19 Dec 2019
View on markets in 2020
Presented by Chris Lioutas - PSK's Chief Investment Officer
As it stands, we think 3 scenarios are likely for 2020 –
- more of the bumper returns from 2019 as political risks subside and economic data improves but not markedly so to end central banks’ current pace of stimulus; or
- a more benign environment were markets are range-bound through the course of the year as political risks continue to spill-over into economic risks which forces central banks to act even further quell a spill-over into markets; or
- a capitulation in market sentiment driven by rising political risks, causing economic risks to spike, resulting in a loss of confidence in central banks’ ability to control the narrative and hence large falls in investment markets.
Following recent “wins” regarding a phase 1 trade deal and a more stable UK political environment, higher probabilities can be assigned to scenarios 1 and 2 above. However, we and many others, aren’t yet willing to rule out scenario 3.
The concern we have as that the probabilities of each scenario are likely to moving beasts, which means we’re probably unlikely to know which scenario we’re likely to get until 2020 progresses. Hopefully we get enough time to act accordingly, but absent that, those that are well diversified, selective, and disciplined will weather 2020 much better than those that chase returns and/or income will little regard for the risks involved.
If you’d like to discuss any of the points raised, please do not hesitate to contact us on 9324 8888.
PSK Financial Services Group Pty Ltd (ABN 24 134 987 205) are Authorised Representatives of Charter Financial Planning Ltd (AFSL 234666), Australian Financial services Licensee and Australian Credit Licensee. Information contained in this article is general in nature. It does not take into account your objectives, needs or financial situation. You need to consider your financial situation before making any decisions based on this information.