Don’t bail out on the stock market or expect a recession quite yet.

Yes, it will continue to be a rocky ride for investors. And yes, a bear market will eventually come in a couple of years, but neither the stock market nor the economy is likely to blow up in 2019.

That was part of two similar economic and investment outlooks from UBS and Natixis officials in separate press briefings in Manhattan on Wednesday.

Market volatility will continue in 2019 as well as central bank tightening, said officials at both sessions. But there is some equity growth left in this now long-in-the-tooth bull market, which won’t drag down the economy, they said.

“We don’t currently see the conditions commonly associated with an impending recession, and there are still opportunities for pockets of value,” UBS officials wrote in “Turning Points. Year Ahead 2019.” A recession, they said, is still 12 to 18 months away.

However, both Natixis and UBS officials warned that next year there again could be some tough times for investors.

“The volatility situations that have existed through 2018 are likely to continue throughout 2019,” said David Jilek, chief investment strategist for Gateway Investment Advisers.

What will keep volatility high in 2019? Changes in Federal Reserve bank money creation, fiscal policies continuing to generate huge amounts of red ink and an expected drop in earnings numbers are playing into the high volatility rates, Jilek added. He said that recent high earnings numbers are “probably unsustainable.”

And then there are the central banks.

UBS officials noted that 2019 will be the “first time since the global financial crisis when central bank balance sheets are on track to end the year smaller than the they were at the start of the year.” They predicted that the Fed will increase interest rates by some 100 basis points over the course of the year.

However, both UBS and Natixis officials hedged their 2020 predictions by warning that everything could be ruined if a trade war breaks out between China and the United States. Still, they said that it is unlikely that leaders in the two nations would let the disasters of a tariff war happen.

While tariffs talks continue between the representatives of the nations, UBS officials predicted moderate growth or small negative numbers in the United States next year. They also predicted a bear market in 2020. By the way, UBS officials also expect that, when the bear market does come, it will be an average one of about 20 to 25 percent.

Still, UBS officials along with their Natixis counterparts made the case that it makes sense to get the last benefits of this bull market. They said that historically bull markets, just before bear markets and recessions, often have generated one last great surge of growth. For instance, at the end of a bull market cycle in 1948, stocks rose over 20 percent in the six months before it ended.

 

UBS officials also said that, in the best-case scenario, stocks could rise 10 percent to 15 percent in 2019; in the worst-case scenario they could be down some 10 percent. Still, they argued that hanging around to the end of a bull market is an effective strategy.

“We think that staying invested will pay off, although investors should prepare for great volatility as the market begins to anticipate the end of the cycle,” UBS officials wrote. Big investors, a Natixis official noted, are getting the message.

Indeed, institutional investors are expected to stick with their stock allocations in 2019, according to David Lafferty, senior vice president and chief market strategist for Natixis Investment Managers. “They are either very happy where they are and they don’t know what to do,” he added.

Lafferty said a recession will happen, “but just not in the near term.” But in 2019, he said, that the global economy is “decelerating to some degree, but it is likely to stay in a positive range.”

This last bit of bull market trend, said the officials at the Natixis briefing, will work against index investing. That’s because a mature bull market will require investors to be nimble; and to look to different places to find value, another official said at the Natixis briefing.

“It will make the case for active management,” said Andrea DiCenso, a co-portfolio manager for Loomis Sayles.

And where will one find good buys? Growth won’t be nearly as good as value investing, one manager said.

“We’re very excited about the market. We see a lot of value in the market,” according to Colin Hudson, a partner and portfolio manager for Oakmark Equity.

“We think that next year could be a very good year,” Hudson said.

And besides value-oriented investments, where will there be good buys in 2019?

UBS officials secular investing themes that should do well include those investments that benefit from population growth, aging and urbanization as well as sustainable investing.

“Investors,” UBS officials wrote in their 2019 review, “could take advantage of the fact that a wealthier world is willing to spend more on ecological goods such as better air quality for its children. There is now ample evidence that sustainable investing doesn’t hurt your portfolio.”

UBS, in its publication, also said U.S. loans, emerging market equities and Japanese equities will be attractive investments. Other opportunities include U.S. and European energy sectors, UBS said. They are predicting that “oil prices will recover in early 2019.”

Martin Blessing, UBS co-president of Global Wealth Management, in a comment at the press conference on Wednesday, argued for global diversification as U.S. markets slow down.

UBS, in the 2019 guide, said that U.S. focused equity investments, which have outperformed global equities by about 50 percent over the past seven years.

But now, UBS said, that is going to change and U.S. oriented investors need to diversify. That’s because the U.S. outperformance is going to end.

“Over the next seven years,” UBS wrote, “we expect higher long-term returns outside the United States.” The report also said that U.S. stocks traded in line with their trailing price to earnings (P/E) ratio over the past thirty years while the global index now trades “at a 20 discount.”

As important as diversifying and not letting the noise of trade disputes and volatility upset investors, says UBS’s Tom Naratil, co-president of Global Wealth Management, is keeping emotions out of investing.

“Clients are human; it is important to understand how you can keep emotions out of decisions,” he said. “We must help them avoid the mistakes; this is the most important advice we can give our clients.”