After 10 years rising, this bull trend is showing signs of fatigue. But there are still opportunities. Article originally published at Master Investor Magazine January 2020 Issue 58 p.30-35.
Equity valuations are too stretched, profits aren’t growing as before and economic growth is far from spectacular“
With risks rising, gold may provide a hedge to a portfolio, particularly if carefully selected.
With markets rising so vividly, no one really cares about the downside, but the risks are mounting as the late-cycle phase of the business cycle sets in. Profits for investors have been spectacular for the last 10 years. Take the S&P 500, for example. It rose 186%, which translates into an increase at the annual pace of 11.1%. The case for tech stocks is even more spectacular, with the Nasdaq 100 rising 371% in the same period, or 16.8% per year.
Still, the situation may change soon. No uptrend lasts forever. Investors should become more selective. Value, UK, gold, defensive sectors, clean energy and some very carefully selected bonds offer some good opportunities. To read more about The Macro Investor views for 2020, please read my full article at The Master Investor Magazine.