2020 Investment Outlook – A mix of opportunity and challenge

2020 Investment Outlook – A mix of opportunity and challenge

Market sentiment has experienced flip flopping back and forth daily between Risk-On and Risk-Off all year round. So will risk on, risk off continue into 2020? How to rationally deal with emotional switching? That’s what I want to discuss with you today, so let’s write down some new hints and prepare for the next switching.

When faced with the Risk-On, investors are not afraid of risk, they behave positively. And riskier assets tend to get pricier. Conversely, when uncertainty or negativity hits the market, people will instinctively avoid risks, they tend to sell aggressive assets and buy safer one, we call this Risk-Off.

Financial markets are more intertwined than ever, and global uncertainty and risk seem to be on the rise daily. Recently, uncertainty concerning further Fed rate tightening, the upcoming Brexit vote, and the ongoing trade war and tariff situation have all served to curb the risk appetite of investors. On this occasion, active management techniques and asset allocation become even more critical.

  • Facing a Risk On/Risk Off environment, investors may have a choice of low-volatility value dividend-paying stocks, such as the energy sector. In addition, debt and alternative investments such as private credit, infrastructure investment strategy is also worth consideration. As the investment environment has changed, passive investment strategy ——index funds, may not be appropriate.
  • Incorporating sustainable investing in your core portfolio is another choice. The global financial industry is at a turning point, sustainable investment is no longer empty talk, it is a real investment. From the view of the world, sustainable investment factors such as environment, society, and governance (ESG) have become an irreversible trend.
  • When the recession finally begins, the housing market is going to soften. This could get even worse as we head into 2020. So whether you’re a foreign investor looking to take advantage of the soft real estate market, or a local investor with great credit and capital to back it up, you’ll likely have a chance to buy fantastic residential and commercial property at a good price.
  • Although the proliferation of $1 billion + mega-funds have made it hard for many venture capitalists to justify smaller Series A investments, I don’t think this is the right approach for venture capitalists or startups. The excess capital creates the wrong incentive structure for long-term success.
  • With 47% of eCommerce transactions (or 5% of all U.S. retail sales), Amazon has surpassed Walmart as the world’s largest retailer. E-commerce has transcended physical and digital channels as brands and retailers continue to invest in digital to grow their business while juggling with data, privacy, and logistical challenges.

Greater awareness of the global dynamic and market opportunities, lower risk aversion, greater availability and awareness of risk-mitigation tools, and a greater policy emphasis are good reasons to believe that we are going to achieve financial goals.Getting a decent return can be an important objective, but adjusting for risk may be equally important for everyone.

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Michael Aniston

Michael started with a master's degree in finance before he went into technology and coding. He is now a freelance journalist and video producer living in Berlin, Germany. When he doesn't write, he will travel many countries.