The Return Triangle of the German DAX Index 1970 To 2019

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In the short-term stocks can be volatile and can yield negative or low returns. However in the long run especially measured in years or decades stocks usually tend to produce a positive return. This is true in most equity markets of the world including the benchmark of Germany, the DAX Index. According to a research report by German Equity Institute, the average annual return of the DAX Index from 1970 thru 2019 was 8.9%.  In the worst case scenario it was 4.7% and in the best case the return was 16.1% annual.

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Source: German Equity Institute via DAS Investment

Download in pdf format (in German):

Related ETF:

  • iShares MSCI Germany Index Fund (EWG)

Disclosure: No Positions

The Top Ten Trading Partners of Germany in 2019

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The Top 10 Trading Partners of Germany in 2019 are shown in the chart below. According to The Federal Statistics Office (Destatis), China was the most important trading partner of Germany in 2019 for the fourth consecutive year.  China was also the top import source country for Germany and the 3rd main export market for Germany after the US and France. Good worth about 206.0 billion Euros were traded between Germany and China (exports and imports). The US was the 3rd major trading partner with goods worth  190.0 billion Euros traded between the countries.

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Source: Destatis

The top 3 export goods of Germany are motor vehicles, machinery and equipment and chemicals and chemical products.

Gold Offers Portfolio Protection During Drawdowns

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Gold offers excellent protection to a well diversified portfolio during market crashes. Gold, as an asset class is not a great tool for generating income. However when markets head south most investors dump stocks and try to seek refuge in assets like gold. In general, gold tends to perform well during crises. For example, during the Global Financial Crisis(GFC) 2007-2009, the S&P 500 fell nearly 53% but gold actually went up by over 20%. The difference in returns is of course over 70%. Similarly during the dot com collapse also gold performed very well.

In the current crisis also gold should perform well relative to other assets.

The following table from a recent article at Schroders compares the returns of S&P 500 and gold during drawdowns:

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Past performance is not a guide to future performance and may not be repeated.
Source: Refinitiv Datastream and Schroders. Notes: S&P 500 drawdown calculated as change in index price level from peak to trough. *Exceptions in 1980-1982 can be attributed to real yields jumping from -5% to 8% while dollar debasement fears subsided, and in 1998, when the Asian Financial Crisis triggered a rapid reversal in Asian gold jewellery demand.

Source: Is now the time to own gold?, Schroders

Below is another interesting chart that shows the performance of gold vs. S&P 500 during the past 11 crises periods:

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Source: Sprott Asset Management 

Related ETFs:

  • SPDR S&P 500 ETF Trust (SPY)
  •  SPDR Gold Trust (GLD)

Disclosure: No Positions