Caution and circumspection will help out investors in the coming year

the Coming year can be very difficult for investors in the stock market. There are a lot of reasons. Among them – a prolonged bull market: it lasts already for ten years, and as you know, trees don’t grow to the skies. The current year was artificially delayed correction in the stock market, and it is possible that we will have to pay more than usual price. Without understanding this, in my opinion, it is impossible to plan investments. No matter, there will be a correction next year or the year after, it seems inevitable. In any case, teaches the history, a factor that every investor needs to keep in mind.

the Policy

the Main driver of the stock market next year, apparently there will be elections of the President of the United States. I guess Donald trump will do everything possible and impossible to the investor was not disappointed. Interesting fact: since 1928, every year the election of the President of the United States, as a rule, has been good for the stock market. Of the 23 election years, only four ended with the fall of the us stock indices. For example, in 2000, when Bush battled al Gore, and the market began to deflate the technology bubble, the S&P 500 down 9.1%. And the tragic collapse of this index, 37%, came in 2008, when Barack Obama defeated Senator John McCain.

we should Not forget about the beginning of procedure of impeachment. Although the market is now practically does not react to this event, believing that the majority of Republicans in the Senate will not allow it to happen, I would not put this factor out. America without trump is a strong negative for the market, which is already too obviously hooked not only on low rates, but also on the verbal interventions of the presidential Twitter.

macro and markets

the Choice of assets for investment in 2020, should take into account the macroeconomic parameters of on stumbled mnogie investors in the current year. Abrupt changes to monetary policy, the fed’s increase of interest rate reductions has forced many on-the-go to set and change the plans. That’s why bonds suddenly shot, although this particular one was not expected. So, an exchange traded Fund Vanguard Total Bond Market Index Fund (BND) has brought investors from the beginning of the year of 8.7% (here and further data on the 13 Dec) total income, while in 2018, he was not much progress and even showed a total loss. Not sure that this will be repeated in the coming year, but are firmly fixed plans, I would not.

Gold performed well in this year. Its price increased by 14%, and in September was generally recorded the highest growth of 21%. I think that next year this precious metal should be kept in the portfolio. How many – everyone has to decide for themselves based on their circumstances. The balanced investor should think at least 10-15% of the portfolio value. It should also be remembered that in times of rising prices for gold make good money on the stock of companies involved in the extraction of precious metals. Thus, the Fund VanEck Vectors Gold Miners (GDX) rose in 2019 31.4%, beating even the broader market index S&P 500 (26.2 percent).

Also I would recommend next year to pay special attention to Warren Buffett’s Berkshire Hathaway. Let’s not confuse her modest results this year growth stocks is 11.4%, two times worse than the market. For the coming year, this investment has one big advantage. Berkshire have large cash reserves – $128,2 bn And they can be used to purchase depreciating securities in the event of a collapse in the market that will give the company a huge advantage for the next 3-5 years, maybe longer.

Now, almost all experts agree that most of the stocks in the US market are very expensive and their purchase is related to the risk significant losses in the nearestausie years. That’s why I would be extremely cautious with new acquisitions and trying, for example, in a balanced portfolio does not go abroad in 30% of its value. For those looking for big earnings and willing to risk, I would recommend shares of companies engaged in the cultivation and processing of cannabis, and the production from it of medicines. Recently, this market was a big correction, and many of the papers look very tempting. For example, shares one of the leaders in this “clearing” Cronos Group is now trading three times cheaper than the peak year.

I Think that the success of investments in bonds in 2019 is unlikely to be repeated in the coming year. For those who need a regular income in all market conditions, I would advise to pay attention to exchange-traded funds, working with preferred shares. One of them is the iShares Preferred Securities and Income ETF (PFF). A Fund of preferred stocks of U.S. companies that bring higher dividends. Only the dividend yield of this Fund in 2019 is 5.6% in dollars, and the total (with the increase in the value of securities of the Fund) YTD – 13.9 per cent.

While I would not firmly fixed proportion in the asset structure, and ready to flexibility and new circumstances. I would not pursue income, and came primarily from personal goals and acceptable personal risk level. Caution and prudence should be the main concern of private investors in the coming year.

experts ‘ Opinions of banks, financial and investment companies, presented in this section do not necessarily reflect the views of the editors and are not an offer or recommendation to buy or sell any assets.