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As The Pendulum Swings By Steven Mayo
We enter 2020 with many positives. The stock markets are on a roll, partly because the recessionary concerns of the summer are now replaced with many issues being somewhat resolved — Brexit is moving forward, Phase 1 of the U.S.-China Trade Agreement has just been signed as I write, better European and Emerging Market news, and good earnings. Of course as the markets rallied in 2019 more dollars were put to work in the fall helping to fuel the year-end global rally we experienced. Everyone is now comfortable. This rally provides for the ability to do some profit taking and it allows an investor to re-assess their portfolio over the next six months. Being this is an U.S. election year, there is likely to be some added political influence in the markets.
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For example, if Elizabeth Warren were to win the Democratic nomination, the Wall Street crowd would be concerned about the effect of her positions on energy companies, health care, financials, technology regulation, and possibly defence. All of these sectors will be in the forefront of the discussion/debate in 2020. However, there is still a good chance that President Donald Trump will be re-elected, as I would be very surprised if the impeachment process resulted in the U.S. Senate removing him from office. As history has shown, there tends to be a pattern of U.S. voters re-electing Presidents, as the last 40 years are shown below . . . Ronald Reagan (Republican) 1/20/1981- 1/19/1989 (2 terms) George H.W. Bush (Republican) 1/20/1989 – 1/19/1993 (1 term)
B I Z X M A G A Z IN E • F E B R U A R Y 2 0 2 0
Bill Clinton (Democrat) 1/20/1993 – 1/19/2001 (2 terms) George W. Bush (Republican) 1/20/2001 – 1/19/2008 (2 terms) Barack Obama (Democrat) 1/20/2008 – 1/19/2016 (2 terms) For 2020, I think investors should have another look at the defensive stocks that had done well when the markets were worried about a recession in August, and have since pulled back. These being utilities, REITS, and telecommunications. This is a time for investors to reacquaint themselves with their goals, and not chase indexes. Markets have a habit of humbling us. With the added noise of U.S. politics for 2020, I expect interesting times ahead. Consider the following quote to end this column: “Democracy cannot succeed unless those who express their choice are prepared to choose wisely. The real safeguard of democracy, therefore, is education.” ~ Franklin D. Roosevelt Steven Mayo is a Vice President, Director, and Investment Advisor with RBC Dominion Securities Inc. (Member — Canadian Investor Protection Fund). This article is not intended as nor does it constitute investment advice. Readers should consult a qualified professional before taking any action based on information in this article.
