Investors, economists, and stock market analysts alike are all following the current trend of reflecting on their successes and sharing valuable tips with the public. Whether they do it through interviews or their own publications, the public is very intrigued. Ted Bauman is an expert analyst with positive opinions on the current bull market.
Bauman’s advice is sound, and comes from his decades of education studying both economics and history, along with his experience working in the nonprofit sector and time spent living in South Africa. According to Ted Bauman, there are essentially three scenarios that would take place leading up to a stock market crash.
The first, describes Bauman, is a return back to an average ratio. Using the CAPE ratio, which is formulated to account for price-to-earnings, Bauman notes that the ratio is currently at a record historic high. If it were to return to its average, that would mean a drop of over 35%. It would take over a year for this to happen, and its two effects would likely include investors bailing in order to find profits once they realize that their investments would not return (with an adverse effect, and more appealing asset returns.
Second, Ted Bauman believes that a scenario could take place where investors begin to identify yield curve from the United States Treasury. If this is taken into account, it is likely that bond markets won’t be expecting anything out of the ordinary within the economy for the next few years.
Ted Bauman’s last scenario includes a drop in the economy due to rules-based selling, which would be followed by a partial rise recovery. Bauman relates this scenario to a similar one: the Dow Jones largest percentage drop in one day, which occurred in 1987.
With the goal in mind of educating his readers and investment followers, Ted Bauman has a few tips in mind to encourage them to protect their investments. First, investors should focus on diversifying their portfolios and reducing their risk. Next, any stocks purchased should be those that have a low rate of volatility. Third, utilize help of an expert, if possible, to revisit current investment strategies; also, be sure that any of these strategies have been designed with the potential of a fast crash. Last, Bauman advises his readers to avoid immediate action in the face of a sudden crash.
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