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Tags: reasons | investor | optimism | 2019
OPINION

Reasons for Investor Optimism in 2019 Despite Volatility

woman pulls pack page and reveals sunset.
(Kevin Carden/Dreamstime)

Nigel Green By Thursday, 03 January 2019 09:12 AM EST Current | Bio | Archive

U.S. stocks have gotten off to a tumultuous start to 2019, following their worst year in a decade.

Picking up a selloff fueled by a variety of concerns that are making investors jittery, Wall Street is coming off a difficult month in which stocks fell about 6 percent.

However, behind the gloom-laden and often sensationalist headlines, there are several key reasons why investors should look to 2019 with optimism.

For instance, the recent sell-off now makes U.S. stocks appear considerably cheaper, meaning buyers are getting "more bang for their buck." There are some key buying opportunities available. Indeed, U.S. equities moved into 2019 with valuations beneath some historical averages.

More widely, stock market valuations are generally not overstretched, except for a few sectors in the U.S., the UK, Europe and Japan. Emerging markets in particular are offering value. With ultra-low interest rates in Europe, Japan and the U.S., it still doesn’t serve investors to keep large cash reserves. This supports the stock markets.

Investors will also appreciate that global growth remains solid, despite a slowdown in some of the world’s major economies, including the U.S. and China. In addition, the U.S. Federal Reserve has signaled that next year’s planned interest rate hikes may be delayed if economic data weakens, which last week’s relatively modest payrolls data and November’s inflation data suggests is the case. Should the Fed push back raising rates, this will help support the U.S., and therefore global, economy.

Another key source of optimism for investors as we move into 2019 is that the world’s financial system is in a much better condition. Banks and other financial institutions have significantly enhanced their capital levels over the last decade, making them more capable to withstand defaults on loans.

History teaches us that stock markets go up over the long term, so I would urge investors to remain invested. No-one wants to miss out on returns.

But investors need to ensure that their portfolios are well diversified, meaning across asset classes, sectors, regions and even currencies. This is the best way to mitigate risk and take advantage of the important and rewarding opportunities.

Nigel Green is founder and CEO of deVere Group. One of the world’s largest independent financial advisory organizations, de Vere does business in 100 countries and has more than $12 billion under advisement.

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NigelGreen
Behind the gloom-laden and often sensationalist headlines, there are several key reasons why investors should look to 2019 with optimism.
reasons, investor, optimism, 2019
387
2019-12-03
Thursday, 03 January 2019 09:12 AM
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