FRANKFURT (DEUTSCHE-BOERSE AG) - Fund manager Christoph Frank examines the poor performance of German equities during the first months of the year.
April 14, 2026. FRANKFURT (pfp Advisory). The first quarter of the trading year is in the books, and for most holders of German stocks, it was a period to forget. The DAX, Germany's blue-chip benchmark, shed more than 7 percent, while its "smaller siblings" - the MDAX, SDAX, and TecDAX - posted losses of similar magnitudes. These are the facts, which immediately lead to the frequently asked question: What can shareholders expect for the remainder of the year after such a dismal start?
Naturally, I know the answer no better than anyone else on this planet. However, when faced with such inquiries, I like to look at history to find some solid ground for feet treading uncertainly on the trading floor. Here, the first finding - which may surprise some investors - is that a weak opening quarter is by no means rare. In 21 of the 66 years between 1960 and 2025, the DAX (or its predecessor index calculated by the Bundesbank) posted a loss in Q1, representing nearly a third of all years. Legendary crash years such as 1970, 1987, 2001, or 2008 are among them, but so are some surprises like 1999, 2003, or 2009. Conversely, exceptionally poor years like 1973 or 2002 are missing from this list, which is also surprising at first glance.
Looking at returns from April to December, however, no clear pattern emerges: on eleven occasions, a weak opening quarter was followed by positive returns over the rest of the year; ten times, returns remained negative. While this distribution is slightly less favorable than the average distribution across all periods, it does not deviate significantly from the norm.
More interesting, however, are certain details: if a negative Q1 followed directly on the heels of a long and/or sharp downward trend - specifically in 1963, 2003, and 2009 - it was invariably followed by very strong upward movements, with price gains ranging from approximately 21 to 64 percent within nine months. Apparently, in these cases, significant upside potential had built up during the preceding long and loss-making phases. Once the panic-driven selling pressure had been exhausted and the lid was removed, this potential erupted like a fountain. If, on the other hand, a bull market had preceded the drop, gains followed in over 70 percent of cases during the remainder of the year. The most dangerous scenario was when the false start occurred after a sideways movement: in those instances, a loss followed 78 percent of the time, meaning no "quick comeback" for German blue chips.
Which scenario best fits the price action of 2026 so far? There was definitely no bear market prior to Q1/2026, which immediately rules out the top-tier scenario of high gains. Unfortunately, we are seeing both a roughly one-year sideways trend (since April 2025) and a roughly three-and-a-half-year bull market (since September 2022). For my analysis, I set the threshold for a sideways movement at "at least one year" (admittedly arbitrary), and that is exactly where we are currently following the tariff volatility in the wake of "Liberation Day," since which the DAX has essentially been treading water. Consequently, the outlook at this point remains unfortunately ambiguous.
The findings regarding the dispersion of results are much clearer, especially when considering only those opening quarters that saw a loss of more than 7 percent (as in 2026): in those cases, the probability of experiencing double-digit percentage gains or losses from April to December was 90 percent. In 60 percent of cases, the return even exceeded plus/minus 20 percent. Naturally, given the thin data set, these findings are more anecdotal than statistically definitive. Nevertheless, for those who use the past as a yardstick, it should come as no surprise if the rest of 2026 turns out to be stellar - like 2003, 2009, or 2020 - or "abysmal" like 1970, 1987, or 2008. To put it more bluntly: it is make or break.
By Christoph Frank, April 14, 2026, © pfp Advisory
(Deutsche Börse AG is solely responsible for the content of this column. The articles do not constitute an invitation to buy or sell securities or other assets.)
