The US stock markets are going to lose $100bn in the next three years, and investors have to find a way to absorb that, according to one leading asset manager.
The Dow Jones Industrial Average is expected to fall about 600 points this year, and the S&P 500 is expected hit another 300 points, the Morningstar Group said on Thursday.
The impact will be felt by US investors, who are already facing the worst global recession since the Great Depression, which began in December 2009.
The US economy is expected shrink by 0.6% this year as a result of the recession, which is the worst since the late 1970s, according the Bespoke Investment Group.
“We think the stock market will suffer from an adverse impact on US economic growth in 2019, 2020 and 2021, particularly if investors are still uncertain about the outlook for the US economy in 2019 and 2020,” said Mark Schlesinger, chief investment officer at Morningstar.
The stock market is up about 1% so far this year compared to last, and is expected by analysts to climb further this year.
But, it’s not just the stock markets that are on the brink of a big loss.
“Investors have been expecting the stockmarket to decline for a while now,” said Stephen Mascaro, senior investment strategist at UBS Wealth Management.
“That was the biggest fear for investors that the US stockmarket was going to crash in 2019.”
“Investment managers are not going to be able to afford to lose money on stocks,” he said.
Meanwhile, investors will also have to look beyond the US, where the S &p 500 is up by about 3% sofar this year to its highest level since April 2009, according TOF Labs.
Investors should not be worried about the US and the stockmarkets, but they will also need to worry about China, the second biggest economy in the world.
China’s economy grew at an annualised rate of 4.4% in the third quarter of this year according to official data released on Thursday, and its growth rate is forecast to increase by 6.4%.
China’s main trade partner is the US.
China has a $20tn economy, and imports more than double what it exports.
China also has a large manufacturing sector.
“It’s going to continue to be a challenge to investors,” said Mascarpo.
“You need to be cautious about China.”
Investors will also see a steep decline in the value of their holdings.
The average value of the S, P and D funds in the US have fallen by $1.4tn so far, while the S and D Funds in the UK have plunged by $8.9tn.
For those who don’t want to go into the markets, they can still get involved in the markets using ETFs.
There are also more ETFs that track the Siam Investment Fund, which tracks the Chinese equity market.
Investors can also use a fund manager to buy shares in companies such as Apple, Cisco, Microsoft and Twitter.
“In 2019, there is a lot of pressure to buy stocks and there’s a lot more pressure to sell,” said Schlesingers.
“And investors need to make sure they’re not selling too soon.
They’re not going out of business, they’re just not going for too long.”
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