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Where I’d be investing my money in 2020

As we near the end of 2019, I think it’s safe to say that it hasn’t been the year that many of us expected we’d see on many fronts.

The Reserve Bank of Australia (RBA) and other central banks around the world continue to slash interest rates beyond already record lows, while the US–China trade war has continued to drag on into the second half of the year.

Talks of a market crash have been overblown after big share market falls in February, and we’ve seen the Afterpay Touch Group Ltd  (ASX: APT) and its fellow WAAAX stocks defy expectations and surge higher.

So, with this in mind, here are some ideas of how to position your portfolio in 2020, given what we’re seeing in the markets as we head towards the end of 2019.

Some defensive exposure could be a good thing

As we’ve seen in the past, periods of uncertainty in geopolitics and global markets have seen defensive stocks such as the ASX gold miners perform strongly in 2019.

The Newcrest Mining Ltd (ASX: NCM) share price has rocketed more than 50% so far this year while we’ve seen strong gains from Resolute Mining Ltd  (ASX: RSG).

If you’re not prepared to bet your hard-earned cash on the volatility of US–China relations, another alternative could be diversifying into countercyclical industries such as the Energy or Consumer Staples sectors.

With this in mind, the AGL Energy Ltd  (ASX: AGL) or Coles Group Ltd  (ASX: COL) share prices could be good value before the end of the year and both offer good defensive benefits to the right portfolio. 

But tech share prices still have growth left

As mentioned, the WAAAX stocks have rocketed higher and been real outperformers in 2019 so far.

The Afterpay share price has led the tech group higher with 166% gains since the start of January while Appen Ltd  (ASX: APX) and Altium Ltd  (ASX: ALU) shares have also outperformed in 2019.

If the economic fundamentals remain intact into the first half of 2020, I’d expect to see the tech share prices continue to surge higher – particularly if we see a resolution to the trade war.

Foolish takeaway

It’s anyone’s guess what is coming our way on the ASX in 2020, but it helps to be aware of trends and keep an eye out for indicators.

While we see a lot of doom-and-gloom commentary about the inversion of the yield curve and an impending recession, the reality is we could have a further 2–3 years before markets see a correction.

By investing in a few defensive stocks in late 2019, you could setup your portfolio for 2020 and still gain the upside of a strong ASX market performance in 2020 at the same time.

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Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO and Altium. The Motley Fool Australia owns shares of Appen Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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