Many investors were in low spirits at this time last year, a period where nearly all assets offered losses and the U.S. equity market had just undergone its worst December since 1931. Fast forward to today and we are looking at just the opposite picture, with 100% of the main risk assets that we track in positive territory on a year-over-year basis. Now what should we expect for 2020? To answer this question, we go through our assessment of the four key pillars of asset allocation, namely, (1) monetary conditions, (2) global growth, (3) valuations, and (4) investors sentiment. ˃ The bottom line? With monetary conditions set to remain accommodative and global growth bottoming out, 2020 is shaping up to be a positive year for risk assets. However, investors must temper their return expectations given the already high level of valuation for most financial assets. What more, high optimism currently reflected in the markets calls for some prudence in the near term. Under these circumstances, we still consider our modest overweight in equities as the right positioning.
** I have prepared this commentary to give you my thoughts on various investment alternatives and considerations which may be relevant to your portfolio. This commentary reflects my opinions alone, and may not reflect the views of National Bank Financial Group. In expressing these opinions, I bring my best judgment and professional experience from the perspective of someone who surveys a broad range of investments. Therefore, this report should be viewed as a reflection of my informed opinions rather than analyses produced by the Research Department of National Bank Financial **