Stock market strategies for 2020 after December rally: Morgan Stanley - Business Insider

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Morgan Stanley has pinpointed 3 strategies for stock traders to use as they decide what to buy in 2020. Here's what they are — and which stocks fit into each.

Mike Wilson, Morgan Stanley's chief investment officer and chief US equity strategist, has some ideas about that. He's long been bearish on stocks, and while he isn't betting on a dramatic improvement in the stock market or global economy — but he still thinks the right tactics can create an edge.

"We see some risk of disappointment in the [economic] data as we see payback for demand pull forward ahead of tariffs and margin pressures in the US," he wrote in a note to clients. "However, we think central bank liquidity and the removal of tail risks are offsetting forces that should support equities in the near term."

In a recent client note, Wilson shared three strategies his team has formulated for beating the market in 2020. They are as follows:Wilson says investors can bet on growth without investing in stocks that have already gotten too expensive. "As economic growth has slowed, the price investors are willing to pay for durable growth has risen, making it hard to find value within growth," he wrote.

He's recommending companies with strong returns on invested capital since the Global Financial Crisis, and price-to-earnings growth ratios that reflect low long-term growth forecasts. All of those companies have market capitalizations of at least $5 billion, and none are cyclicals. They are also all rated "Overweight" by Morgan Stanley.

 

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