US outlook 2020: Positive 12 months ahead but decade of sub-1% gains could follow

Muted equity returns to define the 2020s

Valuation continues to be the primary consideration for US equity investors moving into the 2020s, with Morningstar Investment Management (IM) expecting a decade of sub-1% returns from the US stockmarket.

As the US economic expansion and, in turn, equity bull market have continued unabated into record territory, valuation has driven the conversation when it comes to year-ahead outlooks for across the Atlantic. For the vast majority of the past three years, US stocks have only ever been as expensive twice in history - prior to the Great Depression in 1929 and before the tech bust at the turn of the century. That continues today, with the MSCI USA trading on a cyclically adjusted price/earnings (CAPE) ratio of 29.2 times as at 30 September, according to Barclays' Shiller indices. Than...