This expert’s calls for 2019 were dead on. Here’s what he’s bullish on for the year ahead.
2019 has been an incredible year for stocks with the S&P returning nearly 28% this year. And one expert says we could be in for another banner are ahead.
Jim Paulsen, chief investment strategist at The Leuthold Group, said this week that he could see the S&P 500 spiking another 15% in 2020.
However, Paulsen says the U.S. market may not be the best bet on the planet next year.
“This will be like the third time we’ve had re-acceleration in the global recovery just in this expansion along,” Paulsen told CNBC. “We had it in 2012 and 2013. We had it again in 2017, 2018. Every time that’s happened, international stocks have beat U.S. stocks, and I think they will again.”
Paulsen continued, “The emerging markets will be the big winner of 2020. They’re under-owned in most portfolios. They’re unloved because of their underperformance in recent years.”
The Emerging Markets iShares MSCI ETF—which is exposed to emerging markets like China and India—has returned just under 14% this year, and is down -4.3% in the last two years.
Paulsen’s calls for 2019 paid off. He predicted this summer that the major indexes would break out by the end of the year, which they have as evidenced by all-time high after all-time high being reached in the last week alone. The strategist also said that investors were too bearish at the end of last year when stocks briefly slipped into bear market territory on December 24, 2018.
For next year, Paulsen says he thinks the major indexes will continue to push into record territory given the economic environment.
“We have very low inflation,” Paulsen said. “But more important, we have very stable inflation. We have the least volatile consumer price inflation rate over the last 30 years of any time in U.S. history.”
In such an environment, Paulsen also likes small caps, technology stocks, financials, and some industrials, in addition to emerging markets.
Investors “have been piling into bonds and defensive stocks. They’re going to have to come back to more of the cyclical areas of the stock market,” he said.