The year 2019 has once again shown that forecasts concerning developments on financial markets must be treated with great caution. The uncertainty and the fall in share prices in December 2018 are still well
remembered. After a rapid countermovement in the first quarter of 2019, new highs were finally reached by the end of the year.

Our many years of experience have shown or confirmed scientific findings that it is not possible to optimise investment results by short-term market timing over longer periods of time. The decisive factor for long-term investment success is the consistent and efficient implementation of the appropriate investment strategy. Interim political or economic uncertainties are put into perspective in the long term, reflecting the stock market saying: “Political stock markets have short legs”. Rather, what is essential is a global economy that grows in the long term and leads to rising corporate profits. Stable framework conditions at the political level and free markets that allow global trade are prerequisites for this.

In the following, we would like to set out a few points that financial experts should keep in mind for the investment year 2020:

Economic growth
After a decline in global economic growth in 2019, some experts expect the situation to stabilise in the new year. However, there is uncertainty in this regard, as various economic indicators are sending negative signals. The expansive monetary and fiscal policy is providing support.

Yields: Bonds vs. Equities
The volume of bonds with negative returns is considerable. Alternatives with attractive distribution yields, in particular equities and real estate, are being sought. The interest rate level forms the basis for the valuation of financial investments and is there- fore decsisive and also serves as the basis for investment decisions.

Corporate profits
Historically, companies have achieved high profit margins in recent years. Financial analysts assume that these cannot be maintained in the future. Nevertheless, most experts are positive about equi- ties due to the lack of investment alternatives, but recommend focusing on quality stocks with high profitability and low debt.

Government debt
Since the financial crisis, government debt has continued to rise worldwide, reaching new highs in many places. This is expected to have negative effects in the long term. At present and in the near future, experts assume that the generally very low interest rate level and central bank interventions will stabilize yields and thus the debt service of governments.

Sustainable investments
In view of climate change, various measures have been adopted at political level aimed at reducing CO2 emissions. At the same time, more and more institutional investors are focusing on the sustainability of their investments across all areas, including corporate culture. In the future, institutional investors will increasingly take these aspects (environmental – social – governance) into account and therefore it will influence the financial markets accordingly.