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Recession in 2020? This is why I’ll carry on investing

Have you looked back on the market predictions for 2019?

Some people predicted another huge recession, while others were cautiously optimistic.

It’s not been a bad year for investors in the FTSE 100, with shares up around 7%. Even better are the returns from the FTSE 250, which has grown by roughly 19%. But, are these indices about to run out of steam?

I don’t believe these returns paint a full picture of the current situation in the market. I’m not going to pretend I know what’s going to happen next year, but from reading many company accounts and trading updates, I have seen the same two things hammering revenues and disappointing investors time and again.

Some businesses have suffered at the hands of one of these problems, while others have been hit both. Although the situation is not ideal for a short-term investor, for someone with a longer outlook, I believe that this leaves us with some brilliant buying opportunities in the market.

Some of my fellow Fool’s fear a sell-off, but ever the contrarian, I have a degree of optimism. By identifying the stocks that have been weighed down from these economic issues, I believe returns for investors could be lucrative in the long term.

Although I can’t say with any degree of certainty, I remain hopeful that the resolution of the macroeconomic issues I’ll outline might be clearer by the end of 2020.

In any case, I believe there will be plenty of buying opportunities for value investors.

Brexit

Has it only been three years since the referendum?

The looming deadlines and subsequent extensions are causing uncertainty for businesses and investors. But with an imminent general election result, it feels like we are a bit closer to a solution.

Whichever party wins the election, next year will surely have to be crunch-time. On whatever terms we leave – if we leave at all – I think businesses and investors will appreciate the clarity. At least then, proper measures can be taken and contingency plans actioned. 

US-China trade war

When Donald Trump was in London for the Nato summit, he warned that he was not in a rush to sign a new trade deal with China before he stands for re-election in November.

The trade war between the two nations has been blamed for cutting global trade growth, and some analysts believe this could continue into 2021.

Some commentators have said that although an end to the trade war might look unlikely, it could be conceivable that a ‘cease-fire’ between the two nations might be the next step, with no new tariffs being implemented.

The important part here is the US election, which I’m sure investors will be following closely. If Trump loses, will his successor reverse some of the tariffs?

If the US-China trade war does end next year, I would expect the global markets to soar. In any case, the returns from the S&P 500 are on another level to its UK equivalents, with gains of 25% in the year to date.

What will I do if the trade war continues? I’ll be looking out for those value investing gems and invest for the long term.

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T Sligo owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.