To put our 2019 outlook into action, aim to be more active and selective. For example, make sure you don’t write off entire regions or markets based a single event such as Brexit. Rather, it’s important to understand which stocks/sectors will be favoured based on specific scenarios.
Five actions to consider
Don't write off entire regions or markets based on one event – Brexit, for example. It's important to understand which stocks/sectors will be favoured based on specific scenarios.
Guard against inflation
Globally, inflation pressures are rising as consumer prices increase; investors should consider equities, commodities and real estate as natural inflation hedges. Global equities and commodities still look well-positioned as a whole.
Keep searching for income
The hunt for income remains pressing in a world still experiencing low interest rates. Investment-grade and high-yield bonds in the US and Europe may be challenged in the coming year, though credit fundamentals are stable globally.
Look for contrarian ideas
Diversification as a strategy is not working as well, as QE has mispriced many asset classes; contrarian ideas and out-of-consensus themes may come into favour.
Search for alpha from disruption
Disruption of politics and technology is creating clear winners and losers globally; active research and analysis can improve the chances of finding alpha.
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