Almost half of the world's biggest stock market investors predicted a downturn in 2019. Instead, it was the second-best year of the decade
Even the experts get it wrong. A whopping 41% of the world’s biggest investment firms predicted a stock market downturn going into 2019.
Instead, they were blindsided by one of the most sizzling stock market runs in history. The Dow Jones is up 18% year-to-date while the S&P 500 returned 24%. Unless there’s a huge upset in the final weeks of the year, 2019 will go down as the second-best annual return in a decade.
The lesson? Don’t bet against the longest bull run in history!
Despite a monster year on the stock market, those same investment managers have grown even more bearish. 48% now see a downturn going into 2020, up from 41% the year before.
On the longer-term spectrum, 83% predict a global financial crisis within the next five years.
The data comes from Natixis Investment Managers – an investment firm based in France. They polled 500 of the world’s largest investment firms with a collective $15 trillion assets under management (AUM). Respondents include pension firms, endowments, and insurance managers.
While investors aren’t necessarily pulling out of the market, they’re taking a cautious “wait and see” approach. Talks of recession ramped up this year on the back of weak manufacturing data, ongoing trade war tensions, and the infamous inverted yield curve. But those fears haven’t manifested in any meaningful reversal for the Dow or S&P 500.
Uncertainty grips investors and is so far preventing them from making meaningful changes to portfolios as they adopt a ‘wait and see approach’.
This latest data from Natixis echoes recent findings from a Bank of America Merrill Lynch survey. The BofAML survey found that 38% of fund managers fear a near-term reversal.
“Recession concerns continue to temper investor risk appetite as 38% of Fund Managers in latest BofAML survey expect a recession over the next 12mths” – Holger Schaepitz, Welt.
Even Warren Buffett seems reluctant to enter the stock market, keeping a record $128 billion in cash on the sidelines.
Undoubtedly, the stock market is over-valued by most common metrics, but it’s hard to bet against a raging bull market that just won’t quit.
Last modified: September 23, 2020 1:20 PM