Investment Forecast For 2020 And Beyond – Forbes

Trying to predict investment opportunities for a year or two into the future is not an exact science. The standard warning that goes with such forecasts is they are educated predictions, and there is no guarantee they will occur. However, as I share my forecast with you, I’ll explain the thinking that goes into it.

This is for those of you who are sitting on a good amount of cash. You may be an individual or a company with the pleasant problem of deciding what to do with your money. You might find yourself continually asking, “Should I invest my money or hang onto it? And if I invest, where should I put it?” After all, the goal of an investment is to preserve what you are investing, while receiving a good return off it.

As everyone knows, the stock market has been perking steadily upward for more than a decade. It seems like an extremely attractive vehicle to place your money. While history gives no indication of future performance, those who do not learn from history are doomed to repeat it. In its past, the New York Stock Exchange has seen several streaks where the stock market continually rose. One was from 1949-1956 and resulted from World War II concluding and America starting its march to becoming the most robust economic machine in the world. A couple others occurred in the 1980s and ’90s, when new federal laws governing investments, savings and pensions infused a great deal of money into the market. The latest is from 2009-present and came about after the market meltdown of 2008. Much of the current streak is the result of very low interest rates as the Fed cut those rates to historically low levels for a long time.

The previous upward trends, and any other little streaks the market had, all have one thing in common — they ended. Some ended with a bang and a crash, while others were more of a bull market turning to a bear market. I don’t think we are going to be heading into an economic recession with a resulting market crash or major correction anytime soon. However, there is one factor affecting the stock market that is unpredictable and, I believe, has a more significant impact on its performance than ever before.

I am talking about politics, both the national and international variety. Whatever your opinion is of President Trump, the stock market should stay steady throughout 2020 and into 2021, at least, if he wins re-election next year. If the Democratic candidate wins, the stock market will probably take a negative hit, at least initially. Investors would then have to see what type of economic policies the new administration formulates to get an idea where the stock market will go from there.

The policies of whomever is president as they deal with trade and relationships with other countries will also have a bearing on the nation’s economy. Every time trade with China is in the headlines, you see a bounce or a dip in the stock market depending on the type of news. Wars and conflicts can also crop up at an alarming rate, and when that happens, all forecasts get thrown out the window until the situation stabilizes. Unfortunately, we live in a volatile world, and there is no sign of that abating in the future.

Overall, I believe the stock market will continue to rise, but because of the political volatility the nation is experiencing, there are going to be some peaks and valleys with moderate growth. Fixed investments continue to see a low yield and low interest rate environment. While their rate of return might not be stellar in the economic conditions that favor the stock market, there are ample opportunities to invest in things like general account portfolio of life insurance companies and other specialized fixed items, such as short-term private lending and mezzanine debt, due to their availability.

The economy still appeals to the bulls. For bears, low interest rates make it difficult for those who receive a fixed income on conservative investments. Those same low interest rates set by the Fed that spurred the current bull market have slowed the growth of some other investments.

The bottom line is the economy looks good for the next couple of years. I don’t think we will see a recession. That being said, I urge great caution for anyone considering a major investment right now. The potential effect the political environment in the United States can have on the stock market and other investments is a wild card you cannot ignore. If you are sitting on money to invest, it would be wise to keep sitting on it. Even with a still rising economy, keeping money liquid for future investments is a good idea. Even if the political dust clears after the 2020 election, it might not be until 2021 that the picture will clear on the best places to put your cash.

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

Let’s block ads! (Why?)

Source link