Investors are increasingly asking whether the macroeconomic growth cycle still exists, and, if so, where are we in it? The answers to these important questions have real implications for the way equity investors should think about their portfolios.

AllianceBernstein’s global economists recently downgraded their growth forecasts for next year. But, while the softer outlook suggests that economies and financial markets will be more vulnerable to the many risks they face, we continue to think a significant recession is unlikely.

For some investors, this is just the problem. It’s been 10 years since the last global recession and the macroeconomic and geopolitical risks are intensifying. Although markets have been more volatile over the past year, stocks have continued to climb. Stormier weather seems inevitable.

Small wonder then that investors would like some sense as to when the storm will break or at least some idea of where they stand in the investment cycle—and assurance that such a cycle still exists!

With today’s complex market realities, there are no simple answers. It is possible, however, to look rationally at what these uncertainties mean for investment and to map out how investors might learn to live with them so that they can continue to invest effectively for the long term.

Developed Markets Are a Challenge

Part of the uncertainty arises from the fact that developed markets—those with open, manufacturing-based economies such as Europe and Japan—are among the most exposed to the various risks (debt, demographics, low-productivity growth and the US-China trade war) affecting the global outlook.