What’s in store for 2020?
by Tom Kelly -
January 9, 2020
2019 turned out to be a fantastic year in markets but it didn’t feel that way. Why was this the case? How about the US China trade war; the slowest global economic growth since the Great Recession; the never-ending saga known as Brexit; and a U.S. president facing impeachment and an election.
What is the lesson?
How we feel day to day often doesn’t match what the market is doing. If you had stuffed your money under the mattress at the beginning of 2019, you would have left significant growth on the table. With a longer-term perspective, you can shut out the daily “noise” and focus on growing wealth over time.
So, what do we think is most likely to happen in 2020?
- Although closer to the end of the economic cycle, we do not expect a global recession as central banks maintain accommodative policies, with room for governments to add fiscal stimulus if needed.
- Stocks are likely to rise further, but we don’t expect next year’s returns to be as impressive as those of 2019.
- Longer term, we expect leadership in stock markets to rotate out of the U.S. and into international and emerging markets, but we need more concrete evidence the global economy is rebounding before taking a stronger stance.
- Given global uncertainties bonds will continue to provide downside protection but we expect lower returns than last year.
Within our team and our process, we will continue to challenge ourselves to think about how the future will look. Although it is dangerous to always think “this time is different”, we must recognize that disruption is all around us.
For example, 2019 was the year that more people bought on-line rather than in store. We need to be aware of these significant milestones and how they affect the businesses we are invested in.
All the best for 2020!