The problem with having quarterly meetings | Weekly Market Update

This is my last weekly note for a couple of weeks as I take a summer break. In that spirit, I thought I’d look back on the last 12 months and try to give a (very quick) summary of how we got to where we are today (for equity investors at least). Here is a summary of the last 4 quarters (including the one we are in):

 

A few observations on this:

 

• If you just focus on 2025, you can see that the UK (and Europe) is ahead of the US year to date. But when you look back a quarter you get a better sense of what is going on. When Trump was elected (only 10 months ago!) there was a strong sense that the US was the home of capitalism. Trump was a pro-growth president and there was no better choice for investors than to be overweight the US. Money flooded into US markets and the US outperformed.

 

Of course, in January the market woke up to the fact that Trump was in fact still Trump. Suddenly, the world was overweight a country with a maverick president set on taking tariffs back to 1930s levels. This was a catalyst for international investors to bring some of their capital back home. The dollar fell as investors sold US assets and bought their own markets and nowhere was that more true than in Europe. But putting Q4 and Q1 together you can see this was more or less a Hokey Kokey style round trip. And my feeling is that by mid-Apil most of this move was done. Europe will need some new catalysts to keep outperforming in the second half of 2025.

 

• One way to run money is to have quarterly investment meetings where the great and good of the firm meet to set their asset allocation. To be crystal clear, we do not do this at IPS. One reason is that it is easier for smaller firms to meet and move quickly. Another is what might have happened if we had had this sort of approach this year (and especially if we chose, as many do, to meet around the end of each quarter).

 

As an example, here are some very plausible outcomes from the last two quarterly meetings (which, full disclosure, I know some of our competitors have made, which I might well have gone along with had I been in the room). In the December/January meeting, US markets were roaring and going overweight the US would have felt like a very easy decision, but by the time April came around, equity markets were in free fall, Europe was almost 15% ahead for the year and US political risk was as high as I can remember it. The consensus would have been to cut risk (so sell equities), reduce your exposure to the US and buy back Europe. Of course, with the benefit of hindsight, all these decisions were 100% wrong. Not having a quarterly decision-making rhythm has helped us this year. I think I can safely say we will not be switching to it any time soon.

 

• Finally, I wrote at the start of the year that if the global economy holds up then risk assets – and especially equities – are normally a good place to be. Looking back over the last 12 months I think that view has more or less played out. When equities did fall in April it was over fears that the tariff shock would trigger a recession. But today the global economy looks (once again) to have been pretty resilient to this kind of disruption. And, looking forward, we still look to be in pretty decent shape. Here is the current Q3 forecast for the US:

 

 

2% growth is very much in line with long term averages and this number includes some of the hit from tariffs. And even the UK had some better jobs and growth data this week. In fact, the UK has been the best performer of the major economies over the last 6 months. I would not have predicted this given that this is the period when the UK’s national insurance taxes went up. Long may this continue.

 

 

The risk to markets continues to be that this relatively benign economic outlook does not last for the rest of the year. If there are any nasty surprises in the next couple of weeks you will, I am afraid, be hearing from me again. But absent that, I hope you get to enjoy the last few weeks of the summer and I will see you all again in September.

 

Chris Brown, CIO

cbrown@ipscap.com

The value of investments may fall as well as rise and you may not get back all capital invested. Past Performance is not a guide to future performance and should not be relied upon. Nothing in this market commentary should be read as or constitutes investment advice.