Posted in: Market News
Published:
December 8, 2019 1:48 PM UTC

41% Billionaire Investors Wrongly Predicted 2019 Stock Market. Here’s Their 2020 Call

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

  • 41% of the world’s biggest investment funds predicted a stock market downturn in 2019.
  • They were dead wrong. The Dow Jones is up 18% year-to-date and hovering just below all-time highs.
  • The bearish sentiment is even higher going into 2020 with 48% now predicting a downturn.

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!

The S&P 500 (blue line) is up 24% year-to-date while the Dow Jones (orange) is up 18%. Source: TradingView

What do the stock market oracles think about 2020?

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.

83% of institutional investors predict another financial crisis within the next five years. Source: Natixis Investment Managers

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’.

Billionaire investors cautious about Dow and S&P 500

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.

This article was edited by Samburaj Das.

Last modified: January 22, 2020 11:41 PM UTC

Ben Brown @_ben_brown

Ben is a journalist with a decade of experience covering financial markets. Based in London, UK, his writing has appeared in The Huffington Post and he was Chief Editor at Block Explorer, the world's longest-running source of Blockchain data. Reach him at benjamin-brown.uk or on Twitter at _Ben_Brown. Email ben @ benjamin-brown.uk.

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