence, you are reading the Pecunia Causa year review.

We have ended a busy year in the financial markets. 2018 was for a number of countries the first year since 2011 that the markets lost value on year basis. Some of the markets have come very close to becoming a ‘bear market’, or have even entered this dreaded phase. For those not very familiar with the language of Wall Street, a bear market means that the price of an index or share of a company is more than 20% lower than its most recent high. For the most bear markets at this moment, that very peak is still in 2018, showing how fast the stock prices dropped in 2018. So what on earth actually happened?

In February 2018 things already went bad. Markets worldwide dropped hard and they dropped fast. The reason for this was, most likely, blind panic. The American government, led by Donald Trump, gave strong tax cuts for domestic companies. This actually frightened investors, as they saw a risk of the American economy overheating. This fear got worse by the contracting monetary policy that the Federal Reserve implemented to counter overheating. That the Fed had been planning this move for a long time already did not seem to matter anymore. Ultimately however, markets recovered and, despite some small corrections, calmly increased until their peaks in August.

From August on, the problems really started. The reasons are numerous, although the important note has to be made that these connections might also be made in hindsight, in order to create some sense in the chaos of stock price movements. For completeness, we will provide a short list of reasons for this large drop in stock prices.

The causes that are named most often are: crisis in emerging market economies (Turkey, Argentina, South Africa, Brazil), the Sino-American trade war, diminishing attractiveness of stocks in favour of bonds (because of the increasing interest rates), the end of quantitative easing, the chaos that is called Brexit, the Italian government budget, the murder of Jamal Khashoggi and so on and so forth. Plenty of these reasons could be considered one time affairs, however there are also some causes that could remain a worry for a longer amount of time. The most important of these are the Brexit (after the UK leaves the EU, economic consequences will be felt for a significant amount of time) and the aftermath of quantitative easing (not only do stocks become less attractive in favour of bonds, because of the large amounts of money in the economy, there are plenty of bonds and loans that are not safe).

So most markets worldwide did not perform well in the past year. This also holds for the AEX, which also experienced its first year with a loss since 2011. Pecunia Causa unfortunately also did not manage to book a positive year. Our benchmark for performance is generally the AEX. The AEX lost 14.4% in the period May-August 2018. Meanwhile the value of a share Pecunia Causa lost 13.8%. This only seems like we performed slightly less bad than the market. It does not tell the full story however. The beta of the Pecunia portfolio is well above 1, suggesting we should have lost more than the market did. Perhaps this reflects a bit better on our performance.

Outside of this year review, Pecunia Causa holds monthly meetings in which we discuss the news of all financial markets, companies in our portfolio and we hold pitches to either buy or sell shares in our shared portfolio. If you are interested, please come by once to see whether you like our meetings. For more information, see our Facebookpage ( or send an email to

I am curious to see what 2019 has in store for us!

Best regards,
Rinze Hartman, XIth secretary of Pecunia Causa