Ben’s (not-so) Bold Predictions for 2020
Happy 2020 everyone! As we speed through the start of the year, a fresh beginning, a new decade and what is also an election year, I’m willing to make some predictions for you. I’m not in the game of making guesses per se [I’d rather call them “reasonable assumptions”]. But I share these predictions to try to illustrate a point and help you with your planning this year. After you read through them, you can decide for yourself if they are indeed bold predictions, or not.
Here goes…drum roll please….
- The US stock market will not return ~30% again this year – Historically, we’ve seen 30%+ only (9) times since 1927 and 66% of the time it followed a negative year1. So, don’t be disappointed if we only eke out a few percentage points this year. I’m hearing most investment institutions predict mid-to-high single digit returns on the S&P 500 for 2020. Even if the S&P 500 is flat for 2020, it’s 3-year average would still be ~8%, hardly something to complain about.
- The US stock market will not crash this year – I use the word “crash” purposefully and without a definition. A recession is not a crash, nor is a 20% correction in the market a crash. I DO fully anticipate more volatility than we had last year based on many uncertain items (politics, global growth, geopolitical events, trade (still!?), etc.). But 10% corrections in the market are historically common and do not mean the bottom is falling out. Economically, things are still okay, in my opinion.
- In the end, the 2020 election will not have major implications on stock prices. That’s right, who wins the democratic primary will not dramatically change your ability to retire or stay retired or pass a legacy to your kids. And the winner of the presidency in November won’t change any of that either. We all have our political preferences and that’s important to us. And I do realize there are some rather progressive platforms proposed for healthcare, taxes, education, etc., all of which would clearly have financial implications. But platforms do not equal policy and I believe the markets care more about policy than debate tactics and agendas. So, my prediction is that after all the crazy headlines and debates, Apple will still make the next iPhone, Amazon will still ship packages to your doorstep, and the US economy will still truck along this year regardless of who is leading the polls for President.
What can you do with these (not-so) bold predictions? Not much. Other than recognize that in all three cases, there’s really nothing you can do to control the outcomes of politics and market performance. Please vote, voting matters. But don’t let the result dramatically change how you invest and save. And don’t let market volatility in 2020 change your fundamental approach to diversification and asset allocation. Instead, make sure your allocation is in line with your risk profile (CLICK HERE), and reset your expectations if need be. Maybe rebalancing your portfolio or realigning your buckets (that’s Haas Financial Group lingo) is a good idea too. And if you’re not sure how you’re allocated or what your risk profile is, then call us. We want you to start the next decade off on the right foot which starts by knowing what you own!
And finally, I predict the Chiefs will win the Super Bowl.
The opinions voiced in this material are for general information only and are not intended to provide specific advise or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Economic forecasts set forth may not develop as predicted and there can be guarantee that strategies promoted will be successful.
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