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Sept. 14, 2019, 10:16 a.m. EDT

Why next year could be the most volatile in history for investors

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By Shawn Langlois, MarketWatch


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Are you positioned for the coming storm?

Think 2019 has been hectic? You ain’t seen nothing yet.

According to our call of the day from John Mauldin of Mauldin Economics, 2020 “will be the most volatile year in history” for investors

“The last few weeks marked a turning point in the global economy. It’s more than the trade war. A sense of vulnerability is replacing the previous confidence — and with good reason,” he wrote in his latest market update . “We are vulnerable, and we’ll be lucky to get through the 2020s without major damage.”

Mauldin pointed to supply shocks, the trade war, interest rates, unproductive debt and Europe’s mess as some of the factors set to create the perfect storm, but it’s one volatility bomb, in particular, that could blow up best-laid plans.

“Remember when experts said to keep politics out of your investment strategy?” he asked. “We no longer have that choice. Political decisions and election results around the globe now have direct, immediate market consequences.”

Of course, the most consequential of all: The 2020 U.S. election. And Mauldin doesn’t sound too hopeful about any of the scenarios.

“None of the possible outcomes are particularly good. I think the best we can hope for is continued gridlock,” he said. “But between now and November 2020, none of us will know the outcome. Instead, a never-ending stream of poll results will show one side or the other has the upper hand.”

Markets will be a mess, bouncing up and down with each headline, Mauldin warned, and that will inspire politicians and central bankers to react. To “do something.” That something, he said, will probably be the wrong thing.

The chart

While Mauldin is expecting a nasty stretch, J.C. Parets of the All Star Charts blog is feeling rather bullish on global markets after chewing on the trendlines. From London /zigman2/quotes/210598409/delayed UK:UKX -0.44%  to South Korea /zigman2/quotes/210598069/delayed KR:180721 -0.83%  , he’s seeing upside all over the world. But it’s the bright green signal flashing on the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA -0.95% that has him most optimistic:

“A breakout through 26,700-27,000 could spark a new leg higher, and I believe that is the higher probability outcome,” he wrote. “For the world’s largest and most important markets, I don’t see what there is to be bearish about.”

The market

The Dow /zigman2/quotes/210598065/realtime DJIA -0.95% , S&P /zigman2/quotes/210599714/realtime SPX -0.39%    and Nasdaq /zigman2/quotes/210598365/realtime COMP -0.83% are all moving slightly higher midway through Monday’s session. Gold /zigman2/quotes/211755585/delayed GC.1 +0.11% has turned slightly lower as has silver /zigman2/quotes/210315219/delayed SI00 +0.10% . Oil /zigman2/quotes/211629951/delayed CL.1 -0.37% is rallying toward $58 a barrel, with investors eyeing news of a new Saudi oil minister, while the dollar /zigman2/quotes/210598269/delayed DXY +0.08% is barely budging.

Europe stocks /zigman2/quotes/210599654/delayed XX:SXXP -0.32% edged lower, while Asia markets /zigman2/quotes/211618636/realtime XX:ADOW +0.03% ended in positive territory.

/zigman2/quotes/210598409/delayed
UK : FTSE UK
7,150.57
-31.75 -0.44%
Volume: 818,881
Oct. 18, 2019 4:59p
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/zigman2/quotes/210598069/delayed
KR : Korea Exchange
2,060.69
-17.25 -0.83%
Volume: 516,687
Oct. 18, 2019 6:03p
loading...
/zigman2/quotes/210598065/realtime
US : Dow Jones Global
26,770.20
-255.68 -0.95%
Volume: 293.61M
Oct. 18, 2019 5:08p
loading...
/zigman2/quotes/210598065/realtime
US : Dow Jones Global
26,770.20
-255.68 -0.95%
Volume: 293.61M
Oct. 18, 2019 5:08p
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
2,986.20
-11.75 -0.39%
Volume: 1.99B
Oct. 18, 2019 5:08p
loading...
/zigman2/quotes/210598365/realtime
US : U.S.: Nasdaq
8,089.54
-67.31 -0.83%
Volume: 1.82M
Oct. 18, 2019 5:16p
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/zigman2/quotes/211755585/delayed
US : U.S.: Nymex
$ 1,489.90
+1.70 +0.11%
Volume: 4.00
Oct. 20, 2019 6:01p
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/zigman2/quotes/210315219/delayed
US : U.S.: Nymex
$ 17.60
+0.02 +0.10%
Volume: 687.00
Oct. 20, 2019 8:00p
loading...
/zigman2/quotes/211629951/delayed
US : U.S.: Nymex
$ 53.58
-0.20 -0.37%
Volume: 1,970
Oct. 20, 2019 8:00p
loading...
/zigman2/quotes/210598269/delayed
US : U.S.: ICE Futures U.S.
97.36
+0.08 +0.08%
Volume: 0.00
Oct. 20, 2019 8:00p
loading...
/zigman2/quotes/210599654/delayed
XX : STOXX
391.84
-1.24 -0.32%
Volume: 0.00
Oct. 18, 2019 5:50p
loading...
/zigman2/quotes/211618636/realtime
XX : Dow Jones Indices
3,238.73
+0.92 +0.03%
Volume: 0.00
Oct. 20, 2019 8:10p
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