Yes, your clients should make some money next year, but not a lot. The markets will continue to be up, but not by much. And there are several potential threats to the continued expansion, even a possibility of irrational exuberance.

Those were some of the views on Tuesday at the Natixis 2020 outlook. It is a common theme at many end-of-the-year market surveys projecting into the new year. The S&P 500 will be “up a bit,” said the group of money managers and market observers. However, they cited lots of potential threats to the expansion.

And problems of possible expanding trade wars and red ink are bothering institutional officials, according to David Goodsell, executive director for the Natixis Center for Investor Insight.

“They tell us that debt is the biggest threat to global financial security,” Goodsell said. Nevertheless, he added that institutional investors are not changing their allocations at this point.

Real estate money manager Gina Szymanski said it has been a good year for REITs, which are up by some 21% so far in 2019. But she doesn’t expect returns to be as good next year, when she puts them at closer to 7% or 8%. Szymanski, the director and portfolio manager for real estate securities at Natixis’s AEW Capital Management, said strong growth in her sector would depend on the continuance of easy money policies. It is also critical for the sector that the United States avoid a trade war, she said.

“The biggest growth will come from self-storage and retail [real estate],” she added.

David Lafferty, chief market strategist with Natixis Investment Managers, agreed that markets would continue to move up slightly, but he pointed to several potential dangers.

“I worry about effects of negative interest rates and long-term quantitative easing policies,” Lafferty said.

He said the greater danger is overconfidence. “I wonder if we’re not creating a class of investors who think that there is no such thing as a bear market—that one cannot exist.”

He feared that today’s markets and central bank policies could be pushing many investors into portfolios with too much risk. He admits that “his base” case is that markets and the economy will gain in 2020. “It will be a positive return, but not be a big return.” He said the average allocation of 60% to stocks, 40% to bonds should yield small positive returns. But that doesn’t stem his worry about an unexpected bear market.

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