1. Brace for Market Volatility
Stock fluctuations could make 2020 a rollercoaster year. AMG believes economic growth next year will be slightly above trend, but the first six months might be choppy, making markets vulnerable to sharp corrections. Also, America will hold a presidential election in November, and pundits and politicians will most certainly try to persuade everyone that doom is approaching if the other side wins. While the gloom is probably overdone, elections create uncertainty and add to market volatility. Long-term investors need gut checks as to whether they are prepared to handle ups and downs, or whether they would prefer to sit on the sidelines and miss potential upside.
2. Prepare for Success
Caution is always warranted when growth is tepid. The economy is on solid footing, and some of the trade uncertainty is appears to be resolving. It’s likely both domestic and foreign economic growth will pick up again through 2020, and that could give the markets a bump. A properly allocated portfolio can weather a downturn, but lost upside may be gone for good.
3. Update Your Estate
Again, the election plays a role. There is a chance for significant tax reform, including estate taxes. Don’t wait to make significant gifts or change your estate plan. Lawyers may be extremely busy at year-end. If gifting makes sense now, take care of it in the first half of the year.