The investment strategy in 2020 – not to hurry and wait for depreciating securities

Ends 2019. At the end of the year to take stock and make plans. Here we try to look beyond the horizon and into tomorrow. Something to go to 2020, and what to expect from him in the stock market? But before moving forward, you need to look around and to understand where we are.

back in early autumn, the mood of investors around the world deteriorated in the eyes. There were all the signs of a slowdown in the global economy, which would inevitably lead to the fall of the stock markets. All started to prepare for that unpleasant event which must happen, but nobody knew the main thing – when? In recent months, the timing of this WHEN much moved. In the fall most analysts were expecting trouble if not winter, in early spring, and it is absolutely sure – by the summer of 2020, But it’s only been a couple of months and the timing of a possible Armageddon analysts unanimously moved to the end of 2020, after the US presidential election, or even at the beginning of the year 2021-th. There are several reasons. But they all boil down to one: the world economy was not so weak to have to bury her tomorrow.

first, the fall season of corporate reports have shown that American business continues to generate good profit and even higher than expected, but many expected a loss! But with America all and so more or less clear: she was and remains the best among the developed countries and continues to feel obviously better than others.

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secondly, the Chinese economy, which step by step during the summer and early autumn has downgraded its macro-economic indicators suddenly changed my mind to weaken and demonstrated to at least stabilize the situation.

third, the biggest surprise came from Europe. So the European economy is not buried just lazy. However, in recent months 2019 unexpectedly began to show signs of discovering bottom. Moreover, so obvious that analysts at Deutsche Bank even made a very bold prediction: the bottom is reached, and then will be a reversal. So it is difficult to say, but the optimism of market participants with these words, of course, he added.

all this should be added the successful elections for the conservatives in the UK. And then finally there was light at the end of Brexit-tunnel. Well, the icing on the cake was the Christmas gift markets from the main world Santa Claus US President Donald trump, who agreed with President XI Jinping about anything in future U.S.-China trade relations.

in Other words, optimism by year-end has increased markedly. And world markets reacted accordingly: the U.S. indices day after day to conquer new peaks, updating their historical highs, while European indices has finally returned to the levels reached over four years ago, and also updated the highs, but local.

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In such circumstances, the question naturally arises: what next? Where is this crisis? Where is the promised recession? Where the drop in the markets? The whole logic of events suggests the following possible scenario for 2020 In the first few months (most likely in mid-January – early February) will attempt to slightly lower the market reached heights. Too high we climbed! However, the drop should be small and purely technical – of five percent. If you manage to shake the market, it may be 10%, which is still unlikely. And then the smart money (ie the money of large institutional investors), and with them the small speculators drucan attack the depreciating assets and take the markets up. Big hype, in 2019, of course. Will grow slowly, with stops and minor adjustments, with all sorts of sell in may and summer holidays. The main challenge for financial markets, before the administration of the trump (and now he is the main trader!), – save the “pretty picture” before the presidential elections, to preserve the achievements from November 2016 And is neither more nor less – the growth of the market by 60%! Therefore, the purpose clear? Do!

On to earn

as in this situation, do the ordinary investor? First of all, do not trust anyone – everything can be completely different. “Black swans” of nature have not disappeared and continue regularly to visit us. Then you should remain cautious. The market is growing very long, and the risk of serious falls, even unmotivated, remain extremely high. So, of course, in this situation, you need to continue to give preference to first of all safeguard the assets – shares of utilities and telecommunications companies, stocks with high dividend yields, as well as, of course – and perhaps primarily – a reliable debt securities with relatively short maturities. This should be the basis of the investment portfolio by 2020.

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But given the current situation and the ongoing wave of optimism in the portfolio you can add a little bit of risk. First of all should pay attention to the shares of the biotechnology sector. All the years of the presidency of the tramp, while the overall market grew, the stock of medical and biotech companies have been crushed by the pressure of revision of the program of medical care Obamacare. Investors feared that in the struggle for transparency of medical services and reducing the cost of medicines for the population, as usual, throw out the baby with the bathwater and mmedicinskih companies legislators will leave no stone unturned. However, fortunately, nothing happened, and the new Medicare program, launched since October 15, instead of Obamacare, a special mess in life of medical companies is not made. And investors immediately started to pick up all that is bad. And bad in the health sector almost everything, and now it can be a lot to take for a long time, without looking. But best of all looks now, of course, biotech. Especially big companies of the biotechnology sector such as Gilead Sciences, Alexion Pharmaceuticals, Vertex Pharmaceuticals. They are the center of attention, there are always rumors that these companies are here someone will buy it for some crazy money. And because buy! Only this year I bought two giants of the biotech – Celgene and Allergan. First company – a premium of 50% to the market – bought Abbvie and the second Bristol-Myers Squibb has acquired and is twice the market value! So in any case the shares of the biotech sector would be a good addition to your investment portfolio.

And the most important that common sense and caution. Financial markets have become too dependent on politics and politicians. And politicians need to act very carefully – they are too unpredictable and fussy. Money love silence and predictability. So don’t let yourself be drawn into adventures and save your money. They will still be useful to purchase a good and depreciating securities. That time will come soon. Don’t rush!