2019 Market Predictions: What the Experts Say

By the end of 2018, not one of the eight asset categories tracked by Ned Davis Research was on track to post a return greater than 5 percent. Since it’s common for the market to yield at least some “winners” and “losers” among asset classes each year, this was a significant phenomenon that hasn’t occurred since 1972, according to Ed Clissold, a strategist at Ned Davis Research.1

In the early days of 2019, the market has bounced back but remains somewhat volatile. The reality is that even when the market experiences a steady upward trend, it is still vulnerable to unexpected volatility. This is generally best managed through diversification, careful securities selection and, depending on individual circumstances, potentially incorporating insurance products to help provide income guarantees and financial protection for the future. For those who are concerned about what’s ahead this year and beyond, we’re happy to meet with you to discuss available investment and insurance options.

Many money managers publish a general market outlook at the beginning of each year. The following is a summary of several market prognostications.

Oppenheimer Funds

Oppenheimer researchers believe the economy will slow down in at least the first half of 2019. This is more in line with global growth and is a result of the diminishing impacts of last year’s new tax legislation and prior years’ fiscal stimulus. With that said, many experts still view U.S. stocks as inexpensive relative to bonds with greater potential to outperform, as they see both investment grade and high-yield corporate bonds as overvalued. They also have a positive outlook on a new trade agreement between the U.S. and China.2

Charles Schwab

Schwab analysts are a little more bearish. They’re not encouraged by the market pressures stemming from trade wars, instead envisioning financial conditions as continuing to constrict, with slower earnings growth and increased market volatility. Moreover, Schwab is concerned that continued low unemployment numbers will start to push up wages, which in turn may reduce corporate margins and lead to higher interest rates.3

The Capital Group

The wealth managers of American Funds warn U.S. investors that more volatility is ahead throughout 2019, largely due to three factors: tightening monetary policy, continuing trade disagreements and debt overload. For this reason, the group is positive on international and emerging market equities, both of which appear to offer significantly lower valuations and good buys to help diversify domestic portfolios.4

U.S. Trust

The analysts at U.S. Trust are less focused on individual market valuations and more on the economic life cycle. They see the transition from low inflation, low interest rates and low volatility in the markets to higher inflation, interest rates and volatility as inevitable. On a positive note, they do see these new factors leading to stronger economic growth. Moving forward, U.S. Trust favors higher-quality companies with strong global brands, healthy balance sheets and little need for capital market financing.5

JP Morgan

JP Morgan sees more upside for stocks in 2019. Analysts posit an optimistic view on everything from current fundamentals to strength in earnings, investment spending, corporate balance sheets and leverage.6

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1 Elena Popina. Bloomberg. Dec. 5, 2018. “It’s the Worst Time to Make Money in Markets Since 1972.” https://www.bloomberg.com/news/articles/2018-12-05/total-market-pain-is-worst-since-1972-as-investor-anxiety-mounts. Accessed Jan. 17, 2019.

2 Oppenheimer Funds. 2019. “U.S. Lands Softly, Converges with Rest of the World.” https://www.oppenheimerfunds.com/advisors/interactive/outlook?CMPD=spcmotw. Accessed Jan. 17, 2019.

3 Liz Ann Sonders. Charles Schwab. Dec. 10, 2018. “2019 Market Outlook: U.S. Stocks and Economy.” https://www.schwab.com/resource-center/insights/content/outlook-us-stocks-and-economy?SM=uro. Accessed Jan. 17, 2019.

4 The Capital Group. Dec. 17, 2018. “2019 Outlook: Prepare for heightened volatility in the coming year.” https://www.thecapitalideas.com/articles/outlook. Accessed Jan. 17, 2019.

5 Christopher Hyzy. U.S. Trust. Dec. 12, 2018. “Outlook 2019.” https://www.ustrust.com/articles/outlook-2019.html. Accessed Jan. 17, 2019.

6 JP Morgan. Dec. 20, 2018. “Global Market Outlook 2019.” https://www.jpmorgan.com/global/research/global-market-outlook-2019. Accessed Jan. 17, 2019.