{"id":8384,"date":"2019-12-16T19:50:47","date_gmt":"2019-12-16T19:50:47","guid":{"rendered":"https:\/\/zackspcg.com\/blog\/?p=8384"},"modified":"2022-02-26T13:06:51","modified_gmt":"2022-02-26T13:06:51","slug":"three-reasons-to-be-bullish-in-2020","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/three-reasons-to-be-bullish-in-2020\/","title":{"rendered":"Three Reasons to be Bullish in 2020"},"content":{"rendered":"\n

Zacks Investment Management sees the U.S. economy growing at\na 2% to 2.5% clip in 2020,1<\/sup> which is arguably reason enough to be\nbullish in the new year. However, below we give you our three additional\nreasons to maintain a constructive outlook on stocks heading into 2020.  <\/p>\n\n\n\n

Reason #1: Election\nYear = Political Gridlock2<\/sup><\/strong><\/p>\n\n\n\n

In any given year, the stock market\u2019s performance is\ninfluenced by a myriad of factors \u2013 economic growth, corporate earnings,\ninflation, interest rates, and valuations, just to name a few. But, in our\nview, ongoing analysis of S&P 500 returns in U.S. presidential election\nyears reveals a common trend: Stocks\ndeliver positive returns a majority of the time.<\/strong><\/p>\n\n\n\n

Going a step further to analyze the performance data, we found\nthat \u2013 on average \u2013 the stock market delivers double-digit positive returns <\/em>in U.S. presidential election years. <\/p>\n\n\n\n

___________________________________________________________________________<\/p>\n\n\n\n

Do You Know How These Economic Indicators Could Affect Your Investments?<\/a><\/strong>
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It can be challenging as an investor to stay on top of all the important news stories and economic indicators that shape the market.
\u00a0
You don\u2019t need to become an expert. However, having a grasp of key economic and financial statistics\u2014from the inflation rate to the new corporate tax rate\u2014can provide insight into how key variables might influence your returns, and could potentially help you reach your financial goals with more confidence.
\u00a0
If you have $500,000 or more to invest, get our free guide,\u00a06 Essential Concepts to Help You Pursue Investing Success<\/em>.3<\/sup>\u00a0It\u2019s https:\/\/go.steadyinvestor.com\/download-data-checklist?source=website=&medium=blog&term=steadyinvestor_blog_2019_12_16&content=data_check_list_guide a valuable resource that walks you through influential data, from the unemployment rate to corporate earnings, and our views on how these factors could affect your investments.
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Download Our New Guide –\u00a0<\/a><\/strong>6 Essential Concepts to Help You Pursue Investing Success<\/a><\/strong><\/em><\/p>\n\n\n\n

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S&P 500 Index Total Returns During Presidential Election Years (1928 – 2016)<\/strong><\/p>\n\n\n\n

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Source: First Trust4<\/sup><\/em><\/strong> <\/figcaption><\/figure>\n\n\n\n


In our view, these are more than just number-crunched statistics and it is more than just coincidence that stocks have tended to do well in election years. We believe that the equity markets \u2018like\u2019 political gridlock and political certainty. It generally means that new, consequential laws won\u2019t get passed and businesses can operate without worry or concern that property rights, taxes, or regulations may suddenly change. In U.S. presidential election years, legislative efforts usually ground to halt as all attention and time is focused on the campaign. 2020 does not look to be any different.<\/p>\n\n\n\n

With 2020 being a presidential election year, and based on\nhistorical data detailed above, can we reasonably expect positive returns for\nthe S&P 500 Index next year? With the U.S. and global economy expected to\nproduce modest but positive growth in 2020, and with corporate earnings poised\nto rebound from sluggish 2019 growth rates, we don\u2019t see why not.<\/p>\n\n\n\n

Reason #2: Corporate\nEarnings are Poised to Rebound <\/strong><\/p>\n\n\n\n

2018 was a year\nwhere most U.S. corporations greatly benefitted from tax cuts, posting sizable\nquarter-over-quarter earnings growth rates along the way. It follows that 2019\nwas a year where corporations had very high comparisons when it came to\nmeasuring growth, which predictably led to flat and negative earnings growth in\nmultiple quarters throughout the year. Looking a bit deeper into the data,\nhowever, it is important to note that revenues and sales were on the rise even\nas earnings declined in Q3, which to us was a signal that underlying demand\nwas\/is holding up. <\/p>\n\n\n\n

Looking ahead\ninto 2020, S&P 500 corporations now have to meet a lower threshold (with\n2019 comparisons) to post solid quarterly growth, and we\u2019re expecting full year\ngrowth closing in at 10%.5 <\/sup>Though valuation multiples expanded in\n2019 with the S&P 500\u2019s strong rise, I still believe with close to 10%\nearnings growth there should be more wiggle room for the equity markets to\ntrack higher.<\/p>\n\n\n\n

Reason #3: Everyone\u2019s\nWorried About a Recession<\/strong><\/p>\n\n\n\n

Many \u2018experts\u2019\nhave been fearing a trade war since the trade war began, but worries have been\ngaining real traction since the yield curve inverted in May (it\u2019s not inverted\nanymore) and data confirmed substantial weakness in the global and U.S.\nmanufacturing sector. <\/p>\n\n\n\n

Back in Q3, the\nInstitute for Supply Management (ISM) reported that U.S. manufacturing remained\nfirmly in contractionary territory, hitting its lowest level since June 2009.\nEverything was down: new orders, production, employment, imports, exports, and\nprices. Additionally, global manufacturing contracted in September, with nearly\nevery major economy taking a hit.6<\/sup> <\/p>\n\n\n\n

The \u201cwall of\nworry\u201d grew and is still growing<\/em>, in\nour view, which we think should make you more bullish. The more that fear gets\nbaked into the market, the higher the probability of a positive surprise\ndriving markets higher, in our view. When an investor ignores the noise and analyzes\nthe broader economic fundamentals, it becomes evident that the recession card may\nbe overplayed \u2013 with the risk of recession already discounted into the market.\nIn 2020, unexpected surprises on trade, growth, and earnings have the potential\nto rally the market and even potentially stimulate a broad rotation back into\ncyclicals. <\/p>\n\n\n\n

It can be challenging as an investor to stay on\ntop of the unexpected surprises, important news stories and economic indicators\nthat could shape the market in 2020. In addition to keeping up with news that\ncould impact the market, it is important to understand key economic indicators\nand financial statistics that could influence your investments.
\n 
\nFrom the inflation rate to the new corporate tax\nrate, insight on these factors can help you better understand how these\nvariables might influence your returns, and could potentially help you reach\nyour financial goals with more confidence.
\n 
\nIf you have $500,000 or more to invest, get our\nfree guide, 6 Essential Concepts to Help You Pursue Investing Success<\/em>.7<\/sup> It\u2019s\na valuable resource that walks you through influential data, from the\nunemployment rate to corporate earnings, and our views on how these factors\ncould affect your investments.<\/p>\n","protected":false},"excerpt":{"rendered":"

The upcoming election, corporate earnings, and even recession worries are all reasons for optimism<\/p>\n","protected":false},"author":3,"featured_media":7430,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[71,73],"tags":[],"class_list":["post-8384","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-private-client-group","category-steady-investors-week"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8384","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=8384"}],"version-history":[{"count":1,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8384\/revisions"}],"predecessor-version":[{"id":10667,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/8384\/revisions\/10667"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=8384"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=8384"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=8384"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}