T
he past decade seemed to defy
conventions. The economy contin-
ued to chug along without falling
into a recession every several years, as it
has done in the past. The bull market in
stocks that started in 2009 is now the lon-
gest in history. And the bull may still have
room to run.
But there are signs investors are
getting uneasy. A recent joint Kiplinger-
Personal Capital poll found that nearly half
of respondents say the economy is slow-
ing, with about one-third bracing for
a recession by the end of 2020. Most
respondents also worry about a stock
market decline. Some four out of 10 check
their portfolio either daily or weekly. And
investors of all ages have moved a sizable
portion of their portfolio into cash.
Our Personal Capital advisors are see-
ing more and more investors ask about
where to put their money going forward,
or how to protect against the inevitable
bear market. Of course, no one can pre-
dict what this new decade will bring. But
here are answers to some frequent ques-
tions from investors—and our outlook for
the decade ahead.What are lessons investors should
have learned in the past decade?
There are three main lessons. One, that
big, awful bear markets like 2008 will
happen, but stocks will generally increase
in value over long periods of time anyway.
This is why, at Personal Capital, we
encourage investors to stay focused
on the long-term instead of making
drastic changes to their portfolios based
on fear of market movement.
Two, that interest rates are just as hard
to predict as stocks. For most of the de-
cade, everyone expected rates to rise, but
they fell. Now most expect them to keep
falling, but it is dangerous to be overconfi-
dent about this. Even the Fed doesn’t
seem to know, so don’t expect any so-
called expert to either.
And three, be wary of making impor-
tant investment decisions based on
politics. Political experts had a horribleADVERTISEMENT
By Craig Birk, Chief Investment Officer
Investing Outlook for a New Decade
PROFESSIONAL INSIGHTS FROM PERSONAL CAPITAL
What trends do you see for the
upcoming decade?
More rapid advances in technology,
cheaper startup costs, and changing
consumer preferences will lead to wealth
creation, but also more frequent and
faster disruption of existing businesses.
Looking ahead, major changes are
likely imminent in financial services
and investors should expect the unex-
pected, even with today’s tech darlings.
Faster change cycles should be positive
for diversified investors, but they can
also create greater risk for those with
concentrations in single sectors or
industries.
Also, this record-breaking bull market
has mostly been dominated by the US.
While the length of this trend is impres-
sive, long and powerful winning streaks
between US and international stocks
are the norm. Don’t be surprised if
the next decade favors a more global
approach.How can investors take advantage
of these trends?
There will be some big winners in the
next decade, but we may also see more
established companies losing share. Last
decade, innovation mainly favored large
technology companies. Over the next
decade, smaller and more nimble compa-
nies across other sectors are likely to
gain share.
We urge investors not to give up on
global diversification. When it comes to
domestic vs. international, for the last
50 years you could have done very well
just by owning whichever area fared
worse the previous decade. That may be
too simplistic of an approach, but owning
some of each ensures you don’t get
caught behind the trend, which can be
very damaging to long term results. ■“Don’t be surprised
if the next decade
favors a more
global approach.”
Personal Capital offers free online financial
tools, a mobile app, a high-yield account,
and personal wealth management services.
Learn more at http://www.personalcapital.com.record this decade of predicting elec-
tion outcomes. Even those who got it
right struggled to anticipate the market
impact.Are we due for a recession soon?
The 2010s was the first decade in the US
without a recession, which is unlikely to
happen again. You should be prepared
for a recession sometime early the next
decade, but also shouldn’t be surprised if
we have additional years of growth.How can investors protect themselves
in a recession?
The best protection is to have a well-
diversified portfolio that is aligned with
your long-term financial plan, and one
you will be able to stick with if things
turn south. Being too conservative over
time can have a cost, but it is not nearly
as bad as bailing out when prices are low.
Another way to protect against reces-
sion is to avoid unnecessary debt. Dig-
ging out of high interest rate credit card
debt can be tough during a recession.