Seth Masters, chief investment officer of Bernstein Private Wealth Management, shares his outlook for the coming year in a recent interview with Business Insider.

Here are some highlights:

• Masters sees volatility ahead for the markets. With respect to the Dow, he says, “One implication of more volatility together with relatively slower growth in stocks is that you probably will see 20,000 hit multiple times, not just once.”
• Concerning the global economic outlook, Masters believes there are some “very significant risks in today’s environment that are worth thinking about.” These include managing the Brexit outcome, Italy’s referendum and upcoming elections overseas which may “create some friction for the European economy and perhaps for the euro as a currency.” One area of concern, says Masters, is the potential for the Trump administration to foster “restrictionist trade policies that really are onerous or that trigger retaliation by some of our trading partners. That could be very bad for our GDP.”
• On investment risk, Masters says, “It’s going to be critical now for investors to be really careful with how they construct their strategic allocations through stocks, bonds, alternatives and other diversifying assets and really make sure they calibrate their investments properly.”
• “We think that active investors that have good research and strong discipline will be able to generate very strong returns over the next few years compared to broad indices,” according to Masters.
• If the U.S. economy sees strong growth which leads to inflation pressure, says Masters, “I think it’s possible that you could see more rate hikes than currently baked into expectations and it could be a bit of a shock to the market.”
• As far as sector outlooks, Masters comments that banks could benefit from deregulation, interest rate hikes and proposed tax cuts. He believes there is vulnerability in sectors that “were the big darlings over the last few years” such as utilities and consumer staples.

As investors face uncertain times ahead, Masters argues, “I think the key challenge is how do you get yourself to actually stay invested because the seemingly easy thing to do is just stay in cash or something else that’s safe.” While that’s a very “human reaction,” Master asserts, it’s “the one guaranteed losing approach.”