Your 2020 Stock Investment Strategy
Do you have a serious plan for your investments for this year and beyond? Is politics, international trade and stock market volatility scaring the life out of you? Are you selling in 2020?
There’s lots of advice out there and which will turn out to be accurate? We’ll know in 2021. When you take politics into consideration, literally anything can happen from booms to market crashes. Political candidates talk about raising taxes, removing tariffs, and raising interest rates, which doesn’t bode well for US equities if it should happen.
Yes, the US economic forecast is good but those forecasts are predicated on the status quo continuing.
Timing: When Exactly Could the Market Tank?
One big investment firm is pushing China and India stocks, touting how wise their Asian investment focus was back in 2016. But are global stocks and India and China a good bet for investors now given Trump’s push to protect US companies?
Or are they simply betting the Democrats can win the 2020 election and reopen the doors for foreign imports?
If Trump Should Lose, What Will Happen?
These are big gambles. If the Democrats do win, they will undo a lot of Trump’s actions which could create a big mess. US investment money would flee the risk and higher taxes. So with that, stock investors are probably into timing their selloff in 2020. The exit vacuum could be massive.
The stock market, oil markets, and even housing market likely will hinge whether the America First agenda survives. With each setback Trump suffers, the heartland sees its economy take a nose dive. Much of the investment future relies on voters. If they feel US protectionism is too important to let go, Trump will win. If they believe a recession is coming, they may not care who is President.
Risk On, Risk Off
Are you into pot stocks, gold, oil stocks, housing, blue chips, cryptocurrency, ETFs, tech startups, or mutual funds. Every one of them is risky. Of all of them, rental housing might be the best. There’s a housing shortage, house prices are insane, yet everyone will need a place to live.
Well, all of that is for your investment advisor to worry about, if you can afford one. While a lot of investors are moving over to automated or AI guided trading services (Wealthsimple, QPlum, Trading Technologies), do any guarantee you won’t be losing a lot of money in the coming years?
The US Economy Booms Until 2020
The recent Q1 economic report and rosy stock market report has everything on an upward trend this year. With the 2020 Presidential election coming next year, will Questtrade or your investment advisor be able to predict market directions and which sectors will plummet?
These are human and emotional factors that systems and pros don’t handle well. Each has its limited perspective.
Charles Schwab’s CEO, Walt Bettinger, speaking in a Forbes post advises investors to ignore volatility and stick to their plan. But what’s missing is what that plan is.
Bettinger and Schwab is apparently adopting new tech tools like artificial intelligence, data analytics and machine learning and yet he still believes in the wisdom of human emotion. He says quite wisely that AI will never match or understand or replace human judgement. You can read more about AI investing here.
AI, Old Data, Volatility, Politics and Forecasting
I’ve stated in previous posts that relying on old data and old market models isn’t wise. That’s primarily because most of the data is based on Free Trade era activity. Everything President Trump has done is the opposite of the last 10 years and before.
And stock investment analysts themselves are using new analytics tools. They have new perspectives on market activity and interpretations to boot. Each analyst is biased according to their degree of optimism or political ideology.
It may take another decade before artificial intelligence systems really understand the markets and trends. So we rely on seasoned stock analysts and forecasters.
Most of the investor analysis relies on old data models and common economic theories. Volatility threatens the accuracy of assumptions which makes big corporate advisory firms nervous. A true expert would be able to explain today’s market volatility clearly and concisely.
US News suggests these are the 9 stocks you should buy:
- American Airlines
- Capital One Financial
- Micron Technology
- NRG Energy
- Prudential Financial
- United Continental Holdings
- Valero Energy Corp
Check out FAANG stocks such as Google, Apple, Netflix and Facebook but be aware of the anti-trust movement. Amazon made big news with their promotion of free one day shipping. Facebook and Google have a monopoly on online advertising along with their Chrome Browser and online search. The anti-trust investigation is long overdue and it will lower Google stock price. Netflix has spent a ton on content creation and there is an insatiable consumer appetite for content.
The point to take away here is that the 2020 election is the pivotal event for investors. Forget technical analysis until you’ve figure out how each company will fare if Trump loses the election. Good luck with your investment strategy in 2019 and beyong.
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