The best advice for investing in the stock market in 2020

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J.-Sébastien Brossard: Anyone who invests in the stock market needs to realize that they’re stepping into a world in constant flux. The situation can turn on a dime, which is what makes it so interesting.

[White text on green background: What are the challenges facing stock market investors in 2020?]

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[Text on screen superimposed on part of the green Desjardins logo: J.-Sébastien Brossard, B.A. Economics, MBA, Investment Advisor, Brossard Group, Desjardins Securities]

J.-Sébastien Brossard: The ongoing international trade battles are the main factor that will determine the direction of the stock markets in 2020.

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J.-Sébastien Brossard: Right now, that’s THE question on everyone’s mind, especially investors.

What will happen with the trade tensions, especially between the United States and China?

Fortunately, American and Chinese officials are working on an agreement.

The outcome of the 2020 U.S. election could have an impact on the stock markets.

For example, some say that the election of Democrat Elizabeth Warren would have a catastrophic effect on the stock market,

or at least that’s what her critics claim.

Another important issue is the recession,

a scary prospect to be sure. In the event of a recession, experts predict that share prices could drop by about 30%.

It’s a clear and present risk. But will it happen in 2020? Or in 2021?

Some people think the sluggish economy in Europe and Asia could spill over to other parts of the world, triggering a global recession.

The current turbulence affecting the global economy seems more like a temporary downturn in the manufacturing sector than a recession.

Interest rates are also falling worldwide, reducing the likelihood of a recession in 2020.

The list of reasons for adopting a defensive strategy against an end-cycle economy is a long one.

But are they enough to start preparing for it right now?

From a tactical standpoint, it’s still too early for a defensive stance.

In fact, a study of past cycles reveals that investors have a six-month window before a recession starts in which to adopt a defensive position.

To conclude, the economic and financial backdrop is favourable to equities in early 2020.

[White text on green background: Brossard Group, Desjardins Securities. J.-Sébastien Brossard, Brossard Group, 1 Place Ville-Marie, Suite 1970,
Montréal (Québec)]

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[Text on screen: Wealth Management, Securities]

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[White text on black background: Warning. Each Desjardins Securities advisor named on the front page of this document or at the beginning of any subsection hereof certifies that the recommendations and opinions expressed herein accurately reflect their personal views about the companies and securities that are the subject of this publication and all other companies and securities mentioned in this publication that are monitored by the advisor. Desjardins Securities may have published opinions that are different from or even run counter to those expressed in this document. These opinions reflect the different points of view, assumptions and analytical methods of the advisors who wrote them. Before making an investment decision based on any recommendations made in this document, the recipient should consider whether such recommendations are appropriate, given the recipient’s particular investment needs, objectives and financial circumstances.

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