There's only a few days left of the year and the decade, and we've just capped off one of the best years in memory for ASX shares. The ALL ORDINARIES (INDEXASX: XAO) started the year at 5,625.6 points but looks to end the year at all-time highs – just shy of 7,000 points.
It's a great time to be invested, to be sure. ASX shares of all colours have enjoyed big gains in 2019. WAAAX growth shares like Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO) have banked double-digit gains. Even ASX blue-chips like Woolworths Group Ltd (ASX: WOW) have seen significant price appreciation. WOW shares are on track (at the time of writing) for a 2019 gain of 30%.
So by all accounts, it should be full-steam ahead into the new decade.
But I'm heading into 2020 with a 'cautious optimism' approach.
The great investor Warren Buffett likes to 'be fearful when others are greedy'. Since the markets look set to bank gains close to 30% for the year, I expect a lot of excitement, exuberance and anticipation of further gains next year.
It feels a little too similar to 2007 and 1999 – and we all know how that ended.
Now I'm not a harbinger of doom and I'm certainly not foolish enough to tell you that markets are going to a certain fiery domain in a handbasket in 2020. But I also like to draw on history in thinking about the future. With 10 years of 'up' from the markets, I think a healthy dose of caution is most certainly warranted.
Now, I'm still watching my favourite ASX shares like CSL Limited (ASX: CSL) and Altium Limited (ASX: ALU) for a buying opportunity.
And I'm certainly not planning on selling some of my favourite dividend-paying investments like Washington H. Soul Pattinson & Co Ltd (ASX: SOL) or WAM Global Ltd (ASX: WGB).
But I am planning on keeping a big chunk of cash on the sidelines for a rainy day (despite our low interest rates). And I also plan on building up some hedge assets as insurance. The Vanguard Australian Fixed Interest Index ETF (ASX: VAF) and the ETFS Physical Gold ETF (ASX: GOLD) come to mind.
Foolish takeaway
Anyone who tells you what the markets will do next week, next year or next decade is a charlatan – so that's not what this writer is trying to bring to the table. But I prefer my own portfolio to be ready for anything – and I'm weighing up possibilities for 2020 and adjusting accordingly.
