Investors warn investors not to be so optimistic for 2019

According to Philip Saunders, who is president of Investec Asset Management, many investors hope to find a bottom-up and are overly optimistic. This is Saunders' comment, although the markets have covered losses of $ 1.4 trillion in November.

He said next year it would not be easy for traders. Rebounding from the bottom? It is possible, but there will be no decisive upward movement. According to him, a better strategy for investors would be if they use the short rally upwards to sell off their shares if they fail to cope with volatility. Saunders predicts that US stocks could fall by more than 25 percent of their peak in September - or to enter the sword territory. And for Asia, things can even be worse.

His forecast is in contrast to other market participants such as Allianz Global Investors and UBP Asset Management Asia who say that cheap Asian stocks will be tempting enough to buy to help restore the Asian markets. The major Asian benchmarks are down 12% and the discount here is bigger than the US stocks.

"If US stocks are in bad times, do you really believe you have to give up on them and prefer other markets because the situation may be different?" - says Saunders, noting that Asian markets usually cheaper than the US at an adjustment.

Saunders also highlights several reasons why investors should be careful.

The state of global growth is deteriorating

Saunders does not think he has a direct threat of recession, but he thinks the world economy is having serious difficulties in finding a surety catalyst to support growth. "In our view, economic conditions are showing signs of further weakening in response to tightening monetary policy , declining fiscal stimulus from the United States, and worries about the trade war. "

US stocks will continue to fall cheaper

US economic expansion will slow down and corporate profits will start to shrink next year. Redemption programs, which were also a rally-beacon engine, will begin to lose power.

Chinese easing will not be enough

Monetary and fiscal policies are likely to be further loosened in China, though the effect is more blurred than in the past. Additional tax cuts or infrastructure costs may be imposed, but authorities have to be careful with them because the debt nation is already approaching record growth.

Saunders recommendations? If you are a long-term investor there are opportunities to acquire shares that have a strong foundation. But forget about this scenario if your goals are short-term because you will not have a chance against volatility. In this case, sell the tops.

Source: Bloomberg Finance L.P.

Graphs: Used with permission of Bloomberg Finance L.P.

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