The burning question for investors is how to make money in 2019 after a drab 2018 around the world.
Global markets dropped 10% and in the UK, most major asset classes dropped in value or returned marginal gains. These included equities, bonds and buy to let.
Central banks have shut off the supply of cheap money that boosted markets in 2016 and 2017, leading to the loss of optimism for many investors, says Iain Black, chief economist for accountants and consultancy Deloitte’s.
He points out global equities peaked a year ago, the Eurozone and emerging markets have generally slid downhill and the US markets hit a wall towards the end of the year.
Tale of woe
Listing the downsides inflicting pain on investors, Black observed: “Investors enter 2019 in cautious mood, looking for safer alternatives to equities. Sentiment is the mirror image of where it was a year ago, at the start of 2018, when investors were upbeat and looking forward to more gains.
“A cynic – or a contrarian investor – would argue for doing the exact opposite of what most investors are doing today. As the great British banker, Nathan Meyer Rothschild is supposed to have said to buy when there’s blood in the streets, even if the blood is your own.
“After last year’s falls in equity markets there’s certainly blood on the streets. It remains to be seen whether investors are confident enough to buy.”
The tale of woe for investors includes:
- Oil down 15%
- Government bonds down
- Buy to let house prices nudging up
The success stories were few and far between:
Canada created a legal cannabis industry with one IPO by Tilray starting at $17 in July, then hitting $200 before closing out the year at $70.
Two bottles of Romanee-Conti burgundy broke the world record for bottles at auction by going for more than a total of $1 million in two separate sales.
Black also noted cryptocurrency and Bitcoin had a torrid year, dropping from almost $20,000 a coin in December 2017 to $3,850 a year later – a 63% fall in value.
“By and large major asset classes didn’t do well in 2018, but some obscure investments did,” he said.