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!
This publication is solely the work of Colin Dixon, Tom Kelly & Colin McCubbin for the private information of their clients. Although the authors are Manulife Securities Advisors, they are not financial analysts at Manulife Securities Incorporated or Manulife Securities Insurance Agency (“Manulife Securities”). This is not an official publication of Manulife Securities. The views, opinions and recommendations are those of the author alone and they may not necessarily be those of Manulife Securities. This publication is not an offer to sell or a solicitation of an offer to buy any securities. This publication is not meant to provide legal, accounting or account advice. As each situation is different, you should seek advice based on your specific circumstances. Please call to arrange for an appointment. The information contained herein was obtained from sources believed to be reliable;however, no representation or warranty, express or implied, is made by the writer, Manulife Securities or any other person as to its accuracy, completeness or correctness.