[Bloomberg] In a bull market almost everyone thought was living on borrowed time, the S&P 500 is poised to post one of its best years in two decades. Extraordinary returns like those are complicating the lives of people paid to predict what happens next.Stretches like this are only raising the stakes. Despite falling the most in almost two months on Friday, the S&P 500 has now climbed for seven out of the last eight weeks, with this month’s 3.4% gain tied for the best November return in a decade.
A vanilla 60/40 portfolio -- 60% stocks, 40% bonds -- is now on course for its best year since 2009 -- a feat that few see being repeated anytime soon.
As December beckons, sell-side prognosticators sound anxious, though not quite bearish. Societe Generale SA, Morgan Stanley and Goldman Sachs Group Inc. are among those telling clients that beloved strategies -- America First trades, quality shares, selling volatility -- offer fewer rewards in 2020. Growth and valuation risk is the mantra.
Add the struggle to reach a phase-one U.S.-China trade deal, and investors are in no mood to revel in this year’s double-digit returns.
"We have been bombarded by these outlooks for 2020," said Alberto Tocchio, chief investment officer at Colombo Wealth SA in Lugano, Switzerland. "But I wouldn’t be so sure that growth will expand in any considerable way if a trade deal is not signed."
Colombo Wealth has been turning more defensive over the past month, reducing positions in U.S. equities and instead switching into European value stocks and U.K. domestic shares.
Uniting a host of Wall Street analysts is the view that the U.S. isn’t on the cusp of recession, global manufacturing can recover from its woes and easier monetary policies can deliver a boost to growth. Low interest rates are bidding up bond-proxies while haven demand is juicing quality stocks.