While New Year’s resolutions are being made and retailers are desperately trying to sell remaining Christmas stock, financial commentators are busy making predictions about what 2019 will hold for the market.
One thing they seem to agree on is the market is not looking too bright in 2019, with growth slowing, housing prices continuing to fall and interest rates likely to remain low. Market volatility is also expected, with market rallies being short and some sources mentioning a possible recession. Lower housing construction may be replaced by infrastructure projects, and China’s growth is also predicted to slow, with their central bank recently cutting the required reserve ratio by 1% for its banks to encourage lending.
I myself am not expecting a great year for the market. If pushed, a flat year would be my forecast.
This was my forecast last year as well. While August of 2018 seemed to prove that wrong with a strong market, the year ended with a fall of 7%.
How to approach the market in 2019
My approach remains the same whether the year ahead is predicted to be good, bad or indifferent. Buying and holding solid, reliable businesses with good management at a reasonable price is the way to build wealth over time.
While indeed, there are some shares that are beginning to pique my interest, due to price falls bringing down their valuation I would recommend still keeping a portion in cash as generally great buying opportunities are still limited. As always, patience and discipline are required when it comes to investing.
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