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In 2019, investors had reasons to be happy. The S&P 500 Index, a widely used tool for measuring stock performance, was up about 30 percent for the year, and other indexes also rose significantly. But what can you expect from the financial markets in 2020?
As baseball Hall of Fame player Yogi Berra once said: “It’s tough to make predictions, especially about the future.” And that’s certainly true for the financial markets, which have often defied expectations.
However, many investors do have expectations – and they are often colored by recent events. This “recency bias” can be a problem, because if you base your hopes on what happened in 2019 – a great year for the markets – you might end up being disappointed. Even worse, you could overreact to these feelings by making investment moves that aren’t really in your best long-term interests.
So, feel free to enjoy your investment results of 2019 – but don’t use them as a guide to the future. Instead, when evaluating the investment landscape for 2020, consider several factors that may influence the financial markets:
As you can see, there’s a lot to think about when trying to determine how the financial markets will perform in 2020 – and that’s the case every single year. But no matter how any of the above factors play out this year, you can help yourself by following a long-term investment strategy based on your goals, risk tolerance and time horizon. And it’s important to stick with - investment principles, such as diversification and taking a long-term perspective. So, don’t let the headlines of today, or the anticipated headlines of tomorrow, drive your investment moves. Ultimately, it’s the decisions you make that help determine your success as an investor. And you can get help in making those decisions by contacting an Edward Jones financial advisor.
1 CNBC: “Fed Decision: Interest rates left unchanged, indicates no changes through 2020” (https://www.cnbc.com/2019/12/11/fed-decision-interest-rates.html)
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