I have just returned from spending two days with Pimco in London at their annual conference for investors. Pimco is one of the largest bond specialist firms in the world with an incredible depth of resources. The audience consisted of investment professionals from Europe, and it was apparent that everyone had come to hear not only Pimco’s macro-economic view, but also to clarify just how concerned we, as investors,  should be and what changes we should be making, if any, in the current circumstances.

It was an exceptionally high-level discussion and I will try to share some of the messages with you below. An interesting aspect of the investment world is how different personalities gravitate towards different asset classes. Optimists gravitate towards equities, pessimists to bonds and those with perhaps a tad too much hubris towards hedge funds. Pimco is a firm specializing in bonds. They ooze caution through the air vents. So whilst they were professionally non-committal about whether we are heading towards a cyclical change and/or recession, or not, they did an excellent job trying to identify whether there are any relevant signals now. The bottom line is no panic signals but elevated levels of caution looking into 2020.

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 4^th 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.

Those who have made Aliya from the UK have experienced first-hand the effect of the sterling’s decline over the past decade. From a peak of 8.7 shekel to the pound in the summer of 2007, the rate fell by almost half to its low point in the winter of 2016 and has recovered only slightly to trade at 4.8 this February.

Whilst the Brexit vote has undoubtedly been a factor in this development, the fall in the pound predates the 2016 referendum and is more a factor of the global financial crisis and the remarkable strength of the Israeli economy since then. Whilst this latter point is a source of pride for all Zionists, it creates significant challenges for those who moved to Israel or those thinking of Aliya. A disruptive Brexit or a hard-left new government could cause a collapse in the pound, which would have a significant impact on pension values.

Most investors in Israel who were raised in English-speaking countries are familiar with the concept that the professionals they receive financial advice from must be properly trained and be under the supervision of a national regulatory body. That’s the case in Israel too – with licensed practitioners being supervised by the Israeli Securities Authority – but there’s a glaring loophole that many experts fear is being utilised on unsuspecting clients.

I am writing to you during our office move. Workers are all around busy packing and unpacking boxes. We have been in our old building for 10 years. At the time we moved in there, the S&P was about 880 points and the Dow Jones was about 8300 points. Since then they have gone up by 242% and 244% respectively. Even after a tough year and pretty awful 4^th quarter, the long-term gains are impressive. It may appear as though it was easy to make money however; there were plenty of reasons to be concerned along the way. When we said to clients over the years "focus on the long term", so far, we have been right.

As I tidied my office for the move I found a collection of year-end predictions for years gone by written by some of the highest paid experts in the world. Some were right some of the time; many were wrong most of the time… Some were right in the longer term and very wrong in the short term. It seems no one has the perfect crystal ball. 2018 rollercoaster has been no different but more on that below.

We look forward to hosting you in our new offices at the Amzur building.