2019 was a surprising year in many ways. The predictions of many banks in early 2019 were mostly correct: economic slowdown and high uncertainties due to Brexit and the trade war. Logical conclusions: the banks recommended caution on equities and short durations on bonds. While these predictions turned out to be correct, the result on the markets was very different from that expected: 2019 will have been a record year in terms of performance, both for stocks and bonds. Basically, investors should have been overweight in stocks and have bonds with the longest possible maturities.
So what about 2020?
No one has the crystal ball. However, the rising tide for most assets seen in the past year could give rise to a year of high selectivity. Especially since interest rates on the markets are climbing and that this trend could continue against a background of reduced investor risk aversion and a further deterioration of fiscal deficits in the a time when budgetary austerity, even in Germany, is increasingly challenged.
2020 could therefore be a more difficult year, marked by greater selectivity. While in 2019 “everything worked”, this new year could turn out to be one for “stock pickers” and “bond pickers”, the one where asset allocation will have a lesser impact than stock or sector selection .
As we say in finance, "past performance cannot be an indication of future performance". Nestlé's exceptional increase in 2019, + 31.30%, is therefore likely not to be repeated in 2020.
This is not a recommendation but just our opinion. Please consult with your financial advisor before investing!
2019 was a surprising year in many ways. The predictions of many banks in early 2019 were mostly correct: economic slowdown and high uncertainties due to Brexit and the trade war. Logical conclusions: the banks recommended caution on equities and short durations on bonds. While these predictions turned out to be correct, the result on…
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