While stock market euphoria is at its highest levels, there are now financial analysts like Ted Bauman who are starting to believe that the stock market may face some headwinds soon. Mr. Bauman is an economist who graduated from the University of Cape Town after he emigrated to South Africa. He did work for Habitat for Humanity and has taken many managerial roles in the nonprofit sector. He moved back to the United States and currently works as an editor at Banyan Hill Publishing. He specializes in low-risk investing strategies and wealth preservation. As an economist, he takes a broad view of the markets and advises individuals not to be market timers.
Ted Bauman is foreseeing a decline in the Us stock market if certain factors continue to play out. One factor is that the stock market is currently overvalued. Mr. Bauman and a growing number of other financial analysts believe the stock market is way overvalued and that equity prices are going to have to revert to fair value. Also, the federal reserve is aggressively raising interest rates. Ted Bauman believes that the bull market in stocks will end if interest rates hit four percent. If the US economy continues to grow at its current pace, rates should hit four percent by 2020. Ted Bauman does believe the greatest threat to the stock market is the ongoing trade war with China. He believes that if China retaliates to the tariffs imposed by President Trump, many US corporations who do regular business with China will lose revenue and their stock prices will decline as a result.
If the bull market does indeed die and there is a stock market crash, Ted Bauman advises investors to prepare accordingly. Many investors only invest in the stock market and Mr. Bauman sees this as a huge mistake. Bonds will cushion a financial portfolio in the event of a stock market crash. Bonds pay interest and can be a great source of residual income for an investor. Mr. Bauman advocates that investors keep some of their wealth outside the grips of the financial institutions.