The World's Biggest Investors Paint A Gloomy Picture For 2019

As is usually the case after the holidays, inquiring minds turn their attention to how various assets will fare in the coming new year.

To answer this question, Bloomberg recently published a sample of opinions from top portfolio managers and strategists who shared their views on all asset classes heading into the new year. The common theme: stocks will be risky, volatility is back and returns across all asset classes could be "muted" in the new year.

There were some outliers: Jurrien Timmer of Fidelity Investments was the most bullish on stocks. He believes that earnings growth in the United States will slow to 5% to 7% in 2019. He also thinks that the Fed could raise rates once or twice more and that bonds look "all right" in this environment. Starting the year at what he calls a "reasonable" price to earnings ratio, he predicts that stocks may do better than they did in 2018.

"If you add it all up, it’s not a bad story for stocks -- maybe not double-digits, but better,” he said, although Timmer's optimism was certainly in the minority among his peers. 

Rob Lovelace of Capital Group has tapped into the recent weakness at Apple as a microcosm of what to watch going into the new year. He believes that device companies that lack product diversity, like Samsung, could be dangerous to own in the new year. He also believes that it is time to be a stock picker instead of buying indices.

Kristina Hooper, the chief global market strategist at Invesco recommends emerging market equities in addition to tech stocks and global dividend paying stocks. She also likes commodities - "especially gold". She believes investors should "sell or decrease" US equities.

Hooper told Bloomberg that her "base case is decelerating but solid growth globally, with the U.S. decelerating as well. I also expect tepid but positive global stock market returns. However, the ‘tails’ are getting fatter as risks, both positive and negative, increase. For example, a quick resolution of the trade war with China could push global growth higher and also push stock market returns higher - especially if the Fed become significantly more dovish. Conversely, an escalation of the trade war with China could put downward pressure on global economic growth and likely push stock markets lower as well - particularly if the Fed is less dovish.”

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