NEW YORK, Jan. 25, 2019 /PRNewswire/ -- Aadil Zaman and Syed Nishat of Wall Street Alliance Group have identified the following 9 market forecasts which investors should take into consideration for 2019.
- Market Volatility will persist. It is very important for investors to accept rising market volatility as the new normal. This is largely caused by advancement in financial technology, leading to machine trading and evolution of financial products such as ETF's which can be used to frequently trade in and out of large positions. Markets go up in the long term but in the short term there are many declines along the way. While for some investors, who have a long-term time horizon, these declines can be great buying opportunities, for others who are at or near retirement the same market declines could be traumatic. Simple as it may sound, it is therefore vital to be diversified and invest according to your investment objectives and risk tolerance.
- Market will face 3 Dominant Risks. In any market there are always risks that investors must deal with. In 2019 the 3 dominant risks in the market are prolonged trade wars, Federal Reserve raising interest rates and government shutdown. Any set back or deterioration surrounding these 3 issues could cause market declines. On the flipside, market gains will be triggered by improvements in these 3 factors.
- Trump Administration will attempt to resolve trade war with China. It seems that there is a game of chicken being played between China and US. At some point there is going to be a compromise and resolution. The big question is, when? While the precise timing of this is difficult to predict, given the upcoming 2020 election, the Trump Administration has an incentive to find a solution in 2019. A resolution of this issue will result in an upside movement in the market and the sectors that will benefit the most are industrials and financials.
- Low corporate tax rates will benefit businesses, both big and small. Many of the large businesses which are usually set up as C corporations will benefit from lower corporate tax rates as well as the repatriation tax break. Small businesses that are properly positioned could reap benefits from Qualified Business Income Deductions.
- Brick and Mortar Retailers will continue to struggle. If you can buy an item online in less than a minute, then why would you spend over an hour and drive to the mall to purchase the same item? This challenge will continue to plague brick and mortar retailers while properly positioned online retailers will do well.
- Social Media sector will expand. The era we live in is where social media allows individuals to create their own community of likeminded people who they can stay connected with. Social Media use will keep growing and companies will spend more ad dollars on this medium because it provides an optimal way to target their niche customer base.
- Content Delivery through online streaming will increase. Globally across all generations people are using online streaming more and more. DVD players, cable boxes and DISH antennas are fast getting outdated. The companies that will do especially well in this space are those that can combine online streaming with a deep content library and user-friendly interface.
- US Economy will continue its transition from a manufacturing economy to a service economy. According to some estimates the service sector accounts for almost 80% of the US GDP. Cost efficiency will drive the non-service sector to get automated through technology as well as be outsourced to other countries. This trend is so strong that it will carry on irrespective of regulatory pressures that may attempt to stifle it.
- Federal Reserve will raise interest rates. An important mandate of the Fed is to control inflation and as the economy continues to grow it will have to raise interest rates. The market may not like these interest rate hikes in the short term but in the long term it is vital that rates are increased at a measured pace to prevent inflation bubbles from getting created.
It is important that a balanced and well diversified portfolio in 2019 should be reflective of these trends.
The opinions and forecasts expressed may not actually come to pass. This information is subject to change at any time, based on the market, the political environment, and other conditions and should not be construed as a recommendation of any specific security or investment plan. Past performance does not guarantee future results.
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SOURCE Wall Street Alliance Group