Welcome to Thoughts on the Market.

I'm Andrew Sheets, Chief Cross Asset Strategy

for Morgan Stanley.

Along with my colleagues bring you a variety of perspectives,

I'll be talking about trends across the global investment landscape

and how we put those different ideas together. It's Friday. talking about trends across the global investment landscape

and how we put those different ideas together.

It's Friday, December 20th, at 2 p.m. in London.

2019 has been a good year for investors

in just about anything, with stocks, bonds, and real estate all up significantly.

The story of that strength is likely to dominate the flurry of retrospectives that always

happen around this time of year.

As you read those, however, we'd suggest

keeping in mind three things, important factors that give this year more context and also help

thinking about the year ahead. The first thing to keep in mind is what drove these

gains, especially for stocks. The level of the stock market is composed of the

level of earnings and the multiple that the market is willing to pay for those

profits. Over the long run that valuation multiple is

rangebound meaning that the long-run performance of stocks is about the long-run

performance of corporate profits which tend to rise with the broader economy. But in the short run, the valuation multiple plays a much bigger role,

and that's especially true this year. The big gains of 2019 are entirely

about an increase in this valuation multiple.

...