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Market Views - Economic Outlook 2019

Outlook 2019

Stocks

Growth stocks have led the market the last 11 years, longer than any other period in history. The market has been upside down, with shares in companies with no earnings rising explosively while those with earnings doing little to nothing. We have also experienced a mania in the FANG stocks (Facebook, Amazon, Netflix and Google). We feel all of these are unsustainable and may change in the coming year.

Common sense investing is out of favor and we believe it is on the verge of a massive rebound. However, valuation levels do not yet reflect the lows usually seen in a bear market. For example, the Shiller Price Earnings Ratio*** is double what is usually seen at bottoms. As the economic season shifts into late fall, our research indicates large cap stocks should continue to outperform smaller stocks while Value stocks should outperform Growth. In addition, we believe Utility and Non-Cyclical stocks may hold up better while Technology and Cyclical stocks might be more volatile.

Overall, the market faces significant headwinds – slower earnings growth, fewer buybacks and Fed Quantitative Tightening (QT)****. We believe taking a conservative approach to equities makes sense until the next opportunity arises.

Positives Negatives
Positive Economic growth still in place Negative Slowing earnings growth
Positive Less bullishness Negative FANG mania cresting
Positive Divided government Negative Stocks still expensive
Negative Growth stocks starting to lag
Download The Long-term Economic Report (.PDF)   PDF


Disclosure

This information is of a general nature and does not constitute financial advice. It does not take into account your individual financial situation, objectives or needs, and should not be relied upon as a substitute for financial or other professional advice to assess, among other things, whether any such information is appropriate for you and/or applicable to your particular circumstances. In addition, this does not constitute an offer to sell, or the solicitation of an offer to buy, any financial product, service or program. The information contained herein is based on public information we believe to be reliable, but its accuracy is not guaranteed.

Investing involves risks, including loss of principal.

Past performance is no guarantee of future results.

ALPS Distributors, Inc. 1290 Broadway, Ste. 1100, Denver, CO 80203 (Member FINRA). ALPS is not affiliated with James Investment Research, Inc.

*Quantitative Easing is a course of action undertaken by the Federal Reserve to increase the money supply by flooding financial institutions with capital in an effort to promote increased lending and liquidity. **Yield Curve is a line that plots interest rates, at a set point in time, of bonds having equal credit quality but differing maturity dates. ***Shiller Price/Earnings is a valuation measure applied to the U.S. S&P 500 equity market. *G4 nations comprise of Brazil, Germany, Indian and Japan. ****Quantitative Tightening is a contractionary monetary policy applied by a central bank to decrease amount of liquidity within the economy.

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Economic Outlook

  • Annual Outlook from Fund Advisor
  • Provides recommendation for Investors
  • Forecast for Economy, Bonds, Stocks and International
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You should carefully consider the investment objectives, potential risks, management fees, and charges and expenses of the Fund before investing. The Fund's prospectus contains this and other information about the Fund, and should be read carefully before investing. You may obtain a current copy of the Fund's prospectus by calling 1-800-995-2637 or click here to view or download a prospectus online.

Mid, Small and Micro Cap investing involve greater risk not associated with investing in more established companies, such as greater price volatility, business risk, less liquidity and increased competitive threat. Fund holdings and sector weightings are subject to change without notice. Past performance is no guarantee of future results.
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